Bidvest full year numbers

You know that I am not the biggest fan of quotes and that I believe that you should make your own, this is more a statement from Brian Joffe, the CEO of the Bidvest Group, who reported results for their full year this morning: "We strive to turn ordinary companies into extraordinary performers, delivering strong and consistent shareholder returns in the process. We understand that people create wealth and that companies only report it."

That sounds pretty simple, what it takes is extreme skill, patience and capital allocation second to none. Sweat each and every Rand. I did notice that Bidvest had taken down the sign in their foyer: "We refuse to participate in the Recession" and they had given it (the foyer) somewhat of a revamp. It looks nice, next time I go past I will take a picture and post it to Twitter. So here are the numbers, follow the link as per their website to get to the earnings number.

I agree, these were tough operating conditions and the group certainly has delivered. Bidvest Namibia a laggard, come on the Welwitschias, pull up your socks. I remember that company used to have the most incredible margins in that country. Small market, great operator, delivering, the fish in the sea are harder to fish (82 percent of profits in Namibia are derived from Bidfish, obviously their fishing operations). When you do a detailed read through the results you can see that it was not only the South African business that had troubles, the currency "wins" in the UK and more specifically European businesses mask how tough it is there. Some of the emerging market reporting segment (around 8 percent of group sales) tells you what you know already, China is shifting to a services based economy, Brazil is in a whole heap of you know what, the Middle East is moving forward notwithstanding the obvious problems (lower oil prices and regional violence).

Numbers, HEPS increased to 1882 cents per share, up 8.6 percent on last year, the dividend for the second half declared is 483 cents (after tax that equates to 410.55 cents), payable on the 28th of September. The interim dividend paid was 4.26 ZAR, add the two together you get to 9.09 ZAR. After 15 percent dividend tax, on a 305.02 ZAR share price (close Friday), the stock trades on a yield of 2.53 percent. The price to earnings multiple is 16.2 times. Is that expensive to pay that many years worth of current earnings for a company that has one of South Africa's best allocators of capital? Yes? No? I certainly think not, the company is well positioned to take advantage of a global upturn after a long period of muted growth.

The acquisitions are well thought out, "things" seem to be going better at Adcock, which I think has been overstated in the bigger context of the company. Although as the release points out: "the impact of the acquisition of Adcock has been a negative 2,7% on HEPS." That is not a lot, not nothing equally. The 37.7 percent stake in Adcock (current market cap of 8.86 billion Rand) equals 3.34 billion Rand, relative to the Bidvest market capitalisation of 102.23 billion Rand is 3.26 percent. Hardly worth talking about all the time in the context of this business, yes? I suppose that the products that Adcock produce are household names, like Panado, Compral, Corenza, Bioplus, Vita-thion and Citro-soda, it is no wonder we think it is a "big deal".

In the current financial year, two purchases were made in the UK and Italy, announced last year in July, remember we wrote about it: 2 not so small acquisitions. In aggregate the purchases were 95 million Pounds, or around 1.95 billion Rand at current prices. That is around 1.9 percent of the entire value of the Bidvest Group and yet, how many times do you hear about this one? Very few.

So what to do? Do you still carry on holding your Bidvest shares? I am going to go one further and say that they are still a buy on any weakness. Whilst a few years ago many were talking about a successor for Brian Joffe, that thinking has been proven old school in modern times. As long as the Magician of Melrose Arch continues to be given their stamp of approval by the board of Bidvest, I think he has the energy and gumption to continue to allocate capital prudently and in the interests of long term shareholders. I also think that there are many quality people who could run that business, we are blessed with the brilliance of Brian Joffe currently. As long as he stays in good health, no reason to believe contrary, we should continue to reap the rewards as shareholders.