Namibia
Annual Integrated Report 2017
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NAMIBIAN SEA PRODUCTS (PTY) LTD About this report
Bidvest Namibia Limited is a publicly owned company listed on the Namibian Stock Exchange since 26 October 2009. This report covers the year under review 1 July 2016 to 30 June 2017 and includes material issues up to board approval on 19 August 2017. The report covers all operations. It provides a holistic but concise view of social, environmental and economic factors affecting the ability of the business to create value over the short, medium and long term.
The report is aimed at a wide range of stakeholders, including, inter alia, shareholders, suppliers, employees, government and providers of funding.
The integrated reporting approach and structure allows for comparability of financial and non-financial data. Any restatement of comparable information has been noted as such. Materiality was applied to information gathered during the data collection, as well as board and management interviews.
The following frameworks and reporting requirements were considered: – Corporate Governance Code for Namibia (NamCode), based on Third Report of the King Commission on Corporate Governance in South Africa (King III); Namibia – Namibia Companies Act, No 28 of 2004; – Namibian Stock Exchange Listings Requirements; and – International Financial Reporting Standards.
Further information is available on our website www.bidvestnamibia.com.na
What’s inside
GROUP OVERVIEW CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 1 Who we are 59 Statement of directors’ responsibilities and approval 3 Corporate social investment 59 Declaration by company secretary 4 – 5 Abridged group structure 60 – 62 Independent auditor’s report 6 – 7 Operational highlights 63 – 67 Directors’ report 8 – 9 Directorate 68 – 77 Accounting policies 78 Statements of financial position PERFORMANCE OVERVIEW 79 Statements of profit or loss and other 10 – 11 Chairman’s statement comprehensive income 12 – 15 Chief executive’s review 80 – 81 Statements of changes in equity 16 – 18 Corporate governance report 82 Statements of cash flows 19 – 20 Risk committee report 83 – 114 Notes to the financial statements 21 – 22 Audit committee report 115 Shareholders’ diary 23 – 26 Remuneration committee report 116 Administration 27 – 29 Sustainability report 30 – 47 Operational reviews 48 – 50 Financial director’s review 51 Value added statement 52 – 53 Nine-year review
54 – 55 Segmental report For access on your mobile to the Bidvest Namibia website, scan the QR code above. GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Who we are
Bidvest Namibia is a group We have a diverse portfolio Our automotive, fishing, of companies listed on the of businesses ranging from freight and logistics, Namibian Stock automotive, fishing, freight services, trading and Exchange. and logistics, services, distribution divisions employ trading and distribution, which comprises well recognised 3 481 brands within the Namibian people, creating shareholder market. value we report on.
We believe in creating Our focus areas for our In a big business opportunities and growing people are employment environment we run our people. We understand that equity, industrial company with determination people create wealth, and relations, employee health and commitment evident that companies only report it. and safety, developing in a small business heart. Namibians and attracting and retaining skilled Namibians.
Our philosophy we subscribe to in all business dealings:
T E r a x n c s el pa len rency ce
I n A n c o c v o ati un o ta n I b n ility te gr ity
Bidvest Namibia Annual Integrated Report 2017 01 02 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Corporate social investment “To be able to help those who cannot help themselves creates a greater purpose to our being” – Sebby Kankondi, CEO
Bidvest Namibia Bidvest Namibia supports various local pillars of the society, from education over health to sports and other ad hoc projects.
Pandula Trust Fill this boot with hope The Pandula Trust is a voluntary Bidvest Namibia employee The Land Rover “Fill this boot with hope” initiative whereby our people have the opportunity to initiative was very successful. The community donate directly from their salaries to a central pool. was requested to donate tinned foods, Volunteers of the staff have formed a committee that clothes, blankets, toys and toiletries. All items finds and allocates these funds to so-called “Angel were then distributed by Land Rover to the deeds” which are aimed at helping those in need in outlying regions. our communities.
Graduation at Promise Land Over 50 children of “Promise Land”, a pre-school for underprivileged children, graduated from the pre-school and received school uniforms, school bags, stationery, lunch A box of necessities boxes and other school Pandula Trust Angels delivered accessories to aid them in this boxes to coastal rural areas new phase of their lives. during Christmas to those who have nothing containing food and toiletries to the value of N$1 500. Over 150 boxes were delivered.
Bidvest Namibia Annual Integrated Report 2017 03 Bidvest Namibia Limited abridged Group structure
BIDVEST NAMIBIA LIMITED
BIDVEST NAMIBIA BIDVEST NAMIBIA BIDVEST NAMIBIA FISHERIES INFORMATION PROPERTY HOLDINGS HOLDINGS (BIDFISH) TECHNOLOGY 100% 100% 100%
FISHING PROPERTY AUTOMOTIVE DIVISION DIVISION DIVISION
NAMSOV FISHING BIDVEST NAMIBIA ENTERPRISES AUTOMOTIVE 69,55% (trading as Novel Motor Company) 100% ELZET DEVELOPMENT 100% TWAFIKA FISHING DIROYAL ENTERPRISES MOTORS 75,10% 100% T&C PROPERTIES NAMIBIA 100% NAMSOV INDUSTRIAL CARHEIM PROPERTIES INVESTMENTS 100% 100% LENKOW 100% TETELESTAI MARICULTURE 100%
CARAPAU FISHING 25%
COMET INVESTMENTS CAPITAL 100%
PESCA FRESCA LDA 47%
NAMIBIAN SEA UNITED FISHING PRODUCTS ENTERPRISES 100% 100%
INDUSTRIA ALIMENTAR CARNES DE MOZAMBIQUE ATLANTIC HARVESTERS LIMITADA OF NAMIBIA 40% 100%
GLENRYCK SOUTH AFRICA 51%
04 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
We remain alert to acquisitive growth opportunities to diversify our commercial interests.
BIDVEST NAMIBIA BIDVEST NAMIBIA COMMERCIAL MANAGEMENT SERVICES HOLDINGS (BIDCOM) 100% 100%
FREIGHT AND LOGISTICS, COMMERCIAL AND FINANCIAL SERVICES MATERIAL HANDLING AND FOOD AND INDUSTRIAL SERVICES DIVISION MARINE SERVICES DIVISION DISTRIBUTION DIVISION AND PRODUCTS DIVISION
NAMIBIA TAEUBER & CORSSEN BIDVEST NAMIBIA MANICA COMMERCIAL AND BUREAU DE CHANGE GROUP NAMIBIA (SWA) 49% 100% INDUSTRIAL SERVICES 100% AND PRODUCTS 100%
LUBRICATION CATERPLUS NAMIBIA BIDVEST NAMIBIA SPECIALISTS 100% STEINER 100% (division of Bidcom)
LÜDERITZ BAY SHIPPING MATADOR CECIL NURSE NAMIBIA & FORWARDING ENTERPRISES (trading as CN Business 100% 100% Furniture) 100%
T&C BIDVEST MANICA TRADING TRADING PRESTIGE CLEANING 100% 100% 100%
MONJASA KOLOK NAMIBIA NAMIBIA 100% 57%
MINOLCO (NAMIBIA) ORCA MARINE (trading as Konica Minolta) SERVICES 100% 60%
BIDVEST NAMIBIA WALVIS BAY AIRPORT PLUMBLINK SERVICES 100% 100%
RENNIES TRAVEL (NAMIBIA) WALVIS BAY 100% STEVEDORING COMPANY 55%
VOLTEX (NAMIBIA) WOKER 100% FREIGHT SERVICES 100%
WALTONS NAMIBIA 100%
Bidvest Namibia Annual Integrated Report 2017 05 Operational highlights
Revenue Trading profit Headline earnings – decline to – decline to N$92,5 million per share N$3 776,4 million – decline to 22,4 cents
Revenue (N$’million) Trading profit (N$’million) Headline earnings per share (cents)
4 000 3 858,6 700 160 3 776,5 3 703,5 3 534,8 601,5 3 500 3 294,2 600 140 129,5 3 000 501,3 120 116,0 500 103,2 2 500 409,7 100 400 86,2 2 000 80 294,9 300 1 500 60 200 1 000 40 92,5 22,4 500 100 20
0 0 0
17 16 15 14 13 17 16 15 14 13 17 16 15 14 13
Start-up of Steiner Namibia – 1 February
2010 2012 2009 2011 2013
Bidvest Namibia Acquisition of Acquisition of Protrade listing on Taeuber & into Taeuber & Corssen the Namibian Stock Corssen 100% – 100% – 1 March Exchange – 1 December 26 October Namibia
Start-up of Rennies Transport – 1 December
06 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Total assets Net tangible asset value Cash generated by – decline to N$3 086,9 million per share operations – increase to 737 cents – decline to N$185,1 million
Total assets (N$’million) Net tangible asset value per share Cash generated by operations (cents) (N$’million)
3 500 900 700 3 086,9 3 160,0 3 024,6 800 769 3 000 737 600 585,6 2 764,5 2 778,6 734 700 688 531,7 638 2 500 500 600 413,8 388,2 2 000 500 400
1 500 400 300 300 1 000 200 185,1 200 500 100 100 0 0 0
17 16 15 14 13 17 16 15 14 13 17 16 15 14 13
Buy-in Namibia Bureau de Change 49% – 30 June
Start-up Lubrication Specialists in Botswana – 30 June
Start-up of Monjasa Buy-in Industria Alimentar Bunkering Cranes de Mozambique Services – 1 July 40% – 30 June
2014 2016 2015 2017
Start-up of Orca Marine – Acquisition Prestige 1 January Cleaning 100% – 1 June
Acquisition of Novel Motor Start-up Glenryck SA Company 100% – 31 July 51% – 1 September
Acquisition of the Glenryck Brand 100% – 1 August
Start-up of Plumblink Namibia – 1 April
Bidvest Namibia Annual Integrated Report 2017 07 Directorate
1. 2. 3.
