• Audited results for the year ended June 30  2022


Bidcorp has delivered a very pleasing trading performance for the year, particularly as the COVID pandemic had lingering economic and social impacts in a number of jurisdictions in the hospitality, tourism, and leisure industries. This performance is attributable to the contributions of our excellent global teams, our entrepreneurial and decentralised operating model and our loyal customer and supplier base.

Performance for the financial year started well with most economies rebounding strongly in July through to September 2021, contributing to a record first quarter performance that was driven by Europe, the UK, and Emerging Markets. Australasia was significantly impacted by COVID in the first six months, but recovered strongly into the second half to deliver a great performance. Following the Omicron variant's impact through the Northern Hemisphere winter, we experienced a steadily building momentum with the last four months being particularly strong.

Demand in the freetrade hospitality markets bounced back quickly post any pandemic-restrictive measures, with most sectors reaching pre-pandemic levels towards the back end of our financial year. Activity aligned to office catering has recovered somewhat, but remains impacted by work-from-home flexibility in many markets. Fortunately, our exposure to major catering institutions located in large capital cities has been reduced in recent years. Non-discretionary demand from hospitals, aged care, prisons, military and government departments is stable.

Operating conditions were difficult with our businesses having to contend with localised pandemic restrictions, significant staff shortages and churn, supply chain disruptions and rising operating costs, all of which hampered efficiencies, as well as rapid inflation driven by fallout from the Russian invasion of Ukraine. Despite the difficulties our businesses faced, our teams did a tremendous job of seizing the opportunities that circumstances presented, being able to deliver a record trading performance.

Investment activity gathered pace in the second half of the year, both into capacity expansion projects and bolt-on acquisitions as management anticipates growth ahead.

Headline earnings per share (HEPS) increased by 77,1% to 1 538,3 cents per share (F2021: 868,4 cents per share), with basic earnings per share (EPS) increasing by 56,2% to 1 444,3 cents per share (F2021: 924,6 cents per share). Currency volatility negatively impacted the rand-translated results by 5,9% with constant currency HEPS of 1 588,9 cents per share being recorded.

Distribution

The board has declared a final cash dividend of 400,0 cents per share for the year ended June 30  2022, representing approximately 2,16 times HEPS cover, in line with group policy.

Financial overview

Net revenue of R147,1 billion (F2021: R114,8 billion) rose by 28,2% (constant currency increase of 33,1%). Revenue in constant currency across all divisions was significantly higher than F2021 and overall exceeded that of the pre-pandemic levels in F2019.

Gross profit percentage at 24,2% (F2021: 24,0%) held up very well despite the necessity to trade through rapid product inflation, testament to the agility of our team's responsiveness in volatile economic conditions. Constant currency gross margin percentages are also ahead of pre-pandemic levels.

The overall cost of doing business decreased to 19,1% from 19,8% in F2021 but remained slightly above pre-pandemic levels of 18,7%. The group achieved cost efficiencies with a 28,4% increase in constant currency operating costs against an increase in constant currency revenues of 33,1%. Many of the efficiencies gained through the pandemic were dissipated by rising employee costs, energy and fuel prices, and increased inefficiencies from supply chain disruptions.

Group trading profit increased by 58,5% to R7,6 billion (F2021: R4,8 billion) and the trading profit margin achieved was 5,2% (F2021: 4,2%) which equates to those achieved pre-pandemic.

Net finance charges (excluding IFRS 16 charges) were higher by 10,1% at R336,6 million (F2021: R305,8 million) as a result of the necessary investment into working capital, larger investments into facility capex, higher dividend payments to shareholders, and a materially higher interest rate environment across all financial markets.

Cash generated by operations before working capital was R9,9 billion, a pleasing increase of R2,9 billion more than that generated in F2021. Monthly average net working capital days was at 6,8 days (F2021: 6,7 days) with working capital percentage to revenue running at 3,4% (normalised range of between 4,0% to 5,0%), well managed considering food supply shortages and intentional stocking up leading into the busy Northern Hemisphere summer. Bidcorp absorbed working capital of R0,2 billion in the second half which, in the context of rapid fourth quarter growth, compares favourably with a first half absorption of R1,8 billion.

