Their results this morning, for the full year to end June 2010

OK, Bidvest, you have to admire Brian Joffe, the chief, even if you do not like the fact that the company is perhaps too diversified. Their results this morning, for the full year to end June 2010. There has traditionally been the reluctance on our part to invest in the company over the years, because there are "too many moving parts".



Here goes, revenue fell back a little, 2.3 percent off to 109.8 billion Rands. Yowsers. A big company. In constant currency terms there would have been a 4.2 percent increase. Plus also, as per the report "...trading profit would have been up 11,9% (reported: up 8,1%) and HEPS would have been up 19,3% (reported: up 15,1%)." In constant currency terms. Sadly, this is not the case, you get the price as per the currency cross given to you, MTN had similar dynamics. HEPS at 1070 cents per share, the second half dividend 225 cents per share, a comfortable increase on the distribution of a share premium of 190 cents last year.



Their most profitable division by quite some stretch is the services division, "Bidvest Services". Inside of the services segment are businesses like Bidvest Bank, Bidtravel, Steiner, Prestige, Konica Minolta, Global Payment Technologies, TopTurf and Pureau Water. And I have left a whole lot out of that, luckily there has been some integration, both the McCarthy Fleet Solutions and asset-based finance business have been integrated into Bidvest Bank division, two less divisions to worry about, phew. But you get my point here, although there are only 6 divisions, excluding head office, there are lots of divisions inside of divisions. If you want to get an idea of all of the Bidvest services division, download the 64 page segmented business division review and scroll to page ten: Bidserv divisions.


What we have discussed here in this office over the past few years is that Bidvest could actually unbundle their businesses separately, or, more likely separate them geographically. I have no doubt that there are some shareholders chomping at the bit, wanting a services business with a good Asian footprint, listed locally. With only exposure to that region, perhaps make the European businesses also separate and then an African one, that is what could happen. As ever the most important thing in the medium term is how shareholders have done, versus a heavily laden resources bias overall market, Bidvest has underperformed the broader market. For the record, Jozi all share index 26 August 2005 was at 15383 at the open, close Friday of 26738, that is up nearly 75 percent, of course excluding any dividends. Bidvest over the same time frames is up 47 percent, from 88 Rands five years ago, to 129 Rands close on Friday. It towers over the "rest of the sector", which includes Net1 UEPS and Mvela Group and Adcorp as the biggest competitors.



But let me take you on a trip of sorts, in 1991, the whole group had a turnover of 411 million Rands and profits of just less than 17 million Rands. The company made 34 cents per share worth of earnings, and paid a dividend of 12 cents per share. The stock traded at a high of 282 cents per share and a low of 180 cents a share. Let us say that you bought it in the middle of the trading range for around 240 cents a share. At today's share price of just over 130 Rands a share, that is a 50 bagger in less than twenty years. In other words, if you had decided to buy 4200 shares at R2.40 back in 1991, for 10080 Rands excluding brokerage, that stake would be worth 548 thousand Rands today. The power of Brian Joffe. Plus add in the dividends over the 19 years of owning them, including this one, and you have been paid over 160 thousand Rands. On your little ten thousand Rands investment back then.



The only way that I know how to translate that back to Rands would be to do a Dollar translation. Which is unfair to these
spectacular returns. Back in 1991 the Rand was trading at about 2.75 to the US Dollar. Today it is MUCH weaker at 7.30 to the US Dollar. So ten thousand Rands back then was worth 3635 Dollars. Today 548 thousand Rands is worth 75 thousand Dollars. Even in Dollar terms that is a remarkable return. OK, and in todays terms 3635 1991 Dollars is about 5655 Dollars, or 41281 Rands at 7.3 Rands to the US Dollar. Still, a remarkable return over twenty years, you will agree. The Dow Jones started 1991 at 2560 odd points. Halfway through the year it was at nearly 3000 points, so even in the time that nearly three-fold increase in the Dow Jones, in Dollar terms on this crude measure you are up twenty fold.