CHIEF EXECUTIVE OFFICER NON-EXECUTIVE CHAIRMAN FINANCIAL DIRECTOR
1. Sebulon Inotila Kankondi 51 2. Lindsay Ralphs 61 3. Theresa Weitz 40 Qualification: Post-graduate degree: Business Qualification: CA(SA) Financial director Administration (Unisa) Appointed: 3 March 2014 Qualification: CA(Nam), B Accounting (Hons) Appointed: 10 August 2007 Board committee membership: Remuneration (Stellenbosch) Board committee memberships: Nomination, (chairman) Appointed: 18 August 2011 acquisition and risk Lindsay is chief executive of Bidvest South Africa and a Director of several Bidvest Namibia subsidiaries, Sebby director of various Bidvest subsidiaries. Lindsay joined Board committee membership: Acquisition and risk Bidvest as operations director in 1992. rejoined Bidvest Namibia after he spent six years as the Director of several Bidvest Namibia subsidiaries, Managing Director of the Namibian Ports Authority. He was In 1994, he was appointed managing director of Steiner. Theresa has 15 years’ managerial experience across trained as a mechanical engineer and holds a degree in various industries. She is a former group financial manager Business Administration. Following the acquisition of Prestige, Bidserv was created. Lindsay became its chief executive. Lindsay was appointed of the Ohlthaver & List group of companies. He has also successfully completed UCT and Stellenbosch CE of Bidvest South Africa in February 2011. Lindsay was Business School Programmes in Marketing and Business appointed to the board of Adcock Ingram in 2014. Management and Leadership. He took part in more than three assignments in the Middle East, Norway and the USA exposing him to modern management practices in freight and logistics.
BOARD OF DIRECTORS
AUDIT RISK REMUNERATION ACQUISITION NOMINATION COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE
08 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
4. 5. 6. 7. 8. 9.
NON-EXECUTIVE DIRECTORS
4. Martin Kaali Shipanga 49 5. Jerome Davis 75 6. Hans Peter Meijer 61 Qualification: BCom (Wits), Masters in Public Policy Qualification: CA(SA) Qualification: BCompt, MBL and Administration Appointed: 1 December 2015 Appointed: 17 February 2017 Appointed: 21 August 2009 Board committee membership: Risk and Board committee membership: Audit Board committee membership: Audit and risk acquisitions Peter joined the Bidvest SA corporate office in 1990, then (chairman) Jerome grew up in Namibia and is currently a director of a in 1995 moved into a subsidiary divisional financial role as Martin completed in-service training at De Beers prior to number of companies in the public and private sectors, and financial director of Steiner, appointed as financial director serving the City of Windhoek for 10 years, initially as also runs his own management consultancy. of the Bidserv division in 2001, and finally the Bidvest deputy head of finance and then as deputy chief executive South Africa division in 2011. Peter serves on all Bidvest He qualified as a Chartered Accountant at the age of 25, at before becoming the city’s chief executive. In 2004, he SA divisional boards and divisional audit committees, and which point he left private practice for the world of became a member of the founding executive team at was appointed to The Bidvest Group board as Group commerce and industry. He has been active in diverse Nedbank Namibia and was the bank’s first indigenous financial director in May 2016. industries ranging from fishing; motor dealerships and managing director. Martin subsequently established assembly; to electronics and logistics. SmartSwitch Namibia, a joint venture between Nampost and Net 1 Technologies. He returned to Namibia in 2011, when the late Harold Pupkewitz invited him to serve on the board of Pupkewitz He has served as a director of various public and private Holdings. With the passing of Mr Harold Pupkewitz, Jerome companies and currently sits on the boards of Zebra led the Pupkewitz Group for a number of years as CEO. Holdings, Ebank and Mutual & Federal. He is chairman of the Frans Indongo Group. Martin is a full-time entrepreneur and manages a property portfolio. In addition, he is the founder of Mamma Fresh, Moola Mobile and Tusk Mobile & Electronics.
7. Hans-Harald Müseler 68 8. Martina Mokgatle- 9. Pieter Christiaan Steyn 69 Qualification: CA(Nam)/(SA) MBA (Stellenbosch) Aukhumes 48 Qualification: PMD, Harvard Post-graduate diploma: Compliance and Board Appointed: 17 January 2007 Governance (UJ) Appointed: 10 August 2007 A director of several boards in the fishing industry, Martina Board committee membership: Nomination and Appointed: 10 August 2007 is a communication and public relations specialist. She has acquisitions executive experience in the Ministries of Education, Board committee memberships: Audit (chairman), Regional and Local Government and Fisheries and Marine Director of several Bidvest subsidiaries. Pieter has remuneration and risk Resources and has held senior positions with Sea Harvest 38 years’ experience in the fishing, freight, logistics, and Alexander Forbes Group Namibia. Martina is currently terminals and travel industries. Hans-Harald, a professional with 29 years’ experience executive director of Naneni Investments and the Bonsai as an accountant and auditor, retired as a partner in the Fishing and Aquaculture Project. assurance division of PricewaterhouseCoopers. He is an independent full-time non-executive director and trustee and serves on the boards of entities in the private and public sectors of Namibia, with audit committee responsibilities.
Bidvest Namibia Annual Integrated Report 2017 09 Chairman’s statement
“All assets must be effectively deployeded in every division if profit decline is to be arrested and reversed.”
Lindsay Ralphs, non-executive chairman
In what proved to be a challenging year, Bidvest A significant concern is the continued fall in profits As a result, headline earnings per share (HEPS) Namibia continued to make progress with the at Bidfish, which can be attributed to various declined by 74% to 22,4 cents per share (2016: strategy of growing the business base across a external factors – among others lower market 86,2 cents). At 23,9 cents (2016: 86,9 cents) more diversified group. These gains were made prices, lower quota allocations, pressure on the earnings per share (EPS) were down by 72,5%. despite a dramatic shift in national fortunes as horse-mackerel and pilchard resources and higher The Group’s board of directors declared a final Namibia moved from strong GDP growth to levies and taxes. We continued rightsizing this cash dividend of 6 cents per share. This brings the recession in a surprisingly short space of time. operation in line with our quota allocations, which total annual dividend to 10 cents per share (2016: resulted in the sale of MFV Namibian Star during Austerity measures were introduced by 38 cents per share) the current financial year. government, projects went on hold and official National vision spending dried up. The cutbacks had wide-ranging Though our core fishing business faces continued In many important respects, we share the same effects across the economy, but were successful in pressure, the division’s downstream diversification objectives as the nation we serve. We wish to reducing the country’s mounting budget deficit. planning is very much on track. Investment into achieve growth and create jobs. We view skills sales and distribution via a strategic stake in a Bidvest Namibia was materially affected by constraints as a major obstacle to continued Mozambican operation met expectations and good deteriorating economic conditions and our Group progress and regard investment in training and progress was made with the Glenryck brand experienced a disappointing 12 months. All education as the best method of removing it. revitalisation. divisions failed to meet financial objectives. This We are supporters of the President’s Harambee represents a significant setback and strenuous Refocusing at Freight and Logistics proved timely Prosperity Plan, a key component of which is the efforts by managers and their teams will be as Namibia – and our division – can no longer rely upskilling of young Namibians. necessary to rebuild the momentum. on the oil and gas industry as a constant source of substantial revenue. More flexible structures were The Group has therefore decided that over the next Strategic progress needed across a broader spread of activities. Our three years it will commit sustained investment We made no outright acquisitions in 2017, but divisional team had put these structures in place. to the Bidvest Namibia Youth Development integration of the new Automotive division was Programme. This supersedes another youth- completed and made its first full-year contribution. Our people worked hard to win new business in focused initiative, our three-year sponsorship of The new Plumblink operation rapidly established tough markets while protecting market share. the Bidvest Namibia Cup to provide support for itself within the Commercial and Industrial Services Managers in all divisions sought efficiencies and amateur soccer nationwide. and Products division and a second branch was cut costs, but training investments were opened. Prestige, a cleaning services company, maintained and staff numbers in core operations An investment in the new initiative of N$3 million was taken over from our South African counterparts were stable. is envisaged. in June 2017. Namibian managers now have the Earnings and dividends task of reinvigorating the Company and placing Regrettably, trading profit for the 2017 year fell by operations on a more sustainable footing. In the 68,6% while revenue decreased by 2%. process, they will ensure continued employment for more than 500 workers.