Gross investments in property, plant and equipment of R2,9 billion (F2021: R1,8 billion) largely reflects expanding capacity necessary for organic growth. Maintenance capex reflects the depreciation charge of R1,4 billion. Ten bolt-on acquisitions were concluded at a cost of R0,8 billion in Australasia, Emerging Markets, and Europe.

Non-IFRS 16 net debt at R1,7 billion has increased from June 2021 (F2021: R0,5 billion) due to the investments into working capital and capex. A significant refinancing exercise was undertaken through February and March 2022 to rollover and refinance maturing term debt. This enabled a large portion of the group debt to be termed out to differing maturity dates of three, five and seven years at competitive fixed interest rates, reducing both liquidity and interest rate risks. Free cash flow for the year at R1,5 billion was behind F2021 (R4,7 billion), but acceptable in relation to the necessary reinvestments undertaken. F2021 free cash flows benefitted from one-off sale and leaseback property transactions.

Non-IFRS 16 net debt to EBITDA at 0,2 times and non-IFRS 16 EBITDA interest cover at 25,7 times (F2021: 19,3 times) remains well within group covenants and in line with the group's philosophy of conservative liquidity management. Bidcorp remains well capitalised and retains adequate headroom for further organic and acquisitive growth.

Prospects

Bidcorp's strategy of focusing on the wholesaling of food and allied products to the eating-out-of-home market remains fit for purpose, having demonstrated its resilience through the COVID pandemic of the last two years. Our businesses are focused on growth by remaining close to the correct mix of customer bases through appropriately located infrastructure and world class technology. They deliver a relevant range of available products in a win-win relationship for all parties. This strategy is supplemented via in-territory bolt-on acquisitions to expand geographic reach and/or product ranges, or via strategic acquisitions to enter new markets.

Organic market share gains remain the focus of all businesses in all markets through broadening the offering to our existing customer base whilst gaining new customers. Further development of our product sourcing capabilities, both local and imported, is creating the opportunity to expand our Own Brand product range offering. Small but strategic investments are also being made into value-add product opportunities to further enhance the Bidfood product range.

Our exceptional teams in every business continue to perform extremely well, remaining adaptive to difficult and highly volatile operating conditions. The focus remains on meeting customer service expectations whilst managing ongoing staff shortages and supply chain disruptions.

Our businesses have managed high inflation, present in all our markets, well and are trading through it. Early indications are that inflation may have peaked – which will provide some respite to the hospitality industry and our customers who are facing similar challenges to us.

Capex investments, principally into strategic distribution facilities to provide for future capacity, have returned to pre-pandemic levels, reflecting our confidence in the long-term sustainability of the foodservice industry. Every effort is being made to deploy new technologies in refrigeration, energy efficiency and distribution optimisation in an environmentally and cost-efficient way, to achieve our target of a 25% reduction in carbon emissions by 2025.

Several in-country bolt-on opportunities have been concluded and more are under consideration. No new market acquisitions in the foodservice space have presented themselves, but we are alert to any potential opportunities should they become evident.

Our ecommerce and digital strategy remain key enablers of competitive advantage and are designed to facilitate digital customer interaction in a low-cost but high-impact way. Our technology solutions continue to drive innovation in our businesses. We are committed to ongoing investment to develop our technology and data capability to assist driving our growth strategy forward.

Management is optimistic about the long-term future of the global foodservice industry and Bidcorp's prospects within it. Currently, however, the short-term prospects are uncertain; there are many challenges in various economies and consumer confidence is fragile. Whilst not being able to predict the future, Bidcorp is confident that it has the strategy, the management teams and the business model to take advantage of any opportunities.

Divisional review

Australasia

Divisional revenue for the year was R33,3 billion (F2021: R33,0 billion) with trading profit down 6,4% to R2,3 billion (F2021: R2,5 billion), a commendable result in view of the considerable COVID restrictions impacting trade in the region, particularly in New Zealand.

Australia faced lockdown restrictions throughout the first half of the year, but once markets fully reopened, activity levels bounced back and an excellent second half was delivered.

Staying close to the customer and resisting the impulse to cut costs through headcount reduction delivered a positive outcome as the Australian teams were well equipped to service the surge in demand that followed the lifting of COVID restrictions. Ongoing, focused management of gross margin and overhead expenses was vital as labour shortages, wage inflation and supply chain challenges restricted the second half's strong performance.

