Basis of presentation of summary
consolidated financial statements
The summary consolidated financial statements are prepared in accordance with the JSE Limited Listings
Requirements for provisional reports, and the requirement of the Companies Act of South Africa applicable
to summary financial statements. The Listings Requirements require provisional reports to be prepared in
accordance with the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial
Reporting Standards Council, and to also, as a minimum, contain the information required by IAS 34 Interim
Financial Reporting. The accounting policies applied in the preparation of the consolidated financial
statements from which the summary financial statements were derived are in terms of IFRS.
The consolidated financial statements adopted the following new accounting pronouncements:
Accounting pronouncement |
|
Adoption impact |
Definition of Material – Amendments to IAS 1 and IAS 8 |
|
The IASB made amendments to IAS 1 Presentation of Financial
Statements and IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors which use a consistent definition of materiality
throughout International Financial Reporting Standards and the
Conceptual Framework for Financial Reporting, clarifying when
information is material and incorporating some of the guidance in IAS 1
about immaterial information. The amendment did not have a material
impact for the group. |
Definition of a Business – Amendments to IFRS 3 |
|
The amended definition of a business requires an acquisition to include
an input and a substantive process that together significantly contribute
to the ability to create outputs. The definition of the term ‘outputs’ is
amended to focus on goods and services provided to customers,
generating investment income and other income, and it excludes
returns in the form of lower costs and other economic benefits. The
amendment did not have a material impact for the group as our
acquisitions generate outputs through the selling of frozen, chilled,
ambient, and non-food products (goods) to customers. |
Conceptual Framework |
|
The IASB also issued amendments to references to the Conceptual
Framework in IFRS Standards. The document contains amendments
to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37,
IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32. The
amendments did not have a material impact for the group. |
Phase 2 amendments – Interest rate benchmark to
IFRS 7, IFRS 9 and IAS 1 |
|
The Phase 2 amendments address issues that arise from the
implementation of the reform of an interest rate benchmark, including
the replacement of one benchmark with an alternative one. The
amendment did not have a material impact for the group. |
Other than the adopted amendments above, the accounting policies are consistent with those accounting
policies applied in the preparation of the previous consolidated annual financial statements.
AUDIT REPORT
These summary consolidated financial statements for the year ended June 30 2021 have been audited
by PricewaterhouseCoopers Inc. (PwC). The auditor expressed a
modified opinion on the annual consolidated financial statements from which these summary consolidated
financial statements were derived. The basis of the modification is in relation to the Miumi fraud, where
PwC was unable to obtain sufficient and appropriate audit evidence to conclude whether the recorded loss
is complete, and whether the amounts allocated by management to each respective financial year, and the
related presentation and disclosures, are accurate.
A copy of the auditor’s report on the summary consolidated financial statements and of the auditor’s report
on the annual consolidated financial statements are available for inspection on the company’s website and at
the company’s registered office, together with the financial statements identified in the respective auditor’s
reports.
The auditor’s report does not necessarily report on all of the information contained in this announcement.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s
engagement they should obtain a copy of the auditor’s report together with the accompanying financial
information from the issuer’s registered office.
PREPARATION AND RESULTS
These summary consolidated financial statements have been prepared by CAM Bishop CA(SA), under the
supervision of DE Cleasby CA(SA) and were approved by the board of directors on September 29 2021.
The directors are responsible for the preparation of the preliminary report and the correct extraction of the
financial information from the financial statements.
FORWARD-LOOKING STATEMENT
This announcement may contain forward-looking statements regarding financial prospects of the group and
specific businesses. By their nature, forward-looking statements involve risk and uncertainty, and although
we have taken reasonable care to ensure the accuracy of the information presented, no assurance can be
given that such expectations will prove correct.
EXCHANGE RATES
The following exchange rates were used in the conversion of foreign interests and foreign transactions for
the year ended:
|
Statement of comprehensive
income (average) |
|
Statement of financial
position (spot) |
Currency conversion guide at June 30 |
2021 |
2020 |
|
2021 |
|
2020 |
Rand/Sterling |
20,72 |
19,73 |
|
19,79 |
|
21,37 |
Rand/Euro |
18,35 |
17,31 |
|
16,99 |
|
19,46 |
Rand/Australian dollar |
11,49 |
10,50 |
|
10,74 |
|
11,92 |
Rand/New Zealand dollar |
10,69 |
9,96 |
|
9,99 |
|
11,14 |
Rand/Hong Kong dollar |
1,98 |
2,01 |
|
1,84 |
|
2,24 |
Rand/Singapore dollar |
11,43 |
11,32 |
|
10,64 |
|
12,43 |
Rand/Czech koruna |
0,70 |
0,67 |
|
0,67 |
|
0,73 |
Rand/Polish zloty |
4,07 |
3,97 |
|
3,76 |
|
4,37 |
Rand/Brazilian real |
2,85 |
3,51 |
|
2,88 |
|
3,19 |
Rand/US dollar |
15,38 |
15,65 |
|
14,30 |
|
17,33 |
Rand/Chilean peso |
0,02 |
0,02 |
|
0,02 |
|
0,02 |
Rand/United Arab Emirates dirham |
4,19 |
4,26 |
|
3,89 |
|
4,72 |
Rand/Turkish lira |
1,99 |
2,56 |
|
1,64 |
|
2,53 |
Supplementary pro forma information regarding the currency
effects of the translation of foreign operations on the group
for the year ended June 30
The pro forma financial information has been compiled for illustrative purposes only and is the responsibility of
the board. Due to the nature of this information, it may not fairly present the group’s financial position, changes in
equity and results of operations or cash flows. An unmodified reasonable assurance report has been issued by
the group’s auditor, PricewaterhouseCoopers Inc. in terms of ISAE 3420 Assurance Engagements to Report on
the Compilation of the Pro Forma Information in a Prospectus, and is available for inspection at the company’s
registered office. The pro forma information has been compiled in terms of the JSE Listings Requirements and
the Revised Guide on Pro Forma Information by SAICA and in a manner consistent with group’s accounting
policies.