10 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Vocational training centres Government plans to set up vocational training centres in all regions. It is vital this initiative is embraced by the private sector. Bidvest Namibia therefore plans to provide financial support for one or more VTC students per region. Appreciation I extend my appreciation to the people of Bidvest Namibia for all their hard work in challenging circumstances. It can be frustrating when intense effort is not reflected in financial results. However, the hard work did not go unnoticed and I thank you for it. Progress made Total annual dividend Senior members of the executive team faced intense pressure and I also extend my thanks to with growing a more of 10 cents per share them. I am also indebted to the board of directors diversified group for their guidance and insight during a difficult 12 months.
Of course, the progress of our business is impossible without our customers and suppliers. Revenue Bidvest Namibia Their support was invaluable in 2017. We look forward to strengthening these relationships in the – decline to N$3,8 billion youth development year to come. programme established Future Rapid improvement in trading conditions is unlikely The programme has five pillars: McCarthy Academy has become the sector’s in the next 12 months. – Commercial Advancement Training Scheme foremost trainer of mechanics and auto Acquisitive growth is possible in tough times and (CATS) electricians. we will continue to look for possible acquisitions. – Automotive academy The plan is to set up an academy dedicated to the As always, we will focus on businesses with strong – Namibianisation of officer grades technical training of young people hoping for a management and the potential to complement our – University partnerships career in the automotive sector. own core activities. – Vocational Training Centre support. Close cooperation with the Namibian Training Internally, continued focus will fall on cost control CATS Authority will be necessary to drive the plan and efficiencies. All assets must be effectively The Group will step up its longstanding support of forward. deployed in every division if profit decline is to be this government-endorsed effort to complement arrested and reversed. university study with work experience. Under the Namibianisation of officer grades scheme, the Namibian University of Science and Bidfish has made a major contribution to the Thankfully, our teams are highly motivated and Technology (NUST) provides a theoretical base Namibianisation of officer grades within benefit from continued investment in training and while a private sector partner provides exposure to the commercial fishing industry by sponsoring systems. They have a proven capacity for making the world of work. the training of Namibian officer cadets at the gains, even in the toughest conditions, and I wish Russian naval academy. Ten marine engineers and them every success in the year to come. We already have a proud record of CATS support. navigation officers have completed academy Over the past nine years, various divisions have courses. Seven now seek an even higher level of given work experience to a total of 32 students accreditation. while paying for their NUST education. On completion of their studies, our businesses University partnerships provided fulltime employment to all these students. The Group will further entrench its relationships Lindsay Ralphs with NUST and the University of Namibia (UNAM) Automotive academy Non-executive chairman by contributing to the career development of young This concept looks to build on the model developed Namibians. by our sister company in South Africa, where the
Bidvest Namibia Annual Integrated Report 2017 11 Chief executive’s review
“Change is inevitable, without change in our world, we would stagnate.”
Sebulon Kankondi, chief executive officer
Macro-view deficit. Government should be congratulated for Cash generation was also under pressure Results disappointed in 2017, but our people taking action when it did. and dipped to N$185,1 million (2016: didn’t. They faced challenges throughout the year N$388,2 million). As a result, capital projects in the public sector and sought efficiencies and savings in a came to a halt. Even Namibian sports teams were Despite these challenges, we maintain a robust determined effort to secure profits even as grounded as government support came to an end balance sheet and retain the capacity to fund volumes tumbled and margin pressures increased. and the Sports Ministry returned budgetary continued growth, whether organic or acquisitive. allocations to the Treasury. It took hard work and resilience to maintain market Strategic response share in the face of increasingly tough competition. These constraints would have been difficult to As recession deepened and divisional challenges By year-end, it was clear many of our teams had manage in any economy. In Namibia, where increased, Bidvest Namibia rededicated itself to held their own and increased their share of market government accounts for an estimated 58% of the strategic task of achieving sustained growth. – a notable achievement. gross national product, the impact was significant For us, growth is not something to be sought only Managers – some newly promoted or newly and was felt across all our divisions. when all the economic indicators are in our favour. appointed – were expected to maintain service Growth is our long-term goal and should remain At much the same time, interest rates rose half a and quality standards, even as operational budgets our core objective across market cycles. percent to 9,75%. were cut and new spending was closely scrutinised We have a performance-based culture. If the to ensure every investment added value to the In these circumstances, consumers and economy under-performs our divisions must out- business. businesses found themselves implementing their perform to ensure a fair profit. We can’t sit on our own cutbacks, with significant consequences for Unfortunately, we failed to meet overall divisional hands and wait for the economic horizon to clear. our Group. targets, but this was hardly a shock once the scale The principal driver of profit is the performance of of the economic challenge was realised and official The challenge was particularly evident within our our people. They must have the right tools for the figures finally confirmed the national economy had Automotive business. job. Therefore, investment in systems and been in recession for some time. Financial snapshot infrastructure was maintained. The Namibian economy contracted by 1,7% for At N$3,8 billion (2016: N$3,9 billion), revenue was Capital expenditure in 2017 stood at each of the first two quarters of 2017 and also down by 2,1%. Trading profit was significantly N$59,0 million (2016: N$120,7 million). showed a contraction for the second and third lower at N$92,5 million (2016: N$294,9 million), a quarter of 2016. A year earlier, the economy had decline of 68,6%. People also need the requisite knowledge and been growing by an annualised 5%. skill-sets. For this reason, training continued. Trading margin contracted to 2,4% (2016: 7,6%), Training investment for the year was N$6,3 million As the scale of the challenge became clear, mainly of a result of pressure on the Fishing (2016: N$6,8 million). government announced significant cuts to division’s margin. spending. Austerity is never popular, but fiscal controls were essential to rein in a fast growing
12 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
We remain one of Namibia’s largest employers and at year-end the Group headcount stood at 3 481 (2016: 2 738). Consolidation and diversification Consolidation was a key feature of the year as the new Automotive division bedded in and Plumblink – a 2016 addition – got into its stride. However, diversification and strategic balance remain a strategic imperative.
The need for a broader base has been confirmed by continuing challenges at Bidfish, previously the biggest contributor to Group profit by a substantial margin. Reductions in the biomass and low Trading profit declined Cost needs to be ministerial quotas have resulted in much lower revenues and profit, with little indication this by 68,6% to rigorously managed situation will change any time soon.
N$92,5 million In the recent past, we not only acquired a vehicle retailer, we introduced corporate hygiene services to Namibia and specialist plumbing supplies. All assets have All divisions should Prestige The Group has acquired Prestige Cleaning to deliver the optimise every Services from The Bidvest Group towards the end of the financial year, helping to preserve the jobs of necessary return opportunity 508 office cleaners.