Foodservice achieved a record performance although this was not without its challenges. A large national QSR account was exited in the year, in line with the continued strategy to rebalance the customer portfolio. New opportunities, new locations, bolt-on acquisitions and branch expansions are key to ongoing growth in this business.

Supply Solutions performed above expectation as the product offering expanded. A new manufacturing division was established to focus on growing the value-add product range and developing these operations, some of which are still in their infancy. Meat performed to expectation but continues to be operate in a challenging environment.

Two bolt-on acquisitions were concluded in the year: Salad World and Bayview Seafoods. Investment in modernising premises continues, meeting capacity requirements and delivering greater efficiencies in energy usage and emissions reductions.

New Zealand had a challenging year with harsh restrictions and lengthy border closures impacting activity across both islands. Staffing challenges and wage inflation exacerbated an already difficult trading environment. The various management teams responded admirably and, in keeping the businesses operational, staff motivated, and customers serviced, delivered an exceptional result.

Throughout the year it was necessary to review and amend customer service levels to address inflationary cost pressures. Despite this, the operation succeeded in strengthening customer relationships – as was borne out by market share growth.

Foodservice sales were down for the year, declining further when adjusted for inflation. Trading profit was also down although margins improved, reflecting the impact of reduced volumes and rising costs. Strategic exits of national QSR customers are planned, freeing up capacity to target further freetrade growth.

Fresh had a tough year, impacted by quickly implemented lockdowns and the resultant loss of perishable stock. New management has inspired renewed momentum in this business.

The manufacturing business (now rebranded "Simply Food Solutions") delivered an excellent result. This was despite significant volume pressures and was achieved by embracing preferred procurement opportunities, improved efficiencies, and investment in automation. Strong management has been put in place to focus on growing the business.

Logistics experienced increasing energy and fuel costs. Property expansions in the year included the Hamilton branch and additional land purchased for future branch development. The Total Repack acquisition was finalised, strengthening the current manufacturing portfolio.

The outlook for New Zealand is positive as lockdown restrictions reduce and overall market activity levels resume.

United Kingdom (UK)

F2022 was a tale of four quarters, each with a very different set of challenges for management who succeeded in delivering an excellent full-year result. Revenue increased to R37,8 billion (F2021: R25,0 billion) and trading profit was up nearly threefold to R1,5 billion (F2021: R394,3 million), albeit off a low base. The UK is now again performing at F2019 levels.

The year started very positively for Foodservice with revenue out-performing expectations as Q1 lockdown restrictions were lifted and the market bounced back strongly. The pace of recovery exceeded expectations and the Foodservice operations benefited from a particularly busy "staycation" summer. By Q2 the return of the education sector delivered record-breaking daily sales volumes, but as volumes rose, the ability to maintain service excellence was strained by unprecedented operational challenges and soaring cost hikes – particularly energy costs. Labour shortages, especially in warehousing and driving, were acute, resulting in increased labour agency costs to address high turnover rates. The end of Q2 saw COVID lockdowns reintroduced, which resulted in a muted Christmas season.

Volumes recovered in Q3, and through engagement and proactive communication with customers, a cost-to-serve price increase helped restore margins. Although the pressures continued into Q4, the business' ability to respond and proactively address these headwinds through customer engagement, expense hedging and effective margin management delivered a commendable full-year result.

The Caterfood Buying Group delivered a good year-end trading profit. South Lincs, Caterfood, and Cimandis also all finished ahead of projections. Elite Fine Foods finished well, delivering year-on-year trading profit growth.

The Manufacturing division recorded an 11% profit improvement on the prior year. Yarde Farm had an outstanding year with a 55% trading profit growth. Simply Food Solutions ended a difficult year recording an improved trading profit, but with some room for improvement.

Digitisation strategies and investment into the IT infrastructure were a key focus of the year, positioning the business with a strong, modern foundation to support future growth. Innovative solutions developments and the successful implementations of warehouse management systems, delivery tracking, "customer-for-life" initiatives, consolidation of the ERP environment and other digital projects improved efficiencies.

Significant new national contract wins contributed to the sizeable tender success rate in the business. The Nicol Hughes acquisition, completed in July 2022, is positioned to become an integral part of the Caterfood Buying Group and further acquisitions in this group are being pursued.