The illustrative information, detailed below, has been prepared on the basis of applying the 2020 average rand
exchange rates, above, to the 2021 foreign subsidiary income statements and recalculating the reported
revenue, trading profit, headline earnings, and headline earnings per share of the group for the year ended
June 30 2021.
|
|
|
|
|
Illustrative 2021 at 2020
average exchange rates |
|
R’000 |
2021
Audited |
Restated
2020
Audited |
%
change |
|
2021
Pro forma |
%
change |
|
Continuing operations |
|
|
|
|
|
|
|
Revenue |
114 803 442 |
120 574 182 |
(4,8) |
|
109 484 856 |
(9,2) |
|
Trading profit |
4 787 652 |
4 067 161 |
17,7 |
|
4 505 568 |
10,8 |
|
Headline earnings |
2 900 878 |
2 380 704 |
21,8 |
|
2 703 622 |
13,6 |
|
Headline earnings per share (cents) |
868,4 |
712,7 |
21,8 |
|
809,3 |
13,6 |
|
Constant currency per segment from continuing operations |
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Australasia1 |
33 010 216 |
28 986 744 |
13,9 |
|
30 377 505 |
4,8 |
|
United Kingdom2 |
24 955 373 |
31 462 683 |
(20,7) |
|
23 767 297 |
(24,5) |
|
Europe3 |
35 706 221 |
40 199 177 |
(11,2) |
|
33 859 431 |
(15,8) |
|
Emerging Markets4 |
21 131 632 |
19 925 578 |
6,1 |
|
21 480 622 |
7,8 |
|
|
114 803 442 |
120 574 182 |
(4,8) |
|
109 484 855 |
(9,2) |
|
Trading profit |
|
|
|
|
|
|
|
Australasia1 |
2 489 692 |
1 923 857 |
29,4 |
|
2 289 490 |
19,0 |
|
United Kingdom2 |
394 303 |
666 755 |
(40,9) |
|
367 898 |
(44,8) |
|
Europe3 |
1 086 046 |
958 081 |
13,4 |
|
1 032 528 |
7,8 |
|
Emerging Markets4 |
923 551 |
589 352 |
56,7 |
|
918 833 |
55,9 |
|
Corporate office5 |
(105 940) |
(70 884) |
|
|
(103 182) |
|
|
|
4 787 652 |
4 067 161 |
17,7 |
|
4 505 567 |
10,8 |
|
Exchange rates used in recalculating the reported revenue and trading profit:
1 |
Australian dollar and New Zealand dollar. |
2 |
Sterling. |
3 |
Euro, Czech koruna, and Polish zloty. |
4 |
Singapore dollar, Hong Kong dollar, Chilean peso, Brazilian real, South African rand, Turkish lira, United Arab Emirates dirham. |
5 |
Sterling, South African rand, New Zealand dollar, and Hong Kong dollar. |
Restatement of consolidated annual financial statements
In late June 2021, our internal surveillance and control processes uncovered a significant and sophisticated
fraud that was being perpetuated in the Miumi division of our Greater China business. This was carried out
by our 10% minority shareholder in Miumi, who was also the general manager of that business, certain
employees within Miumi as well as third-party service providers. All employees involved have had their
employment terminated. Ernst & Young (China) Limited was appointed in early July to conduct a
comprehensive forensic investigation into this fraud. However, at the time of finalising the group annual
financial statements the forensic investigation is not yet complete. It is apparent that this fraud has been
going on since about 2016 and has involved the manipulation of accounts receivables, prepayments, the
misappropriation of inventories and unrecorded liabilities the result of which these balances have been
progressively misstated over the past six years.