The strategic justification is clear. Cost containment Agility is also important if we are to maximise every Costs must be rigorously managed at all times, but commercial opportunity in an increasingly Office cleaning is a core component of the especially when trading conditions deteriorate. competitive environment. outsourced services industry. While providing cleaning solutions we can obtain insights into Assets have to deliver the necessary return. If Job pressures envisaged rates of return are not possible, then the demand for other outsourced services – potential Though business sustainability necessitates cost asset should be sold. avenues for further growth into this space. reductions – including cuts to the salary bill – This philosophy was applied at Bidfish and the every effort was made to avoid retrenchments. Furthermore, Prestige has relationships with fishing vessel the Namibian Star, was sold when it Where possible, staff in downsized operations corporate clients across Namibia. became apparent fleet utilisation levels would were reassigned to new work. On other occasions, We see potential in Prestige as a business in its remain depressed for some time to come. non-replacement of staff led to the de facto own right and will give it the necessary attention creation of leaner business units. To contain costs, our fishing business also made and investment as we look to put operations on a the strategic decision to exit the secondary market In some cases, selective recruitment beefed up sustainable footing. in fishing quotas when bidding goes too teams in areas where new opportunities are being New risks high. Improved fleet utilisation is a priority, but not explored. This process will continue as many In global terms, Namibia is a small market. It is at any price. divisions are keen to investigate growth potential, also some distance from major centres of either in coastal areas or in the north of the international business in East Asia, North America Similar thinking is being applied across our Group country. and Europe. However, this is no defence against as teams reduce expenses in line with new cyber-attack by international criminals. commercial realities. Some costs are being cut Staff numbers remained stable in most core and some activities curtailed. teams, though overall job numbers rose in the last All businesses should be prepared for hacking of month of the year when we took over the Prestige their systems by highly sophisticated gangs. In A business is either in good shape for marketplace business and 508 office cleaners and associated 2017, one of our businesses was targeted. Its success or it’s not. All management teams are now staff came on to our payroll. automated telephone system was hacked, engaged in strenuous efforts to ensure their enabling international calls to be routed through operations are in good shape and the right size for prevailing conditions.
Bidvest Namibia Annual Integrated Report 2017 13 Chief executive’s review – continued
our switchboard. The net loss from this incident amounted to N$1,4 million. Improved cyber security measures have been put Bidvest Namibia has over the in place. Government cooperation past two years diversified into We prize efficiency and do everything we can to avoid duplication of effort. Therefore, in the realm of social investment we look to partner with automotive, corporate hygiene initiatives that are already in place and have the structures necessary to deliver help where it is service and specialised needed the most. Often, this means we work in tandem with government programmes. plumbing supplies. Our recently announced Bidvest Namibia Youth Development Programme (covered in depth in our chairman’s report) achieves added effectiveness by looking to collaborate with government initiatives wherever possible. For example, we will provide practical workplace Small business support Divisional snapshot experience in conjunction with the Commercial We are also “on the same page” with government Bidfish had a disappointing year, with declines in Advancement Training Scheme and the internship when it comes to SME development. As job revenue and profit. The horse-mackerel resource programme run by the Namibian University of creators, small and medium-size enterprises make – the mainstay of the business – was under severe Science and Technology and the University of a tremendous contribution to our economy. pressure and no improvement was seen in quota Namibia. We also stand ready to sponsor students However, their limited financial resources make allocations by the Ministry of Fisheries. Market who are admitted to government’s new vocational them vulnerable during an economic downturn. prices were also depressed. Sardine fishing training centres. experienced similar pressures and the canning Their ability to carry on is often dependent on their factory remained closed. Furthermore, our plans for an automotive academy access to funding. Even a small injection of will entail ongoing cooperation with the Namibian working capital can be the difference between Our Automotive division also reported falling Training Authority and its Key Priority Skills Funding continued viability and shutting up shop. volumes and profit. Government cutbacks were initiative. just one challenge. Businesses held back on new Several years ago, we set up the Bidvest Namibia car purchases. So did consumers. Changes to the Of course, our efforts to train engineering and Enterprise Development Fund for just this reason. National Credit Act also impacted sales. Efforts are navigation officers for commercial fishing vessels The fund channels small loans to small businesses, under way to rebalance the division and reduce the dovetails nicely with government’s Namibianisation thereby enabling them to buy materials, tools and dependence on new vehicle sales. Investment in strategy. High levels of accreditation entail other equipment from Group subsidiaries. dealership upgrades and training continued. cooperation with international training The fund was designed to be self-sustaining. As programmes, but at local level we work closely Commercial and Industrial Services and Products loans were repaid the fund was replenished, with the Namibian Maritime and Fisheries Institute fared somewhat better, it was also negatively enabling further loans to be advanced to new to equip crew with additional skills. impacted by the Namibian economy. Voltex borrowers. In tough trading conditions, we believe reduced losses but was severely affected by the In the field of artisan training, we also maintain the fund has a vital role to play and we plan to slow down in the construction industry. Minolco strong relationships with the Namibia Institute of continue this programme. had another good year. Prestige significantly Mining and Technology. Our culture emphasises the need to build a sense widened the service offering at year-end. At the same time, our empowerment and of partnership with suppliers and customers. Food and Distribution disappointed. A loss was upliftment partners at the Namsov Community This philosophy came into sharp focus as the reported. Increased tourist inflows were insufficient Trust (NCT) ensure cost-effectiveness by recession took hold and severe cash flow to counteract the effects of austerity and consumer channelling social investment into the development challenges impacted all businesses. Debtor’s cutbacks. Premium products in the brand basket programmes run by Namibia’s regional governors. management became a key issue for us, but at the were impacted by down-trading. Promotional These investments make a difference in numerous same time teams in our divisions did all they could activity was stepped up, but gains were short- communities. At a time of austerity, continued to assist loyal customers. A balancing act on this lived. Management were not able to get all the commitments like these are even more important pattern may be necessary for some time to come. planned improvements in efficiencies to fruition. and at a recent Governors’ Forum the NCT’s regional development effort was applauded as a pillar of social transformation at grassroots level.
14 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Freight and Logistics experienced a drop in Our freight business is also in better shape to revenue, but management slowed the decline withstand recessionary pressures and develop in profits after vigorous efforts to rebalance the new areas of growth. Government, as well as our business. For the last few years, the division division, is looking to a future that is not reliant on benefited from a buoyant oil and gas industry. As healthy oil and gas revenues. It is also investing in offshore activities stalled, it has become necessary new areas, though Walvis Bay’s new government- to refocus resources. Business units are now funded container terminal is not scheduled to open leaner and more adaptable. Regrettably, some jobs until calendar 2018. As new opportunities occur, were lost as stevedoring staff were cut. Freight and Logistics will follow up strongly.
Appreciation The Commercial and Industrial Services and I thank all our people for their hard work in Products division is also in good shape to maximise extremely challenging business conditions. Results new opportunities. The major losses at Voltex are don’t always reflect it, but our people did well to in the past. Other parts of the business maintain our marketplace position in the face of demonstrated great resilience in 2017 and grew intense competition. Our people, their supervisors market share. It is important to maintain this and managers did a good, solid job and I salute momentum. them for it. Automotive expects ongoing pressure on new In addition, I welcome 508 newcomers from vehicle sales, but is better placed to seek growth in Prestige to the Bidvest Namibia family. We’re workshop and parts business while exploring pleased to see them and look forward to working opportunities in the used vehicle market. together in the year ahead. Food and Distribution had a tough year, but new I also extend my thanks to our directors and systems are being put in place to drive considerable chairman for their support and strategic guidance. improvements in efficiency, setting the scene for a Every year, they make a telling contribution to our return to profitability. development and growth; never more so than All divisions face a similar challenge. They need to in 2017. optimise every opportunity while interrogating During the year under review, we also had good every cost driver. reason to thank our loyal customers and suppliers. We believe in partnerships and collaboration with those we do business with. We thank these partners for their contribution in a tough year and look forward to more of the same in 2018. Future Unfortunately, it may be some time before we see Sebulon Kankondi a return to buoyant economic conditions. Even so, Chief executive officer we look forward to growth in key areas of our business while the full-year effect of recent cost- containment measures will assist efforts to restore profitability.
Fishing challenges will continue, but Bidfish now has a more manageable cost base and is well placed to halt the recent slide in profitability. For the longer term, its diversification efforts remain on track, with the promise of improved growth in new markets.