Positive output from the annual employee survey actioned the launch of the "Foundations of Engagement" tool, a national tool designed to support managers in improving their teams' work environment. Continued rollouts of employee support and awareness programmes are in place to retain and improve working conditions.

Fresh delivered a profitable trading result, notwithstanding a difficult environment experienced throughout the year. Q4 was particularly positive for the business with sales recovery and expected trading profit levels surpassed.

Produce volume growth was positive but cost pressures were significant. Focus is now on managing operational costs. Meat is being relaunched nationally under the brand name "Campbells". More work remains to improve the meat and produce divisions. Seafood volumes into the summer were excellent, but significant price and cost pressures were experienced.

Collaborative initiatives with the Foodservice business continue, identifying opportunities to benefit from existing customer contracts. Operational benefits achieved in consolidating finance, IT and HR into the Foodservice platforms delivered cost savings.

Looking ahead, the UK's focus will be on navigating the anticipated tough coming winter as a combination of price inflation and rising energy bills is likely to be felt acutely. Management's outlook remains buoyant, with new business and the future pipeline secured.

Europe

The European businesses had a solid second-half start considering the seasonality which impacts hospitality during the Northern Hemisphere winter. Only the Netherlands business, constrained by harsh Omicron-COVID restrictions, had its Q3 results significantly impacted. Going into Q4 and the early summer months, sales held up very well in most countries despite the regional macro pressures experienced as a result of the Russian invasion of Ukraine. Revenue for the year was pleasing, up 40,2% to R50,0 billion (F2021: R35,7 billion). Trading profit results were excellent, more than doubling to R2,4 billion (F2021: R1,1 billion).

Netherlands struggled through harsh COVID restrictions and also had to navigate the impact of significant cost inflation pressures and Europe-wide labour and wage challenges. Focused management control of operational costs delivered a strong trading profit. A new acquisition in February 2022, Zegro, has integrated well. National accounts and freetrade performed better than pre-COVID levels, but Catering struggled.

Belgium performed better than F2019, bolstered by the Foster Fast Foods acquisition in the year. National account contracts added to cost pressures as the ability to pass on inflationary costs was delayed. Hospitality sector activity bounced back, matched, unfortunately, by unprecedented cost increases. Ongoing efforts to control operating costs were successful, however. The planned exit of a significant national customer in the new year should support efforts to gain more freetrade exposure.

Czech Republic and Slovakia achieved excellent sales results with revenue and trading profits up on F2019 levels. Cost inflation levels were at an all-time high and required a focused effort to protect margins. The Kralupy fish factory rebuild (post the fire in November 2020), has been completed and the plant is now fully operational. Capex investment continues to grow capacity to meet increasing demand. The Hungary depot continues to expand, with positive growth potential. The good summer weather has driven up ice cream volumes.

Italy reported record sales in the year with improved margins and profits being up fourfold. Navigating the Europe-wide challenges of labour shortages, inflation, supply chain disruptions and the fallout of the conflict in Ukraine is ongoing. Market expansion continues through product range quality and diversity improvements, strengthening service delivery levels and deepening customer relationships. Capex spend on infrastructural maintenance investment continues.

Poland achieved record results with increases reported in revenue, margins and trading profit, the latter being more than three times that of the previous year, and significantly ahead of pre-COVID results. Excellent freetrade growth contributed to these results. The direct Ukraine war-refugee impact on the Polish economy hiked cost inflation. Management responded with tight working capital management through the worst of the impact. Future growth requires infrastructure investment in growing capacity to meet demand. Positive results from the 'myBidfood' ecommerce rollout saw more than 50% of customers being engaged digitally with further expansion plans in place. An excellent summer to date has fostered the expectation of a strong start to F2023.

In Germany, a profit was reported for the full year, indicative of the slow but steady progress towards stability. Negatively impacted by the significant cost increases, some relief was experienced from government support. Rebalancing the customer portfolio, simplifying internal structures, streamlining and implementing efficiencies continue to drive the business transition. The lossmaking depot in Hamburg was exited in June 2022. Austria was profitable for the year with good prospects.

Baltics performed well despite the direct impact of the dampened economic sentiment resulting from the conflict in Ukraine. Revenue and trading profit were both up. Improvements in sales volumes in foodservice, retail, and other segments were positive. Cost pressures continue, however. Market share grew as the customer base and product range increased. Acquisition opportunities to grow the fresh offering are being explored.

