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.

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% (H1F2021: 10%)
• EBITDA multiples: 10,5x (H1F2021: 10,5x)
• Risk-adjusted discount rate: 1,7% (H1F2021: 1,7%)

The following exchange rates were used in the conversion of foreign interests and foreign transactions during the periods:

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. The pro forma information has been compiled in terms of the JSE Listings Requirements and the Revised Guide on Pro Forma Information by SAICA.

The illustrative information, detailed below, has been prepared on the basis of applying the H1F2021 average rand exchange rates to the H1F2022 foreign subsidiary income statements and recalculating the reported income of the group for the period.

ACQUISITIONS

No new country acquisitions have been consumated, however, in the six-month period to December 31  2021 seven bolt-on acquisitions were concluded. These bolt-on acquisitions were as follows:

• Salad World, a manufacturer of sauces based in Melbourne, Australia.
• Total Repack Limited, a specialist dry ingredients repacker in Christchurch, New Zealand.
• Shantou Longjia Food Company Limited, a business trading and distributing dairy products and imported food products in Shantou, China.
• Spice World Kuruman, a distributor of spice, natural casings and butchery equipment in the Northern Cape province of South Africa.
• Vinhais, a broadline wholesaler and dairy specialist based in Sao Paulo, Brazil.
• Forster Fast Food, a wholesaler specialised in fast food concepts located in Mechelen (between Antwerp and Brussels), Belgium.
• Insupan Limited, an ambient wholesaler based in La Serena, Chile.

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 products and services and, as a consequence, has broadened the group’s base in the marketplace. In addition, through these acquisitions the group has acquired managements skill and expertise as a platform from which to further consolidate its position in the foodservice market.

Total investment in acquisitions was R215,7 million, the benefits of which will be evident in the medium term as we extract synergies and grow the businesses. These bolt-on acquisitions contributed R291,6 million of revenue and R11,5 million of trading profit for the period ended December 31  2021. The expected annual total contribution from these acquisitions to revenue is R877,2 million and an increase in trading profit of R38,6 million.

There were no significant contingent liabilities identified in the businesses acquired.

SUBSEQUENT EVENTS

There have been no material events subsequent to December 31  2021.

As reported on in the 2021 financial year, our internal surveillance and control processes in late June 2021, uncovered a significant and sophisticated fraud that was being perpetuated in the Miumi division of our Greater China business.

The group took the prudent view by reversing the full overstated accounts receivables, prepayments, and inventory involved and providing for the unrecorded liabilities. We remain confident of some future recoveries from insurance, the perpetrators and other third parties involved.

Significant additional internal and forensic audit work has been concluded by December 31 2021 and no further issues or changes to previously reported numbers at June 2021 for the 2021 financial year have come to light.

The group’s best estimate based on evidence available is that the loss attributable to the condensed interim statement of profit or loss for the H1F2021 financial year is HK$16,8 million (R35 million), these rand amounts were translated at the respective average South African rand/Hong Kong dollar exchange rates.

Processes followed to restate the trade and other receivables, inventory and trade and other payables at December 31  2020 were:

• 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.
  – Incorrect customer name in PRC legal format.
  – 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.

  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 December 31  2020. These fraudulent trade debtor balances at these respective dates were written off.

• 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 December 31  2020. The average inventory stock holdings for similar Angliss businesses are 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 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 December 31  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:

  	December 31 2020 R’000
  Stock holding days at 35 days (50% change in assumption)	(13 498)
  Stock holding days at 53 days (25% change in assumption)	(6 749)
  Stock holding days at 63 days (10% change in assumption)	(2 700)
  Stock holding days at 77 days (10% change in assumption)	2 700
  Stock holding days at 88 days (25% change in assumption)	6 749
  Stock holding days at 105 days (50% change in assumption)	13 498

  Results from the sensitivity analysis demonstrate 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 December 31  2020. The calculated inventory balances at December 31  2020 are comparable to the physically counted inventory balance of HK$16,8 million (R30,9 million) at June 30  2021 and HK$13,4 million (R26,8 million) at December 31  2021. The December 31  2021 Miumi inventory balance represents 0,2% of the group’s total inventory balance at December 31  2021.

• Trade and other payables
  

  The unrecorded trade and other payables have been allocated to prior financial periods based on the timing of which these goods/services were received by Miumi. No future costs were provided for and all known claims against Miumi at the time of finalising the condensed interim financial statements have been provided for.

  RESTATEMENT OF PRIOR PERIOD ERRORS

  The condensed interim consolidated statement of financial position as at December 31  2020 has been restated to correct the prior period errors in relation to the identified fraud.