Bidvest Namibia Annual Integrated Report 2017 15 Corporate governance report
BOARD OF DIRECTORS
EXECUTIVE COMMITTEE AUDIT COMMITTEE RISK COMMITTEE ACQUISITIONS COMMITTEE REMUNERATION COMMITTEE Monthly Quarterly Quarterly As needed As needed
S KANKONDI H MÜSELER* M SHIPANGA* J DAVIS* L RALPHS* (CEO) (CHAIRMAN) (CHAIRMAN) (CHAIRMAN)
T WEITZ H MÜSELER* (FD) HP MEIJER* J DAVIS* PC STEYN*
Meetings attended by: H MÜSELER* H FERIS M SHIPANGA* S KANKONDI
S KANKONDI
G HOUGH MEETINGS S KANKONDI T WEITZ ATTENDED BY EXCO AND AUDITORS P STEYN*
T MBERIRUA + RELEVANT T WEITZ DIVISIONAL MD INTERNAL AUDIT T WEITZ
M SAMSON H FERIS ACQUISITIONS ABOVE N$5 MILLION APPROVED BY BVN BOD
T VAN ROOYEN (by invitation) G HOUGH
A VAN WYK (by invitation) T MBERIRUA
M SAMSON
* Non-executive T VAN ROOYEN
A VAN WYK (by invitation)
16 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Philosophy throughout the Group. This code is adopted to ensure the building of a sustainable business, Bidvest Namibia is committed to the highest level annually. Employees behave ethically and honestly monitoring regulatory compliance and codes of of ethics, integrity and corporate governance and under the leadership of the Bidvest Namibia best practice, ensuring the communication of embraces the NamCode Report. In alignment with executive committee and board of directors. The adequate and timely information to stakeholders, our South Africa-based parent, we also embrace code sets out our business principles and provides securing new acquisitions, monitoring operational the principles established in South Africa’s King IV guidance to employees on how to apply them. and investment performance, empowering Report. Bidvest Namibia acts with honesty, transparency, executive management, risk management and IT fairness, responsibility and professional integrity in governance and promoting good corporate Our directors regard good corporate governance its dealings with employees, shareholders, governance within Group subsidiaries. as pivotal to delivering sustainable growth in the customers, suppliers and society at large. interest of all stakeholders. The board considers An effectiveness appraisal of the board of directors corporate governance vitally important to the A fraud hotline through an independent third party is conducted every two years through internal success of our business and is unreservedly enables employees to report any perceived evaluation. The development of directors and committed to applying the principles necessary to irregular or unethical behaviour in a confidential induction of new directors are conducted ensure that good governance is practised. manner. Any irregularities are reported to the audit informally. The main issues highlighted by the committee. During the year under review, six previous evaluation include improving public Corporate governance, which is ultimately the issues were reported which were investigated and perception, engaging key stakeholders and driving responsibility of the board and its committees, handled appropriately. growth through projects and opportunities. ensures that we conduct business in a responsible, ethical and transparent manner. Senior Jan Arnold resigned from the board effective Directors dealing in securities policy management, through the accountable and 1 July 2016 taking an early retirement. Jerome and declarations of interest transparent operation of our structures and Davis was appointed to the board effective The policy on directors trading in shares accords systems, helps to instil a culture of compliance. 1 December 2015. with NSX Listings Requirements governing securities dealings by directors. The policy not only Companies within the Bidvest Namibia Group The chairman is not considered an independent covers Bidvest Namibia shares but other listed operate in a decentralised and incentivised director. The board believes the individuals on the investment securities in which Bidvest Namibia environment. In accordance with our corporate board make quality, independent judgements in has a material beneficial interest. Any Bidvest governance policy, they adopt and implement the best interests of the Company on all relevant Namibia share transactions entered into by our Bidvest Namibia’s policies, processes and issues. The roles of chairman and CEO are directors require the prior approval of the CEO and procedures with a view to maintaining sustainable separate and clearly defined. No individual director are notified on SENS. economic, social and environmental performance has unconstrained decision-making powers. in the interest of all stakeholders at every level Directors’ declarations of interests are disclosed at The board is governed by a board charter that sets through the industries in which they operate. quarterly board meetings and updated as and out the roles and responsibilities of the board. The when required. Code of ethics board is responsible and accountable for providing The Company’s core values of accountability, open effective and ethical leadership. Responsibilities communication and excellence are instilled via a include addressing material and strategic issues, code of ethics applicable to all employees directing the strategy and operations of the Group
Attendance at meetings Members AUG NOV FEB MAR MAY
L Ralphs* (chairman) SI Kankondi (CEO) T Weitz (FD) JD Davis* HP Meijer* (appointed 17/2/2017) M Mokgatle-Aukhumes* H Müseler* MK Shipanga* PC Steyn* * Non-executive director Present Apologies
Bidvest Namibia Annual Integrated Report 2017 17 Corporate governance report – continued
Legislative compliance Board committees and divisional board meetings of all operating The board is ultimately responsible for overseeing A wide array of structures, guidelines and auditing, entities are held quarterly. Group compliance with all applicable laws, non- accounting and financial controls support rigorous Each committee operates under a formal charter binding rules, codes, standards and regulations. corporate governance within an ethical framework. that defines its powers and duties. These charters This responsibility is delegated to management, These structures are complemented by our are approved by the board. which is additionally responsible for implementing authority matrix, corporate values and transparent an effective legislative compliance framework and systems of stakeholder communication. Structures Executive committee associated processes. The board is informed of to assist the board in discharging its duties include The committee, under the chairmanship of CEO compliance and any non-compliance through audit, risk, executive, remuneration, nomination Sebulon Kankondi, meets regularly, usually once a proactive quarterly reporting. This reporting system and acquisition committees. All committees, month. The committee is mandated and is monitored by the relevant compliance officers excluding the executive committee, are chaired by responsible for implementing the strategies and internal audit professionals. non-executive directors. Group board, risk, audit approved by the Bidvest Namibia board of directors and for managing the Group’s day-to-day affairs.
Members SEP OCT NOV JAN MAR APRIL JUNE
SI Kankondi (CEO) T Weitz (FD) H Feris G Hough T Mberirua R Raposo (resigned 30/9/2016) –––––– MW Samson W Schuckmann (resigned 21/4/2017) – TJ van Rooyen (attendance by invitation) A van Wyk (attendance by invitation) ––––– Present Apologies
Acquisitions committee Any major acquisitions are referred to this committee for an in-principle decision on whether the acquisition should be investigated and pursued. Meetings are scheduled as required. Depending on their magnitude, acquisitions are sanctioned by the executive committee and submitted to the board of directors for approval.
The acquisitions committee does not have formally scheduled meetings but meets as and when acquisitions are being considered. Members include Jerome Davis, Sebulon Kankondi, Theresa Weitz, Piet Steyn and the relevant divisional MD. Acquisitions over N$5 million are approved by the Bidvest Namibia board of directors.
18 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Risk committee report
The committee is governed by a charter approved Group-wide risk management process which To help address these risks, the Group has by the board of directors (board) under the includes the identification of risks, assessing the developed a performance-based culture. Cost NamCode, the Corporate Governance Code for potential impact and likelihood of the risk management is rigorous and managers are Namibia, which is based on the King III Report on materialising, implementing cost-effective challenged to deliver performance improvements Corporate Governance for South Africa. The mitigating actions and reporting on the results of in tough trading conditions. Furthermore, the committee identifies and analyses risks to all this process to the risk committee. Group takes a conservative attitude to debt and businesses and reports findings and proposed leverage, ensuring our businesses do not carry an On behalf of the board, the risk committee sets mitigation measures to the audit committee. Risks excessive debt burden. policies and ensures these policies and associated are managed at operational level. controls to implement these policies function Material risks for fishing businesses The board holds ultimate risk management effectively. The biggest potential risk facing our Fishing responsibility. Our directors are responsible for division is “the perfect storm” of low market prices, Risk committee meetings are held quarterly. determining the Group’s risk appetite and delegate low catch rates, small catch sizes, low fleet Members are mandated to apply the combined this task to the risk committee. utilisation, low fishing quotas, high prices in the assurance model Group-wide, ensuring a secondary market for quotas, rising costs, This committee monitors threats, pursues coordinated approach to all assurance activities. pressure on the biomass, growing foreign opportunities and ensures Group-wide risks are The chairman reports quarterly to the audit competition, low consumer demand and adverse identified and managed. Maintaining a strong risk committee. currency markets. In many respects, this perfect management culture in all businesses fosters the storm impacted our fishing operations in 2017.