Miumi operates on a relatively standalone basis specialising in the global procurement of Japanese-style
product (mainly seafood, meat, poultry, and dairy) for distribution into Hong Kong and China, through both
the direct HORECA market, as well as through other wholesalers, particularly in China. It was in this
wholesaling component that the fraud occurred. New management has been put into Miumi, the business has been significantly scaled back and all wholesaler activities have ceased. Management believe based on its own investigations, the forensic work conducted to date and on the work performed by our external
auditors, PricewaterCoopers Inc., that this fraud relates only to Miumi, and that the balance of our Greater
China business is not impacted and continues to trade profitably and ahead of our expectations, although
COVID challenges are rapidly reappearing in that market.
Notwithstanding that the forensic investigation is not yet complete, the group has taken the prudent view by
reversing the full overstated accounts receivables, prepayments, and inventory involved and providing for the
unrecorded liabilities. We do, however, remain confident of some future recoveries from insurance, the
perpetrators and other third parties involved. The quantum of the losses as a result of this six-year fraud are
HK$253 million (R471 million) in respect of receivables and prepayments, and HK$102 million (R190 million)
in respect of inventory, and an unrecorded liability of HK$18 million (R33 million), which have been adjusted
as set out below. The tax deductibility of these amounts is uncertain so no provision for any tax relief has
been accounted for.
The group’s best estimate based on evidence available is that the loss attributable to the statement of profit
or loss for the 2021 financial year is HK$60,9 million (R121 million), around HK$47,5 million (R95 million)
relates to the financial year ended June 2020 and the balance to the financial years prior to this, these rand
amounts were translated at the respective average South African rand/Hong Kong dollar exchange rates for
these respective financial years. These losses per financial year approximate the statement of financial
position movements in the net of intercompany debt and cash related balances for Miumi, which is
considered reasonable given that Miumi had little or no investment activities.
After recording the impact of the losses attributable to the Miumi fraud, the Miumi contribution of the 2021
consolidated financial statement items is:
- Revenue: R282 million (0,25% of consolidated revenue);
- Cost of revenue: R237 million (0,27% of consolidated cost of revenue);
- Inventories: R33 million (0,33% of consolidated inventories);
- Trade and other receivables: R78 million (0,58% of consolidated trade and other receivables); and
- Trade and other payables: R68 million (0,33% of consolidated trade and other payables).
Processes followed to restate the trade and other receivables, inventory and trade and other payables at
July 1 2019 and June 30 2020:
- Trade and other receivables
We reviewed the background of the Miumi customers that were managed by implicated Miumi employees
and cross-border trading wholesalers. In addition, the fraudulent debtors were also identified by:
– |
if the customer used an abnormal delivery/business registration address (eg address in the People’s
Republic of China (PRC), residential address, or non-existent Hong Kong business registration/operation address); |
– |
incorrect customer name in PRC legal format (ie there is a typical naming requirement in the PRC,
normally contains the PRC province/city name in the company name); |
– |
through Angliss Greater China management review, if the customer was associated with abnormal
accounting activities such as significant sales returns and trading balances that had been directly
set-off with trade payable balances; and |
– |
from the Miumi accounting records and the above fraudulent debtor approach we were able to
generate a detailed sales and cost of sales transaction listing (by invoice and by customer) that
identified the fraudulent trade debtor balances at July 1 2019, June 30 2020 and June 30 2021.
These fraudulent trade debtor balances at these respective dates were reversed. |
- Inventory
Due to the reliability of documentation to support the Miumi inventory balance, the following procedures/calculations were performed to determine a Miumi inventory balance at July 1 2019 and June 30 2020.
Miumi specialises in the global procurement of Japanese-style product (mainly seafood, meat, poultry, and
dairy) for distribution into Hong Kong and China, through both the direct HORECA market, as well as
through other wholesalers particularly in China. The average inventory stock holdings for similar Angliss
businesses is between 60 and 80 days stock on hand. This is supported by evidence that other Angliss
PRC companies and the Miumi closing inventory balances for June 30 2021 (which have all been
physically counted) are within these expected stock days on hand of 60 to 80 days. The group selected
the mid-point of this range being 70 days to determine the expected Miumi inventory balances on hand at
July 1 2019 and June 30 2020.
A sensitivity analysis was done using stock days at 35, 53, 63, 77, 88 and 105 days. Results are
compared against the calculated stock-holding balance of 70 days. Negatives reflect lower stock-holding
numbers and positives reflect higher stock-holding numbers:
|
July 1 2019
R’000 |
June 30 2020
R’000 |
Stock-holding at 35 days (50% change in assumption) |
(18 319) |
(18 525) |
Stock-holding at 53 days (25% change in assumption) |
(9 159) |
(9 263) |
Stock-holding at 63 days (10% change in assumption) |
(3 664) |
(3 705) |
Stock-holding at 77 days (10% change in assumption) |
3 664 |
3 705 |
Stock-holding at 88 days (25% change in assumption) |
9 159 |
9 263 |
Stock-holding at 105 days (50% change in assumption) |
18 319 |
18 525 |
Results from the sensitivity analysis performed are that changes in number of stock-holding days
(including 50% changes) does not result in a material change to the expected Miumi inventory balance
at July 1 2019 and June 30 2020 or prior period loss allocation. The calculated inventory balances at
July 1 2019 and June 30 2020 is comparable to the physically counted inventory balance of
HK$16,8 million (R30,9 million) at June 30 2021. The June 30 2021 Miumi inventory balance represents
0,3% of the group’s total inventory balance at June 30 2021.