Spain delivered full-year profits following the disposal of the loss-making Carnicas meat business in January 2022. Reported sales volumes are increasing although these are still below pre-COVID levels. Guzman exceeded expectation in H2, achieving profitability. The focus remains on developing the product range to become a broadline supplier. Operational efficiencies and improvements implemented are anticipated to contribute to profitability. Igartza has delivered excellent full-year results. Acquisition opportunities in the Basque region are being explored. A keen focus on rebalancing the customer base to more independents is expected to deliver growth.

Portugal was a star performer, delivering excellent trading profits on higher volumes and tightly controlled costs. Margins were protected through a well-executed pricing strategy. Tourism continues to grow, providing a great growth opportunity. Successfully navigating the widespread cost inflation pressures as volumes grow and capacity constraints are experienced was a key management focus. New depots are planned in Porto and Lisbon. It is expected that the summer season will be very strong.

Emerging Markets

The Emerging Markets businesses (with the exception of Greater China) continue to report increasingly strong growth with current activity levels being significantly higher than pre-COVID levels. Revenue was up 22,6% to R25,9 billion (F2021: R21,1 billion) and trading profit 56,0% higher at R1,4 billion (F2021: R923,6 million). From late January the Greater China business (China, Hong Kong, and Macau) contended with severe restrictions – which continue to affect activity levels.

Bidcorp Food Africa (BFA) achieved record results in a difficult environment. Civil disruptions (Q1), floods (Q3), and ongoing electricity loadshedding impacted operations and also forced customers to close, resulting in a loss of revenue. Added to these challenges, all businesses faced double-digit increases in utility costs, fuel, and energy. Inflation continues to increase and the pressure on disposable income has begun to impact consumer demand.

Bidfood South Africa (Bidfood) bounced back strongly in the restaurant and hotel channels. Market-share gains in the independent/street trade channel were particularly pleasing. Q4 results were excellent following the removal of all COVID restrictions with sales exceeding pre-COVID levels by 9%. The street-trade channel continues to grow, now servicing more restaurants than before COVID, proving that the strategic focus on this channel has yielded positive results. National accounts improved considerably in Q4, particularly the hotels and hospital channels. The airline catering offering remains below pre-COVID levels. The Industrial caterers' channel continues to be under pressure as businesses slowly bring staff back to work while keeping canteens closed or drastically reducing services. Expenses were well managed while capex was invested in the vehicle fleet and the fitout of the new Gqeberha (Port Elizabeth) site.

Crown Food Group (CFG) achieved excellent results but supply chain and stock challenges remain. CFG enjoyed strong growth across the wholesale, food manufacturing and independent channel. Growth in the distributor channel was largely attributed to the cross-border trade into Namibia, Botswana, and Mozambique. CFG is focused on unlocking opportunities in new market segments, including emerging markets and the wholesale trade. Optimising inventory levels remains a priority.

Chipkins Puratos (50% equity accounted) benefited from increased growth in own manufactured products, but higher input costs on yeast impacted results. Sales growth was recorded in the retail, artisanal, and industry channels. The distributor segment showed strong volume growth into most export markets. Capex investment during the year was into a new powder plant, the Long Meadow solar installation, and vehicle fleet maintenance.

Bidfood Properties completed the construction in Gqeberha of a new distribution facility for Bidfood and CFG. Bidfood is planning a multi-temp warehouse in Johannesburg South, construction of which is due to commence in F2023.

Greater China felt the full impact of the Omicron wave, which was longer lasting and more widespread, with more severe containment measures than previous waves. The lifting of restrictions has since been gradual. Revenue was up year on year, but at the time of reporting the trajectory was not yet stable. April and May witnessed the worst of the lockdown impact while June showed signs of some recovery, although catering and restaurant sales did not bounce back as quickly as had been hoped. Good growth was seen in butcheries and caterers, although retailers and wholesalers still made up the biggest portion of revenue. Shantou Longjia Food Company was acquired in August 2021. Management remains agile, responding to the unpredictable environment and taking advantage of opportunities as they arise.