Total mitigation of all potential threats is impossible Members AUG 2016 NOV 2016 FEB 2017 MAY 2017 as fishing per se carries inherent risks. However, M Shipanga (chairman)* impacts can be lessened by rigorous management S Kankondi (CEO) and prompt remedial action. T Weitz (FD) Sustainability demands ongoing profit. Therefore, J Davis* (appointed November 2016) mitigation is supported at Bidvest Namibia by an H Müseler* objective “what’s best for the business” approach. H Feris In the fishing industry, specific action may include the exit of the secondary market for quotas when G Hough right-holders look to realise excessive gains on the T Mberirua sale of their quotas. When low fleet utilisation R Raposo (resigned September 2016) ––– persists, vessels will be sold or laid up. M Samson W Schuckmann (resigned April 2017) – Consumer economy risks Exposure to the risk of consumer belt-tightening T van Rooyen increased in 2016 with the acquisition of the Novel A van Wyk (attendance by invitation) Motor Company, now repositioned as our * Non-executive director Present Apologies Automotive division. The consumer’s propensity to take on debt has significant influence on new Group risk management process In accordance with NamCode recommendations, vehicle sales. As consumer confidence fell in 2017 Every business establishes risk rating criteria. senior managers and executive directors of all so did the appetite for credit. New vehicle sales Criteria are formally reviewed annually and revised businesses convene annual risk review meetings quickly stalled. as appropriate. Senior managers identify and at which they interrogate risk rating criteria, key These risks can best be managed by growing assess material business risks and mitigating risks, mitigating steps and risk management emphasis on used vehicle sales while building up measures on a quarterly basis and report to effectiveness. The Group risk committee receives a the volumes generated by service business and the risk committee, highlighting changes and full report on these deliberations. the sale of spare parts. As vehicle replacement explaining the reasons for the change. Strategic risk periods lengthen, so demand grows for vehicle Typical focus areas include potential monetary A diversified business like ours has a measure of service and repair. Expansion of these aspects of impacts, reputation management, systems and protection from depressed business conditions in the business will therefore receive focused processes, operational practices, legislation and its a specific sector, but is vulnerable should Namibia’s management attention in the Automotive division. interpretation, cybersecurity, the industrial macro-economy face pressure across the board. relations climate and people. The impact on revenues, costs and profits can then be substantial, as we witnessed in the second half Business unit level risk matrices are then of our 2017 year. consolidated into divisional and sub-divisional risk matrices for reporting to quarterly risk committee meetings.
Bidvest Namibia Annual Integrated Report 2017 19 Risk committee report – continued
Group risks identified In June 2017, the Group’s principal risks were: Risk Mitigating actions
Financial performance pressure, specifically pressure on revenue and costs. Intense management focus on performance and efficiency, constant review of business plans and practices while encouraging creative solution finding and new Macro-economic risks as the Group is represented across the national economy. thinking by all management teams. Fundamental fishing viability challenges when faced with low fish prices, low Rapid response to changing marketing conditions, relentless commitment to quotas, high quota purchase costs, adverse currency factors, low fleet utilisation efficiency and optimum asset management to secure profit in unfavourable and a fish resource under pressure. conditions. Renewal of fishing rights as these are granted for a specific period only. As rights Constant review of costs and profitability, with management empowered to make lapse, application for renewal must be made to government. Our rights have to be the best strategic decisions for the business, including the sale and/or laying up renewed in 2018. of vessels. Specific risks relate to low horse-mackerel selling prices as prices might drop to Bidfish is scrupulous in its adherence to all regulations and requirements. The levels below our operating costs. renewal process is well understood by all parties. Bidfish liaises closely with government to keep abreast with renewal requirements. Align fishing activities with times when the optimum size mix is most likely to be available. Fishing resource risk: pressure on fish stock could increase (especially as Angola Namibia’s Ministry of Fisheries and Marine Resources runs a replaced fisheries has begun fishing for horse-mackerel and this resource is shared). management programme based on scientific research. Access to quotas. Cooperation with government via “growth at home”, Harambee, NEEEF and ministry’s quota allocation strategy, thereby retaining strong relationships. Voltex’s potential for continued losses in a tough construction sector. Turnaround plan under way. Manica’s exposure to knock-on effects when project work, port visits and freight Prompt remedial action by management and implementation of cost savings. volumes stagnate. Food and Distribution’s exposure to depressed spending in the retail economy. Focused management efforts to curtail costs while maintaining service levels. Food and Distribution’s need for regular investment in quality solutions Refurbishment and replacement of cooling plant at Food and Distribution (eg ammonia cooling plant replacement at cold stores). premises in Windhoek is imminent. Loss of key skills/need for succession planning for critical positions. Attractive market-related packages, succession planning and transfer of skills. Industrial action leading to disruption in services. Manage relationships with employees and unions. Need for business continuity planning. Offsite backups are maintained for IT. Business units have been given guidance to enable them to document their business continuity measures. Risk of cancellation of an OEM franchise agreement in vehicle retailing or loss Effectively manage relationships with OEMs and brand principals. Maintain of a brand principal in the FMCG sector. geographical scale and quality standards, thereby making the Group the partner of choice for international brands. Disputes with partners or associates in foreign jurisdictions (eg Angolan A fair and ethical approach to deal-making, including international deals, to shareholder dispute). ensure lasting relationships, along with optimum utilisation of legal, commercial and other channels to protect our rights and realise anticipated returns. Growing compliance pressures. Closeness to government and industry bodies to ensure early notification of regulatory change. Legal review of contracts, identification of all related laws and regulations for business units. Unsuccessful acquisitions. Rigorous due diligence reviews of proposed acquisitions.
An effectiveness appraisal of the risk management process is performed annually by the Group internal audit function and providing assurance on risk mitigation actions are key responsibilities of the internal audit function.
Signed on behalf of the committee by:
Martin Kaali Shipanga Chairman
20 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Audit committee report
The committee is governed by a charter approved by the board of directors (board) in terms of the NamCode of auditors of the Bidfish Group and KPMG as Governance Principles for Namibia which is based on King III. The audit committee charter mandates members component auditors of the newly acquired to ensure effective and appropriate internal financial and operational controls on behalf of the board. The associate Namibia Bureau De Change for the committee assists the board in terms of the financial reporting processes, internal controls, risk management, financial year ended 30 June 2017; compliance with legislation and the internal and external audit processes. – Approved the external audit engagement letter, the audit plan and the budgeted audit fees The committee provides effective communication between directors, management and internal and external payable to the external auditors; auditors, reviews accounting policies and financial information issued to the public and recommends the – Determined the nature and extent of all non- appointment of external auditors. audit services provided by the independent The committee is assessed annually through self-assessment. auditors and pre-approved all non-audit services undertaken; The committee members are appointed by the board, consisting of a minimum of three non-executive directors – Obtained assurances from the independent and chaired by an independent non-executive director. Meetings are held quarterly, attended by executive auditors that adequate accounting records committee members, senior management and internal and external auditors. were being maintained; and – Confirmed that no material irregularities had Members AUG 2016 NOV 2016 FEB 2017 MAY 2017 been identified or reported by the independent auditors under the Professional Accountants’ H Müseler (chairman) and Auditors’ Act. P Meijer (in attendance and formally appointed 18 May 2017) Independence of external auditors M Shipanga The committee is satisfied that Deloitte & Touche, PwC and KPMG are independent of the Group after Present Apologies taking the following factors into account: – Representations made by them to the The chairman of the committee reports to the Duties carried out committee; board and to The Bidvest Group Limited audit The committee has performed its duties and – The auditors do not, except as external auditors committee on the activities and the responsibilities during the financial year according or in rendering permitted non-audit services, recommendations made by the committee on a to its charter. receive any remuneration or other benefit from quarterly basis. Financial statements the Group; Purpose The committee: – The auditors’ independence was not impaired The purpose of the committee, which in certain – Confirmed, based on management’s review, by any consultancy, advisory or other work instances operates in conjunction with the risk that the interim and consolidated and separate undertaken; committee, is to: financial statements were prepared on the – The auditors’ independence was not prejudiced – Assist the board in discharging its duties going concern basis; as a result of any previous appointment as relating to the safeguarding of assets, the – Examined the interim and consolidated and auditors; and operation of adequate systems, control and separate financial statements and other – The criteria specified for independence by local reporting processes, and the preparation of financial information made public, prior to their and international regulatory bodies. accurate reporting and financial statements in approval by the board; Internal control and internal audit compliance with the applicable legal – Considered accounting treatments, significant The committee: requirements and accounting standards; or unusual transactions and critical accounting – Considered and recommended an internal audit – Oversee the activities of, and to ensure co- estimates and judgements; charter for approval by the board; ordination between, the activities of internal and – Considered the appropriateness of accounting – Reviewed and approved the annual internal external audit; policies and any changes made thereto; audit plans and evaluate the independence, – Provide a forum for discussing financial, – Reviewed the representation letters relating to effectiveness and performance of the internal enterprise-wide, market, regulatory, safety and the consolidated and separate financial audit function; other risks and control issues; and to monitor statements; – Considered the reports of the internal auditors controls designed to minimise these risks; – Considered any problems identified as well as on the Group’s systems of internal control – Oversee the Company’s annual integrated any legal and tax matters that could materially including financial controls, business risk report for recommendation to the board, affect the financial statements; and management and maintenance of effective including the consolidated and separate – Met separately with management, external internal control systems; financial statements, as well as its interim audit and internal audit and satisfied themselves – Received assurances that proper accounting report and any other public reports or that no material control weakness exists. records were maintained and that the systems announcements containing financial safeguarded the Group’s assets against information; External audit The committee: unauthorised use or disposal; – Perform duties assigned to it under the – Nominated Deloitte & Touche for appointment – Reviewed issues raised by internal audit and Companies Act and other legislation; and as the Group’s lead auditors and RH Mc Donald the adequacy of corrective action taken by – Annually review the committee’s work and as the independent auditor and designated management in response thereto; charter to make recommendations to the board audit partner, with PwC as the component to ensure its effectiveness.