- Trade and other payables
The unrecorded trade and other payables have been allocated to prior financial periods based on the
financial years in which the loans/services were received by Miumi. No future costs were provided for
and all known claims against Miumi at the time of finalising the annual financial statements have been
provided for.
Net debt movements in Miumi
These losses per financial year approximate the statement of financial position movements in the net of
intercompany debt and cash-related balances for Miumi, which is considered reasonable given that Miumi
had little or no investment activities.
Restatement of prior period errors
The 2020 financial statements and the consolidated statement of financial position as at July 1 2019 have
been restated to correct the prior period errors in relation to the identified fraud.
Statement of financial position (extract) as at July 1 2019
R’000 |
Reported
balance
June 30 2019 |
Cumulative
effects of
restatement |
Restated
July 1 2019 |
Trade and other receivables |
15 213 598 |
(329 192) |
14 884 406 |
Inventory |
9 703 879 |
(125 318) |
9 578 561 |
Trade and other payables |
(18 698 495) |
(20 270) |
(18 718 765) |
Net assets |
28 735 967 |
(474 780) |
28 261 187 |
Foreign currency translation reserve |
5 263 176 |
2 921 |
5 266 097 |
Retained earnings |
17 902 350 |
(477 701) |
17 424 649 |
Total equity |
28 735 967 |
(474 780) |
28 261 187 |
Statement of financial position (extract) as at June 30 2020
R’000 |
Reported
balance
June 30 2019 |
Cumulative
effects of
restatement |
Restated
June 30 2020 |
Trade and other receivables |
12 289 674 |
(570 126) |
11 719 548 |
Inventory |
10 195 539 |
(98 346) |
10 097 193 |
Trade and other payables |
(17 602 244) |
(28 347) |
(17 630 591) |
Net assets |
27 938 586 |
(696 819) |
27 241 767 |
Foreign currency translation reserve |
9 609 715 |
(123 741) |
9 485 974 |
Retained earnings |
12 593 698 |
(573 078) |
12 020 620 |
Total equity |
27 938 586 |
(696 819) |
27 241 767 |
Statement of profit or loss (extract) for the year ended June 30 2020
R’000 |
Reported
balance
June 30 2020 |
Effects of
restatement |
Restated
June 30 2020 |
Continuing operations |
|
|
|
Revenue |
121 117 480 |
(543 298) |
120 574 182 |
Cost of sales |
(91 921 749) |
466 378 |
(91 455 371) |
Gross profit |
29 195 731 |
(76 920) |
29 118 811 |
Operating expenses |
(25 033 193) |
(18 457) |
(25 051 650) |
Trading profit |
4 162 538 |
(95 377) |
4 067 161 |
Share-based payment expense |
(100 774) |
– |
(100 774) |
Acquisition costs |
(1 968) |
– |
(1 968) |
Capital items |
(923 687) |
– |
(923 687) |
Operating profit |
3 136 109 |
(95 377) |
3 040 732 |
Net finance charges |
(710 263) |
– |
(710 263) |
Share of profit of associates and jointly controlled entities |
6 448 |
– |
6 448 |
Profit before taxation |
2 432 294 |
(95 377) |
2 336 917 |
Taxation |
(868 614) |
– |
(868 614) |
Profit for the year from continuing operations |
1 563 680 |
(95 377) |
1 468 303 |
Loss after taxation from discontinued operations |
(331 578) |
– |
(331 578) |
Profit for the year |
1 232 102 |
(95 377) |
1 136 725 |
Other comprehensive income |
4 331 548 |
(123 741) |
4 207 807 |
Total comprehensive income for the year |
5 563 650 |
(219 118) |
5 344 532 |
Profit for the year attributable to: |
|
|
|
Shareholders of the company |
1 216 805 |
(95 377) |
1 121 428 |
Non-controlling interests |
15 297 |
– |
15 297 |
Total comprehensive income attributable to: |
|
|
|
Shareholders of the company |
5 506 566 |
(219 118) |
5 287 448 |
Non-controlling interests |
57 084 |
– |
57 084 |
Continuing operations (cents) |
|
|
|
Basic earnings per share |
463,5 |
(28,6) |
434,9 |
Diluted basic earnings per share |
462,6 |
(28,5) |
434,1 |
Headline earnings per share |
741,3 |
(28,6) |
712,7 |
Diluted headline earnings per share |
739,7 |
(28,5) |
711,2 |
Discontinued operations (cents) |
|
|
|
Basic loss per share |
(99,3) |
– |
(99,3) |
Diluted basic loss per share |
(99,1) |
– |
(99,1) |
Headline loss per share |
(47,3) |
– |
(47,3) |
Diluted headline earnings per share |
(47,2) |
– |
(47,2) |
Total operations (cents) |
|
|
|
Basic earnings per share |
364,2 |
(28,6) |
335,6 |
Diluted basic earnings per share |
363,5 |
(28,5) |
335,0 |
Headline earnings per share |
694,0 |
(28,6) |
665,4 |
Diluted headline earnings per share |