  STATEMENT OF FINANCIAL POSITION (EXTRACT) AS AT DECEMBER 31  2020

  R’000	Reported balance December 31 2020		Cumulative effects of restatement		Restated December 31 2020
  Trade and other receivables	11 825 461		(454 389)		11 371 072
  Inventory	9 446 269		(137 181)		9 309 088
  Trade and other payables	(17 534 795)		(29 454)		(17 564 249)
  Net assets	27 737 051		(621 024)		27 116 027
  Foreign currency translation reserve	7 988 408		(12 682)		7 975 726
  Retained earnings	14 079 327		(608 342)		13 470 985
  Total equity	27 737 051		(621 024)		27 116 027

  STATEMENT OF PROFIT OR LOSS (EXTRACT) FOR THE PERIOD ENDED DECEMBER 31  2020

  R’000	Reported balance December 31 2020		Cumulative effects of restatement		Restated December 31 2020
  Revenue	60 766 300		(128 184)		60 638 116
  Cost of sales	(46 536 955)		109 115		(46 427 840)
  Gross profit	14 229 345		(19 069)		14 210 276
  Operating expenses	(11 989 621)		(16 195)		(12 005 816)
  Trading profit	2 239 724		(35 264)		2 204 460
  Share-based payment expense	(50 132)		–		(50 132)
  Acquisition costs	(2 033)		–		(2 033)
  Capital items	190 195		–		190 195
  Operating profit	2 377 754		(35 264)		2 342 490
  Net finance charges	(364 260)		–		(364 260)
  Share of profit of associates and jointly controlled entities	19 304		–		19 304
  Profit before taxation	2 032 798		(35 264)		1 997 534
  Taxation	(515 322)		–		(515 322)
  Profit for the period	1 517 476		(35 264)		1 482 212
  Other comprehensive income	(1 654 040)		111 059		(1 542 981)
  Total comprehensive income for the period	(136 564)		75 795		(1 542 981)
  Profit for the period attributable to:
  Shareholders of the company	1 500 910		(35 264)		1 465 646
  Non-controlling interests	16 566		–		16 566
  Total comprehensive income attributable to:
  Shareholders of the company	(120 427)		75 795		(44 632)
  Non-controlling interests	(16 137)		–		(16 137)
  Total operations (cents)
  Basic earnings per share	449,2		(10,6)		438,6
  Diluted basic earnings per share	448,7		(10,5)		438,2
  Headline earnings per share	391,6		(10,6)		381,0
  Diluted headline earnings per share	391,1		(10,5)		380,6

  STATEMENT OF CASH FLOWS (EXTRACT) FOR THE PERIOD ENDED DECEMBER 31  2020

  R’000			Reported balance December 31 2020							Cumulative effects of restatement							Restated December 31 2020
  Cash flows from operating activities			2 657 881							–							2 657 881
  Cash generated by operations			3 741 897							–							3 741 897
  Operating profit			2 377 754							(35 264)							2 342 490
  Adjustments to operating profit			847 681							–							847 681
  Working capital changes			516 462							35 264							551 726
  Finance charges paid			(312 080)							–							(312 080)
  Taxation paid			(771 936)							–							(771 936)
  Cash effects from investment activities			417 660							–							417 660
  Cash effects from financing activities			(2 786 744)							–							(2 786 744)
  Net movement in cash and cash equivalents			288 797							–							288 797
  Cash and cash equivalents at beginning of period			7 024 426							–							7 024 426
  Effects of exchange rate fluctuations on cash and cash equivalents			(347 152)							–							(347 152)
  Cash and cash equivalents at end of period			6 966 071							–							6 966 071

  The cash flow restatements are non-cash adjustments on the changes in the statement in financial position.

  STATEMENT OF FINANCIAL POSITION (EXTRACT) AS AT JUNE 30  2020

  R’000	Reported balance December 31 2020		Cumulative effects of restatement		Restated December 31 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

Bidcorp may, in this document, make certain statements that are not historical facts and relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable.

These statements may also relate to our future prospects, expectations, developments and business strategies. Examples of such forwardlooking statements include, but are not limited to, the impact of COVID on Bidcorp’s business, results of operations, financial condition and liquidity and statements regarding the effectiveness of any actions taken by Bidcorp to address or limit any impact of COVID on its business; statements regarding exchange rate fluctuations, volume growth, increases in market share, cost reductions, and business performance outlook.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements.

These forward-looking statements have not been audited or reviewed by the group’s auditors.