Hong Kong has experienced significant expatriate and local emigration over the past two years, impacting the high-end restaurant and catering sector. In spite of this macro impact, revenue and trading profit growth were achieved. Market sentiment in Hong Kong remains subdued as concerns over further COVID waves linger. Full recovery depends on mainland China's further relaxation of travel restrictions – particularly for Hong Kong's tourism-related industries.

Singapore witnessed signs of recovery post-lockdown and good growth was achieved. Wholesale and retail trade grew marginally while foodservices and accommodation grew nearly 10% year on year, boosted by the lifting of dine-in restrictions and the re-opening of borders from April.

Malaysia re-opened its borders in April, allowing travel to resume while removing restrictions on operating hours for restaurants and shops. Volume growth was positive but margins were under inflationary pressure. Gourmet Partner Vietnam continued its positive momentum, boosted by post-lockdown demand from hotels, resorts and restaurants.

South America saw a rapid, solid turnaround and prospects for businesses in this region are considerable.

In Brazil, activity returned to pre-pandemic levels and sales were almost double those of F2019. Recent acquisitions performed well and integration is progressing well. Acquisitions include Vinhais and Central Foods, both in São Paolo, acquired in October 2021 and January 2022 respectively.

Ongoing investment into digitisation, ecommerce engagement, modernisation, and capacity expansion continues. Management is optimistic about the synergies and opportunities to be captured as the new acquisitions fully integrate.

Chile returned to pre-COVID economic activity levels as all restrictions were lifted and the restaurant and hospitality sectors bounced back. Revenue and volumes continued to achieve record levels and efforts to diversify the customer base delivered market share gains. The protein segment continues to be a focus area with challenges experienced on product availability and erratic pricing fluctuations. New, larger premises were occupied in Concepción and Antofagasta, growing capacity to meet increasing demand.

The Middle East (BME) region achieved record growth with the UAE, Saudi Arabia, Bahrain, Oman, and Jordan all performing well. There was increased restaurant and hotel occupancy in Saudi Arabia and the UAE. Focused sales efforts to expand the fish product range bore fruit, as did the introduction of a dairy range, particularly in Jordan and Bahrain.

Turkey, despite difficult macro conditions, delivered outstanding results. All businesses achieved record revenues with strong tourism numbers bolstering results. High inflation and currency deterioration did not hamper the team's ability to deliver real sales growth. The opening of a new depot in Ankara has grown the national footprint but investment into bigger premises, to increase capacity, is planned.

Argentina (46% equity accounted) regained pre-COVID activity levels with the government's investment in boosting tourism paying off. Supply chain challenges and labour shortages impacted the cost base. Despite these issues, good revenue and trading profit results were achieved.

Corporate

BidOne continues to deliver world class ecommerce and digital solutions, key enablers of competitive advantage as the bespoke technology solution embraces real-time “AI” as well as experiential learning from around the group. Investment continues into developing the technical and data capability to drive this key component of the Bidfood growth strategy.

Bidfood Procurement Community (BPC) services a wide mix of requirements with tailor-made solutions. BPC researches and confirms suppliers’ certifications with internationally recognised food safety accreditations. Despite supply chain constraints and COVID-related border restrictions, BPC has delivered good results.

BL Berson
Chief executive officer

DE Cleasby
Chief financial officer

Dividend declaration

In line with the group dividend policy, the directors declared a final gross cash dividend of 400,0 cents (320,0 cents net of dividend withholding tax, where applicable) per ordinary share for the year ended June 30  2022 to those members registered on the record date, being Friday, September 23  2022.

The dividend will be paid out of income reserves. A dividend withholding tax of 20% is applicable to all shareholders who were not exempt.

Share code: BID
ISIN: ZAE000216537
Company registration number: 1995/008615/06
Company tax reference number: 9040946841
Gross cash dividend amount per share: 400,0 cents
Net dividend amount per share: 320,0 cents
Issued shares at declaration date ('000): 335 404
Declaration date: Wednesday, August 24  2022
Last day to trade cum dividend on the JSE: Tuesday, September 20  2022
First trading day ex dividend on the JSE: Wednesday, September 21  2022
Record date: Friday, September 23  2022
Payment date: Monday, September 26  2022

Share certificates may not be dematerialised or rematerialised between Wednesday, September 21  2022 to Friday, September 23  2022, both days inclusive.

For and on behalf of the board

AK Biggs
Company secretary representative

Johannesburg
August 24  2022