692,5 |
(28,5) |
664,0 |
|
|
|
|
Statement of cash flows (extract) for the year ended June 30 2020
R’000 |
|
Reported
balance
June 30 2020 |
|
|
|
|
Effects of
restatement |
|
|
|
|
Restated
June 30 2020 |
|
|
Cash flows from operating activities |
|
3 928 340 |
|
|
|
|
– |
|
|
|
|
3 928 340 |
|
|
Cash generated by continuing operations |
|
8 374 137 |
|
|
|
|
– |
|
|
|
|
8 374 137 |
|
|
Operating profit |
|
3 136 109 |
|
|
|
|
(95 377) |
|
|
|
|
3 040 732 |
|
|
Adjustments to operating profit |
|
4 053 593 |
|
|
|
|
– |
|
|
|
|
4 053 593 |
|
|
Working capital changes |
|
1 184 435 |
|
|
|
|
95 377 |
|
|
|
|
1 279 812 |
|
|
Finance income received |
|
80 683 |
|
|
|
|
– |
|
|
|
|
80 683 |
|
|
Finance charges paid |
|
(677 897) |
|
|
|
|
– |
|
|
|
|
(677 897) |
|
|
Taxation paid |
|
(1 354 174) |
|
|
|
|
– |
|
|
|
|
(1 354 174) |
|
|
Dividends paid |
|
(2 213 668) |
|
|
|
|
– |
|
|
|
|
(2 213 668) |
|
|
Net operating cash flows from discontinued operations |
|
(280 741) |
|
|
|
|
– |
|
|
|
|
(280 741) |
|
|
Cash effects from investment activities |
|
(3 153 212) |
|
|
|
|
– |
|
|
|
|
(3 153 212) |
|
|
Cash effects from financing activities |
|
(912 235) |
|
|
|
|
– |
|
|
|
|
(912 235) |
|
|
Net movement in cash and cash equivalents |
|
(137 107) |
|
|
|
|
– |
|
|
|
|
(137 107) |
|
|
Cash and cash equivalents at beginning of the year |
|
6 058 269 |
|
|
|
|
– |
|
|
|
|
6 058 269 |
|
|
Effects of exchange rate fluctuations on cash and cash equivalents |
|
1 103 264 |
|
|
|
|
– |
|
|
|
|
1 103 264 |
|
|
Cash and cash equivalents at end of the year |
|
7 024 426 |
|
|
|
|
– |
|
|
|
|
7 024 426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The cash flow restatements are non-cash adjustments on the changes in the statement in financial position.
Acquisition of businesses and subsidiaries
for the year ended June 30
Acquisition opportunities due to COVID travel restrictions and management’s focus on underperforming
businesses were limited. As a consequence, five relatively small bolt-on acquisitions were concluded. These
bolt-on acquisitions were as follows:
- Craven Foods, a regional food distributor based in Bunbury, Western Australia, on May 31 2021;
- COAR S.p.A, a food distributor situated near Milan, Italy. The group purchased the remaining 50%
shareholding it didn’t own on March 31 2021;
- Wet Fish Trading LLC, a specialist seafood distributor in Dubai, United Arab Emirates, on July 1 2020;
- Leão Marinho located in São Sebastião, Brazil distributing food and beverages in the region, on
February 17 2021; and
- Fein Feinkost GmbH & Co. KG, a small retail bakery supplier located close to Ingolstadt, Germany, on
April 1 2021.
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.
These bolt-on acquisitions contributed R206,3 million of revenue and R16,2 million of trading loss for the
year ended June 30 2021.
There were no significant contingent liabilities identified in the businesses acquired.
The impact of acquisitions on the group’s results can be summarised as follows:
R’000 |
2021
Unaudited |
2020
Unaudited |
Property, plant and equipment |
(40 393) |
(44 679) |
Right-of-use lease assets |
(528) |
– |
Deferred taxation |
(6 689) |
935 |
Investments and advances |
(1 117) |
– |
Inventories |
(39 189) |
(39 395) |
Trade and other receivables |
(85 332) |
(124 860) |
Cash and cash equivalents |
(13 064) |
34 080 |
Defined pension fund obligations |
9 247 |
– |
Borrowings |
28 242 |
14 554 |
Right-of-use lease liabilities |
528 |
– |
Trade and other payables and provisions |
55 363 |
100 061 |
Taxation |
1 076 |
3 845 |
Total identifiable net assets at fair value |
(91 856) |
(55 459) |
Separately identifiable intangible assets |
(917) |
– |
Gain from bargain purchase |
3 136 |
– |
Derecognition of previously held investment in associate |
26 346 |
– |
Goodwill |
(68 657) |
(80 307) |
Total value of acquisitions |
(131 948) |
(135 766) |
Cash and cash equivalents acquired |
13 064 |
(34 080) |
Vendors for acquisition recognised |
38 366 |
210 |
Costs incurred in respect of acquisitions |
(6 151) |
(1 968) |
Net amounts paid |
(86 669) |
(171 604) |
|
|
|
The purchase price allocations are provisional and may be retrospectively adjusted if the group obtains new
information about facts and circumstances that existed at the acquisition date relating to these entities.
