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. By June 30 2018, Bidcorp was close to finalising its 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. The CD business segment is a component of the Group’s United Kingdom business, the operations and cash flows of which can be clearly distinguished from the rest of the Group. 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 Bidcorp’s global foodservice operations. Accordingly, Bidcorp pursued alternative exit proposals, and has engaged in a formal sale process, managed by independent advisers. The sale process is ongoing at December 31 2018.
PCL’s (dairy distribution business for Arla) performance for the half 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. Heads of Terms are being negotiated with Arla, and the sales process is ongoing at December 31 2018. An outcome is expected to be finalised before June 2019. Further costs associated with the exit will be incurred in the second half of the financial year, including trading losses and vehicle fleet disposal costs.
The results of the discontinued operations included in the Group’s results are detailed below:
| December 31 | June 30 | ||||||||
| R000s | 2018 Unaudited |
2017 Unaudited Re-presented* |
2018 Unaudited Re-presented* |
||||||
| Revenue | 9 620 844 | 11 073 688 | 19 408 282 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Cost of revenue | (8 227 118) | (9 582 438) | (16 686 301) | ||||||
| Gross profit | 1 393 726 | 1 491 250 | 2 721 981 | ||||||
| Operating expenses | (1 469 355) | (1 579 080) | (3 353 932) | ||||||
| Trading loss | (75 629) | (87 830) | (631 951) | ||||||
| Share-based payment expense | (1 601) | (1 582) | (3 110) | ||||||
| Net capital items | (470 376) | (811) | (145 545) | ||||||
| Operating loss | (547 606) | (90 223) | (780 606) | ||||||
| Net finance charges | (5 610) | (3 389) | (8 459) | ||||||
| Finance income | – | 2 | 45 | ||||||
| Finance charges | (5 610) | (3 391) | (8 504) | ||||||
| Loss before taxation | (553 216) | (93 612) | (789 065) | ||||||
| Taxation | 98 205 | 19 065 | 126 352 | ||||||
| Loss for the period from discontinued operations | (455 011) | (74 547) | (662 713) | ||||||
| The following adjustments to profit attributable to shareholders were taken into account in the calculation of headline loss: | |||||||||
| Loss attributable to shareholders of the Company from discontinued operations | (455 011) | (74 547) | (662 713) | ||||||
| Net impairments | 389 359 | 657 | 145 394 | ||||||
| Intangible assets | 465 010 | – | – | ||||||
| Property, plant and equipment | 5 366 | 811 | 3 408 | ||||||
| Goodwill | – | – | 142 137 | ||||||
| Taxation relief | (81 017) | (154) | (151) | ||||||
| Headline loss from discontinued operations | (65 652) | (73 890) | (517 319) | ||||||
| Discontinued operations (cents) | |||||||||
| Basic loss per share | (136,6) | (22,4) | (199,2) | ||||||
| Diluted loss per share | (136,3) | (22,4) | (198,6) | ||||||
| Headline loss per share | (19,7) | (22,2) | (155,5) | ||||||
| Diluted headline loss per share | (19,7) | (22,2) | (155,0) | ||||||
* Refer to ‘Preparation and results’ note.
| December 31 | June 30 | ||||||||
| R000s | 2018 Unaudited |
2017 Unaudited |
2018 Unaudited |
||||||
| Effect of the discontinued operations on the statement of financial position of the Group | |||||||||
| Assets classified as held-for-sale | 3 473 095 | 2 402 441 | 2 590 657 | ||||||
| Property, plant and equipment | 313 467 | 219 769 | 212 090 | ||||||
| Intangible assets | 4 525 | 6 081 | 7 437 | ||||||
| Deferred tax asset | 7 752 | 499 | 1 338 | ||||||
| Inventories | 466 982 | 469 322 | 428 733 | ||||||
| Trade and other receivables | 1 959 650 | 1 684 627 | 1 161 229 | ||||||
| Investments and loans | 445 | – | 440 | ||||||
| Taxation | 126 007 | 22 143 | 101 043 | ||||||
| Cash and cash equival | 594 267 | – | 678 347 | ||||||
| Liabilities classified as held-for-sale | 3 403 101 | 2 751 815 | 2 613 207 | ||||||
| Deferred tax liability | 10 906 | 12 069 | 6 476 | ||||||
| Long-term portion of provisions | 183 847 | 52 313 | 30 013 | ||||||
| Trade and other payables | 3 114 250 | 2 501 452 | 2 576 718 | ||||||
| Short-term portion of provisions | 94 098 | 21 839 | – | ||||||
| Bank overdrafts | – | 164 142 | – | ||||||
| December 31 | June 30 | ||||||||
| R000s | 2018 Unaudited |
2017 Unaudited Re-presented* |
2018 Unaudited Re-presented* |
||||||
| Cash flows from discontinued operations | |||||||||
| Net operating cash flows from discontinued operations | (287 161) | 105 143 | 51 273 | ||||||
| Net investing cash flows from discontinued operations | (7 526) | (5 445) | (16 319) | ||||||
| Net (decrease) increase in cash and cash equivalents | (294 687) | 99 698 | 34 954 | ||||||