Bidvest Namibia Annual Integrated Report 2017 21 Audit committee report – continued
– Assessed the adequacy of the performance of – Considered the expertise, resources and the internal audit function and found it experience of the finance function and satisfactory; and concluded that these were appropriate. – Concluded that there were no material Consolidated and separate financial breakdowns in internal control. statements Risk management and legal Following the review by the committee of the requirements consolidated and separate annual financial The committee: statements of Bidvest Namibia Limited for the year – Reviewed the Group’s policies on risk ended 30 June 2017, the committee is of the view management, including information technology that, in all material respects, it complies with the risks and found them to be sound; relevant provisions of the Companies Act and IFRS – Reviewed with management legal matters that and fairly presents the financial position at that could have a material impact on the Group; date and the results of its operations and cash – Reviewed the adequacy and effectiveness of flows for the year. In conjunction with the risk the Group’s procedures to ensure compliance committee, the committee has also satisfied itself with legal and regulatory responsibilities; and as to the integrity of the remainder of the annual – Considered reports provided by management, integrated report. internal assurance providers and the Having achieved its objectives for the financial independent auditors regarding compliance year, the committee recommended the with legal and regulatory requirements. consolidated and separate financial statements Combined assurance and integrated annual report for the year ended The committee reviewed the plans and reports of 30 June 2017 for approval to the board. the external and internal auditors and other Signed on behalf of the committee by: assurance providers including management, and concluded that these were adequate to address all significant financial risks facing the business. Financial director and finance function The committee: – Considered the appropriateness of the Hans-Harald Müseler experience and expertise of the group financial Chairman director and concluded that these were appropriate; and
22 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Remuneration committee report
This committee, consisting of two non-executive Delivery-specific short-term incentives are viewed Executive directors are included in the Group’s directors, reviews and approves the remuneration as strong drivers of performance. As significant rotation plan whereby one-third of the aggregate and terms of employment of executive directors portion of senior management’s reward is variable number of directors (excluding the CEO) or, if their and senior employees of Bidvest Namibia. The and is determined by achievement of realistic number is not three or a multiple thereof, then the committee establishes remuneration principles, profit growth targets. Only when warranted by number nearest to but not less than one-third of incentive scheme policies and recommends exceptional circumstances, special bonuses might the aggregate number of directors (excluding the emolument structures and levels to the board be considered as additional awards. CEO) shall retire from office. All directors (excluding chairman for his consideration and approval. the CEO) should retire after a period of two years. Long-term incentives align the objectives of The Bidvest Namibia incentive scheme was management, shareholders and other stakeholders Executive directors are permitted to serve as adopted and implemented in 2012. Qualifying for a sustainable period. non-executive directors on two other boards with employees have to date received 3 492 500 share the express permission of the remuneration Role of benchmarking options, while 81 employees benefit from the committee. Fees are retained by the director, but Benchmarking and position in the market scheme. annual leave should be taken for time spent on The policy aims at positioning the Group as a other boards. The other board memberships Members AUG OCT preferred employer. The Group believes that its should not constitute a conflict of interest. remuneration policy plays an essential, vital role in H Müseler realising business strategy and therefore should Elements of remuneration L Ralphs (appointed 17 August 2017) be competitive in the markets in which the Group The Group operates on a total cost-to-company operates. (CTC) philosophy whereby cash remuneration and Present Apologies benefits (including a defined contribution Executive directors and members of retirement fund and medical aid) form part of The committee meets bi-annually or as required. group executive committee members Meetings are attended by S Kankondi, T Weitz and employees’ fixed total CTC remuneration. Senior Terms of service P Steyn. management and executive directors also The minimum terms and conditions applied to participate in short-term incentives (in the form of Remuneration policy Namibian executive directors and Group executive a performance bonus plan). A long-term incentive A critical success factor of the Group is its ability to committee members are governed by labour plan, namely the Bidvest Namibia Share Incentive attract, retain and motivate the entrepreneurial legislation. The notice period for these directors is Scheme (for senior management and executive talent required to achieve operational and strategic between two and three months. In exceptional directors) is in place. objectives. Both short and long-term incentives are situations of termination of the executive directors’ used to this end. services, the remuneration committee (assisted by independent labour law legal advisers) oversees the settlement of terms.
The different components of remuneration, their objectives, the policy which governs them and their link to the business strategy are summarised below. Table 1: Summary of remuneration components for executive directors and Group executive committee members. OBJECTIVE CHANGES COMPONENT AND PRACTICE LINK TO BUSINESS STRATEGY POLICY FOR 2017
Part 1 – Base package Attract and retain the This component aligns with business Level of skill and experience, scope of No changes Section 1 best talent. strategy as it takes into account internal responsibilities and competitiveness proposed. and external equity. Hereby, ensuring of the total remuneration package are guaranteed Reviewed annually and competitiveness and rewarding taken into account when determining pay (CTC) set on 1 July. individuals fairly based on a similar CTC. job in the market. Benefits Providing employees with Benefits recognise the need for a holistic The Company contributes towards No changes contractually agreed basic approach to guaranteed package and retirement benefits as per the rules to standard benefits such as retirement are part of the overall employee value of its retirement funds. Medical aid employment fund benefits (defined proposition offered by Bidvest Namibia. contributions depend on each benefits. contribution), medical aid, individual’s needs and the package risk benefits, and life and selection. disability insurance on a Risk and insurance benefits are CTC basis. Company contributions, all of which form part of total cost of employment.
Bidvest Namibia Annual Integrated Report 2017 23 Remuneration committee report – continued
OBJECTIVE CHANGES COMPONENT AND PRACTICE LINK TO BUSINESS STRATEGY POLICY FOR 2017
Part 1 – Short-term To motivate and incentivise Encourages growth in trading profit For the 2017 financial year, target and To combine the Section 2 incentive delivery of performance targets, earnings per share and return on stretch performance targets are set for Company short-term over the one-year operating equity for shareholders in a sustainable the following metrics: financial incentives cycle. manner over the short term. – Company financial performance performance – Trading profit targets metrics with Bonus levels and the Rewards executive directors for their – Measured against prior year’s strategic appropriateness of measurable contribution to the Group performance and budgets. metrics, such measures and weightings based on predetermined metrics. as leadership, are reviewed annually to Earning potential to ensure ensure that these continue At target performance the earning well-balanced to support Bidvest potential is 25% of guaranteed package. KPIs. Namibia’s strategy. Stretch earning potential is limited to The annual bonus is paid in 50% of guaranteed package and is cash in August/September subject to exceptional performance. each year for Company Discretion of remuneration financial performance committee during the previous The remuneration committee has financial year. discretion, when warranted by exceptional circumstances and where considerable value has been created for shareholders and stakeholders of Bidvest by specific key employees, to award special bonuses or other ex gratia payments to individuals. In exercising this discretion the remuneration committee must satisfy itself that such payments are fair and reasonable and are disclosed to shareholders as required by remuneration governance principles. Part 1 – Long-term To motivate and incentivise Alignment of executives’ interests with Award levels are set according to No structural Section 3 incentive – delivery of sustained shareholders through options exercisable best practice benchmarks and to changes are long-term Bidvest performance over the to future delivery of equity. ensure support of Group business anticipated Namibia long term. strategy. Awards consist of share for 2017. incentives Vesting of option instruments are subject Share options, subjected to continued to retention in the Group. Incentive employment period for the duration Scheme Motivates long-term, sustainable of the vesting periods of three years performance. (50% of the award) and four years (75% of the award) and five years (100% of the award) respectively.