DISPOSALS
No subsidiary disposals occurred during the year ended June 30 2021.
SUBSEQUENT EVENTS
Subsequent to year end, South Africa was impacted by civil unrest (looting) in KwaZulu-Natal and Gauteng.
Our owned facility in Cornubia, KwaZulu-Natal and Crown Food Group’s factory mart sites in Springfield
KZN and Soweto were looted. Current estimates of the total direct loss of assets (including inventory,
property, and vehicles) is approximately R73 million. A loss of profits claim will be formalised but is not
expected to be significant. Losses as a result of the looting will be claimed against Sasria (a South African
government-backed insurance programme). As the looting occurred post June 30 2021, no adjusting
entries have been processed in the financial statements of the Bidcorp group.
On September 22 2021, the group signed a facility agreement with a syndicate of relationship banks
giving the group access to a revolving credit facility of €300 million (R5,1 billion) for three years, with
options to extend to five years. Other than these matters, there are no other material events since or
subsequent to June 30 2021.
CAPITAL COMMITMENTS
The board of directors’ policy is to maintain a strong capital base so as to sustain future development
of the businesses so that it can continue to provide benefits to its shareholders.
R’000 |
2021 |
2020 |
Capital expenditure approved: |
|
|
Contracted for |
1 060 248 |
747 726 |
Not contracted for |
1 316 229 |
686 007 |
|
2 376 477 |
1 433 733 |
Capital expenditure split: |
|
|
Property, plant and equipment |
2 298 914 |
1 336 171 |
Computer software |
77 562 |
97 562 |
|
2 376 476 |
1 433 733 |
|
|
|
It is anticipated that capital expenditure will be financed out of existing cash resources.
Significant contracted capital expenditures relate to the following:
- Australia – infrastructure investment in five new buildings;
- Bidfood UK – infrastructure investment in new Glasgow site and vehicle fleet;
- Czech Republic – new fish plant to replace the burnt-down Kralupy fish plant;
- South Africa – infrastructure investment in Port Elizabeth building; and
- Netherlands – new building in Zierikzee and a new freezer in Meppel and an upgrade to the warehouse management system.
Financial instruments
for the year ended June 30
FAIR VALUE HIERARCHY
When measuring the fair value of an asset or a liability, the group uses market observable data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used
in the valuation techniques categorised as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including
their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value
information for financial assets and financial liabilities not measured at fair value if the carrying amount is a
reasonable approximation of fair value.
|
R’000 |
Puttable
non-
controlling
interests |
Investments |
Vendors
for
acquisition |
|
Puttable
non-
controlling
interests |
Vendors
for
acquisition |
Total |
June 30 2021 |
|
|
|
|
|
|
|
Financial assets measured at fair value |
– |
27 281 |
– |
|
– |
– |
27 281 |
Financial liabilities measured at fair value |
(3 983 808) |
– |
(23 779) |
|
(74 753) |
(175 395) |
(4 257 735) |
June 30 2020 |
|
|
|
|
|
|
|
Financial assets measured at fair value |
– |
32 264 |
|
|
– |
– |
32 264 |
Financial liabilities measured at fair value |
(4 632 682) |
– |
(73 150) |
|
(55 262) |
(204 188) |
(4 965 282) |
|
Total |
Level 1 |
Level 2 |
Level 3 |
June 30 2021 |
|
|
|
|
Financial assets measured at fair value |
27 281 |
– |
– |
27 281 |
Financial liabilities measured at fair value |
(4 257 735) |
– |
– |
(4 257 735) |
June 30 2020 |
|
|
|
|
Financial assets measured at fair value |
32 264 |
– |
– |
32 264 |
Financial liabilities measured at fair value |
(4 965 282) |
– |
– |
(4 965 282) |
VALUATION TECHNIQUES AND SIGNIFICANT UNOBSERVABLE INPUTS
Valuation technique |
|
Significant unobservable inputs |
|
Inter-relationship between significant unobservable inputs
and fair value measurement |
The expected payments are
determined by considering the
possible scenarios of forecast
EBITDAs, the amount to be paid
under each scenario and the
probability of each scenario. The
valuation models consider the
present value of expected payment,
discounted using a risk-adjusted
discount rate. |
|
- Average EBITDA growth
rates: 16% (2020: 10%)
- EBITDA multiples: 10,5x
(2020: 10,5x)
- Risk-adjusted discount rate
1,7% (2020: 1,7%)
|
|
The estimated fair value would
increase (decrease) if:
- the EBITDA were higher
(lower); or
- the risk-adjusted discount rate
was lower (higher).
