South African bank up for sale as Bidvest boosts profits
Bidvest has delivered a strong set of results, with the group set to offload its Banking division.
In its financial results for the year ended 30 June 2024, Bidvest said that its results demonstrated consistency in performance, strong cash flow and growth.
“Our considered and focused corporate action execution has resulted in our maiden hygiene services entry in the Asia-Pacific market and the doubling of our Australian facilities management operations,” said the group.
“Despite the pressure points of volume contractions in renewables and new vehicles, the overall results are testament to the value of Bidvest’s diversified portfolio.”
Five of the group’s seven divisions reported profit growth, with four delivering impressive double-digit increases.
The Commercial Products and Automotive divisions faced headwinds due to the high renewables base and a declining new vehicle market.
“We remain confident in our growth strategy and ability to create sustainable value. To ensure a strong pipeline, we deployed almost R5.0 billion on eleven acquisitions and growth capital expenditure, both domestically and offshore.”
Following a portfolio review, the group is disposing of Bidvest Bank and FinGlobal.
The group said that these will position these businesses for the next growth phase whilst recycling capital for the group.
The remaining short-term insurance business was transferred to the Automotive division effective 1 July 2024.
The disposal of Bidvest Bank and FinGlobal is underway, with management aiming to identify a suitable buyer/by the end of the 2024 calendar year.
The transactions will be subject to several relevant regulatory approvals.
The group previously said that it would be looking for a buyer who could ensure business continuity and, importantly, lessen the impact on the segment’s 1,500 employees.
Financials
Looking at the financials, the group said that group trading profit increased by 8.5% due to vigorous gross margin management and strong expense control.
Cash flow from operating activities grew by 18.7% – double net income growth, after paying more its
equity and debt capital providers.
Basic earnings per share and headline earnings per share (HEPS) grew by 6.6%, with the former’s performance mainly due to good operational performance moderated by higher net finance and acquisition charges and increased amortisation on customer contracts.
The group declared a final dividend of 447.0 cents per share. This took the total dividend to 914 cents – a 4.3% increase from FY23.
| Financials | FY23 | FY24 | % Change |
| Revenue | R114.9 billion | R122.6 billion | +6.7% |
| Trading profit | R11.4 billion | R12.4 billion | +8.5% |
| EPS | 1 757.3 cents | 1 873.8 cents | +6.6% |
| HEPS | 1 794.8 | 1 912.6 cents | +6.6% |
| Normalised HEPS | 1 884.7 cents | 1 964.8 cents | +4.3% |
| Total Dividend | 876 cents | 914 cents | +4.3% |
Outlook
“There is an undertone of positive sentiment regarding growth in the medium- to longer term. Consequently, we expect market conditions in all our operating territories to start to improve.”
“Following an incident-free and successful national South African election, which resulted in the formation of a Government of National Unity (GNU), there are strong signs of a significantly enhanced business friendlier environment in South Africa.”
“Reforms in the electricity and logistics sectors are critical to unlock structurally higher and inclusive economic growth in our home base.”
“It is therefore pleasing that the recent performance of SA’s national energy provider, Eskom, has exceeded all forecasts and is starting to restore confidence in business and society, which is urgently needed to support future investment in the country.
The group said that it is important to accelerate energy transition reforms and ensure rapid transmission expansion to connect the continued expansion of new generation capacity.
Transnet is also progressing in its recovery plan, which is linked to the country’s Freight Logistics Roadmap (FLR).
“The government-led National Logistics Crisis Committee, in which business participates, is actively implementing the FLR, although it is generally acknowledged that additional interventions are required to improve performance.”
“This remains at the core of unlocking value for the country’s entire supply chain and to ensure sustainable economic growth.”
However, the group still expects to face headwinds in the first half of FY25 due to no export maize volumes and the elevated renewable energy sales base.
“On the upside, the travel and tourism industry remains buoyant with a strong forward order book.”
“We believe FY2024 was the trough in new vehicle sales volumes, and we should benefit from our brand diversification strategy.”
“The bolt-on acquisitions closed in recent weeks will contribute positively. There is also strong momentum in our businesses, which is evident in new business wins and the ever-growing product and service baskets.”
Read: Major shake-up at Standard Bank – including a new CEO for South Africa
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