|
SENSITIVITY ANALYSIS ON CHANGES IN SIGNIFICANT VARIABLE UNOBSERVABLE INPUTS FOR
PUTTABLE NON-CONTROLLING INTERESTS (LIABILITY)
|
Increase in
assumption
% |
Increase
(decrease) in
liability
R’000 |
Decrease in
assumption
% |
Decrease
(increase) in
liability
R’000 |
Average EBITDA growth rate |
10 |
127 757 |
10 |
124 190 |
Risk-adjusted discount rate |
10 |
(27 734) |
10 |
(27 979) |
|
|
|
|
|
The group recognises any changes in the value of the liability as a result of changes in assumptions used
to estimate the future purchase price directly in retained earnings in the statement of changes in equity.
Independent auditor’s report on the summary consolidated financial statements
To the shareholders of Bid Corporation Limited
Opinion
The summary consolidated financial statements of Bid Corporation Limited set out on pages 2 to 7 and 21 to 31
of the accompanying provisional report, which comprise the summary consolidated statement of financial position
as at June 30 2021, the summary consolidated statements of profit or loss, other comprehensive income,
changes in equity and cash flows for the year then ended, and related notes, are derived from the audited
consolidated financial statements of Bid Corporation Limited for the year ended June 30 2021.
In our opinion, the accompanying summary consolidated financial statements are consistent, in all material
respects, with the audited consolidated financial statements, in accordance with the requirements of the JSE
Limited Listing Requirements for provisional reports, as set out in the “Basis of presentation of summary
consolidated financial statements note” to the summary consolidated financial statements, and the requirements
of the Companies Act of South Africa as applicable to summary financial statements.
Summary consolidated financial statements
The summary consolidated financial statements do not contain all the disclosures required by International
Financial Reporting Standards and the requirements of the Companies Act of South Africa as applicable to annual
financial statements. Reading the summary consolidated financial statements and the auditor’s report thereon,
therefore, is not a substitute for reading the audited consolidated financial statements and the auditor’s report
thereon.
The audited consolidated financial statements and our report thereon
We expressed a qualified audit opinion on the audited consolidated financial statements in our report dated
September 30 2021. That report also includes communication of key audit matters. Key audit matters are those
matters that, in our professional judgement, were of most significance in our audit of the consolidated financial
statements of the current period.
The basis for the qualified audit opinion was due to a fraud perpetrated at the Miumi division of the Group which
comprises four subsidiaries and one division of the Greater China business (collectively, the “Miumi division”).
This fraud commenced in prior financial years and involved the manipulation of trade receivables, prepayments,
inventories, liabilities, revenue, and cost of revenue resulting in the cumulative misstatement of these balances.
Management has quantified and recorded a cumulative estimated loss in the amount of R694 million in the
consolidated financial statements for the year ended June 30 2021. The forensic investigation into the matter
has not been concluded as at the date of the audit opinion on the audited consolidated financial statements.
Consequently, we were unable to obtain sufficient and appropriate audit evidence to conclude on whether the
recorded loss and the associated disclosures are complete and accurate.
Furthermore, management has quantified the loss allocation attributable to the current and preceding financial
years. We were unable to obtain sufficient and appropriate evidence to support this allocation in respect of the
various financial years.
After recording the allocated portion of the current year loss as described above, we were unable to determine
whether any further adjustments were required to the Miumi division’s contribution to the consolidated financial
statement line items, which includes:
- Revenue: R282 million;
- Cost of revenue: R237 million;
- Inventories: R33 million;
- Trade and other receivables: R78 million;
- Trade and other payables: R68 million.
The related financial statement line items in the summary consolidated financial statements are also impacted by
this matter.
Director’s responsibility for the summary consolidated financial statements
The directors are responsible for the preparation of the summary consolidated financial statements in accordance
with the requirements of the JSE Limited Listings Requirements for provisional reports, set out in note “Basis of
presentation of summary consolidated financial statements” to the summary consolidated financial statements,
and the requirements of the Companies Act of South Africa as applicable to summary financial statements.
Auditor’s responsibility
Our responsibility is to express an opinion on whether the summary consolidated financial statements are
consistent, in all material respects, with the audited consolidated financial statements based on our procedures,
which were conducted in accordance with International Standard on Auditing (ISA) 810 (Revised), Engagements
to Report on Summary Financial Statements.
PricewaterhouseCoopers Inc.
Director: E J Gerryts
Registered Auditor
4 Lisbon Lane, Waterfall City, Jukskei View, 2090
Private Bag X36, Sunninghill, 2157, Johannesburg, South Africa
September 30 2021
Report on the Assurance Engagement on the Compilation of
Pro Forma Financial Information included in the Annual Results
To the Directors of Bid Corporation Limited
We have completed our assurance engagement to report on the compilation of the Pro Forma financial
information of Bid Corporation Limited (the “Company”) by the directors. The Pro Forma financial information, as
set out on page 20 of the Provisional Report (the “Annual Results”), consist of Pro Forma financial information
which presents the impact of the currency effects of the translation of foreign operations on the Group as at June
30 2021. The applicable criteria on the basis of which the directors have compiled the Pro Forma financial
information are specified in the JSE Limited (JSE) Listings Requirements and described on page 20 of the Annual
Results.
The Pro Forma financial information has been compiled by the directors to provide users with relevant information
and measures used by the Company to assess performance and to illustrate the impact of foreign currency
movements on the Company’s reported financial results for the year ended June 30 2021. As part of this
process, information about the Company’s financial performance has been extracted by the directors from the
Company’s financial statements for the year ended June 30 2021, on which an audit report has been published.
Directors’ responsibility
The directors of the Company are responsible for compiling the pro forma financial information on the basis of the
applicable criteria specified in the JSE Listings Requirements and described in page 20 of the Bidcorp Results.
Our independence and quality control
We have complied with the independence and other ethical requirements of the Code of Professional Conduct for
Registered Auditors, issued by the Independent Regulatory Board for Auditors’ (IRBA Code), which is founded on
fundamental principles of integrity, objectivity, professional competence and due care, confidentiality, and
professional behaviour. The IRBA Code is consistent with the corresponding sections of the International Ethics
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards).
The firm applies International Standard on Quality Control 1 and, accordingly, maintains a comprehensive system
of quality control including documented policies and procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory requirements.
Reporting accountant’s responsibility
Our responsibility is to express an opinion about whether the pro forma financial information has been compiled,
in all material respects, by the directors on the basis of the applicable criteria specified in the JSE Listings
Requirements and described on Page 20 of the Bidcorp Results based on our procedures performed.
We conducted our engagement in accordance with the International Standard on Assurance Engagements
(ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included
in a Prospectus issued by the International Auditing and Assurance Standards Board. This standard requires that
we plan and perform our procedures to obtain reasonable assurance about whether the pro forma financial
information has been compiled, in all material respects, on the basis specified in the JSE Listings Requirements.
For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any
historical financial information used in compiling the pro forma financial information, nor have we, in the course of
this engagement, performed an audit or review of the financial information used in compiling the pro forma
financial information.
The purpose of pro forma financial information is solely to illustrate the impact of a significant event or transaction
on unadjusted financial information of the company as if the event had occurred or the transaction had been
undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any
assurance that the actual outcome of the event or transaction would have been as presented.
A reasonable assurance engagement to report on whether the pro forma financial information has been compiled,
in all material respects, on the basis of the applicable criteria involves performing procedures to assess whether
the applicable criteria used by the directors in the compilation of the pro forma financial information provide a
reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain
sufficient appropriate evidence about whether:
- The related pro forma adjustments give appropriate effect to those criteria; and
- The pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.
The procedures selected depend on our judgment, having regard to our understanding of the nature of the
Company, the event or transaction in respect of which the pro forma financial information has been compiled, and
other relevant engagement circumstances.
Our engagement also involves evaluating the overall presentation of the pro forma financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the pro forma financial information has been compiled, in all material respects, on the basis of the
applicable criteria specified by the JSE Listings Requirements and described on Page 20 of the Bidcorp Results.
PricewaterhouseCoopers Inc.
Director: E J Gerryts
Registered Auditor
4 Lisbon Lane, Waterfall City, Jukskei View, 2090
Private Bag X36, Sunninghill, 2157, Johannesburg, South Africa
30 September 2021
Administration
DIRECTORS
Chairman: S Koseff
Lead independent director: NG Payne
Independent non-executive: T Abdool-Samad, PC Baloyi, B Joffe, KR Moloko, CJ Rosenberg*, H Wiseman*
Executive directors: BL Berson* (chief executive), DE Cleasby (chief financial officer)
*Australian
COMPANY SECRETARY
Bidcorp corporate services (Pty) Ltd
Represented by Ms AK Biggs
BID CORPORATION LIMITED
(Bidcorp or the group or the company)
Incorporated in the Republic of South Africa
Registration number: 1995/008615/06
Share code: BID
ISIN: ZAE000216537
Registered office
Bid Corporation Limited
2nd Floor North Wing, 90 Rivonia Road
Sandton, 2196
Postnet Suite 136, Private Bag X9976
Sandton, 2146
Transfer secretaries
Computershare Investor Services (Pty) Ltd
Private Bag X9000, Saxonwold, 2132
Sponsor
The Standard Bank of South Africa Limited
30 Baker Street, Rosebank, 2196
Independent auditor
PricewaterhouseCoopers Inc.
Registration number: 1998/012055/21
Waterfall City, 4 Lisbon Lane, Jukskei View
Midrand, 2090