Further details on long-term Non-executive directors themselves for re-election. As appropriate, the incentive plans Terms of service board, through the nominations committee, Bidvest Namibia Share Incentive Scheme Non-executive directors are appointed by the proposes their re-election to shareholders. There is At the 2012 AGM, shareholders approved a share shareholders at the AGM. Interim board no limit on the number of times a non-executive option scheme. appointments are permitted between AGMs. director may make him or herself available for re- Appointments are made in accordance with Group election. Bidvest long-term incentive plans and policy. Interim appointees retire at the next AGM Fees dilution when they may make themselves available for re- Group policy is to pay competitive fees for the role In terms of the Bidvest long-term incentive plan election. They are included in the Group rotation while recognising the required time commitment. rules an overall limit of approximately 1% of the plan whereby one-third of the aggregate number The fees comprise an attendance fee for scheduled issued shares of the Company has been imposed of directors or, if their number is not three or a meetings, as tabulated in part 2 of this report. when shares are allocated and issued in terms of multiple thereof, then the number nearest to but No contractual arrangements are entered into the share options. The total award that may be not less than one-third of the aggregate number of to compensate non-executive directors for the allocated to any one individual may not exceed directors shall retire from office; but may offer 10% of the total awards made in that year. loss of office.
24 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Non-executive directors do not receive short-term Non-binding advisory vote and complexity of comparable listed companies by incentives nor do they participate in any long-term Shareholders are requested to cast an advisory reference to market capitalisation, turnover, incentive schemes, except where non-executive vote on the remuneration policy as summarised on profitability, number of employees and sector. directors previously held executive office, and they pages 23 and 24: section 1: Guaranteed pay Due to the state of the Namibian economy a remain entitled to unvested benefits arising from (CTC); section 2: Short-term incentives; section 3: decision was taken at exco level that, with their period of employment. The Group does not Long-term incentives; and any other policy matters effect from 1 July 2017, no annual cost of living provide retirement contributions to non-executive not contained in the aforementioned summary. increases will be paid at a Group-wide level directors. Implementation of remuneration which includes executive directors. This will be Management proposes non-executive directors’ policy reviewed with effect 1 January 2018. fees (based on independent advice) to shareholders 1. Guaranteed pay – base pay and 2. Short-term incentives 2017 annually for shareholder vote. benefits Short-term incentives for 2017 were based on Guaranteed pay increases for 2017 and 2018 Directors’ interests in contracts profit growth targets. As the Group did not achieve In determining the CTC increases for executive All interest in contracts are declared at the the targets, no short-term incentives were accrued. directors and Group executive committee meetings and directors recuse themselves on members, the remuneration committee considered decisions where they may have a conflict of the average increases to general staff and also interest. All transactions where directors have used relevant market data. private interest on are declared in the annual financial statements under related-party balances Benchmarks were selected based on a number of and transactions note. factors, including, but not limited to, Company size
Summary of executive directors’ guaranteed pay and short-term incentives 2017 Retirement/ Bonuses Basic medical accrued Total remuneration benefits leave paid emoluments Director N$’000 N$’000 N$’000 N$’000
S Kankondi 2 732 493 – 3 216 T Weitz 1 398 338 – 1 736 2017 total 4 121 831 – 4 952 S Kankondi 2 748 319 – 3 067 T Weitz 1 419 237 – 1 656 J Arnold 2 373 1 196 3 344 6 913 2016 total 6 540 1 752 3 344 11 636
3. Long-term incentives Disclosure of the value of long-term incentives The tables below illustrate on an individual executive director level the details of long-term incentive participation.
Held in terms of the Bidvest Namibia Share Incentive Scheme Details of the directors’ outstanding share options: Share options at Share options granted Share options at 30 June 2016 during the year Share options exercised 30 June 2017
Average Average Market Average price price price price Director Number N$ Number N$ Number N$ Number N$
SI Kankondi 250 000 10,74––––250 000 10,74 T Weitz 125 000 10,74––––125 000 10,74
Bidvest Namibia Annual Integrated Report 2017 25 Remuneration committee report – continued
4. Non-executive remuneration Non-executive directors’ fees paid The remuneration paid to non-executive directors while in office of the Company during the year ended 30 June 2017 can be analysed as follows:
2017 2016 Directors’ Directors’ fees fees Director N$’000 N$’000
P Steyn 606 288 M Mokgatle-Aukhumes 154 145 H Müseler 358 360 MK Shipanga 373 353 JD Davis 259 57
Proposed non-executive directors’ fees for 2017/2018
Basic Per per annum meeting
Chairman 180 391 – Non-executive director 30 064 22 548 Audit committee chairman 112 725 22 548 Audit committee member 15 033 22 548 Remuneration committee chairman 60 131 22 548 Remuneration committee member – 22 548 Acquisitions committee chairman 45 099 15 033 Acquisitions committee member – 15 033 Risk committee chairman 60 131 22 548 Risk committee member – 22 548
Refer to ordinary resolution 3 on page 1 of the notice of annual general meeting for approval of the fees by shareholders in terms of section 66 of the Companies Act. There is a 6% increase proposed for the non-executive directors’ fees for 2017/2018.
Signed on behalf of the remuneration committee
Lindsay Ralphs Remuneration committee chairman
26 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Sustainability report
professional associations, regulators, official departments and government. We strive to communicate with them all. Entity- related matters are addressed by individual businesses. Wider issues are escalated to divisional or Group level. Stakeholder communication includes SENS Sustainability announcements, presentations to shareholders, analysts and the business media, press releases, profiles, articles in industry and national directories, newsletters and community interaction. Environment Stakeholders All divisions commit to sustainable environmental Environment practice, notably fuel and energy efficiency and responsible waste management. Efficiencies here generate cost savings and drive performance improvements. We have a strategic interest in national fish stocks Corporate People and our fishing businesses liaise closely with the social investment Ministry of Fisheries and Marine Resources. The ministry’s total allowable catch (TAC) determination and fishing quotas are material to our business. Bidfish is therefore fully engaged in long-term fish biomass management. Our food and distribution businesses rigorously monitor and control fuel usage and their cold Sustainability ethos scenarios in which the Namibian economy as a storage and air-conditioning systems. Food safety Sustainability is built into the business model at whole comes under pressure. is a priority. Bidvest Namibia. We commit to the development of Representation in sectors across the Namibian Bidfish contributes significantly to food security. sustainable businesses, the creation of sustainable economy means that what’s good for Namibia is Millions of Africans rely every day on our fish as a jobs and the delivery of sustainable shareholder generally good for our Group. Conversely, when the source of affordable protein. value, while protecting the wider environment. broad economy suffers, these adverse conditions It is therefore essential that we maintain ongoing An abiding strategic objective of our board of may also impact Bidvest Namibia. cooperation on fish resource management with the directors (the board) and executive committee That said, underperformance by the wider Ministry of Fisheries. (exco) is the maintenance of an unblemished economy can never be an excuse for Group corporate reputation. underperformance. Which is why we emphasise The TAC for horse-mackerel, pilchard and monk fish is a key sustainability issue for our fishing A key part of our mission is to develop a corporate the need for outperformance by our teams in good businesses. brand Namibians are proud to be part of. times and bad. This is a central feature of our commitment to the development of a sustainable Profit – a sustainability issue In the 2017 calendar year, the horse-mackerel TAC business. Ongoing profit is a prerequisite for sustainable was 340 000mt (2016: 335 000mt). The pilchard business development. To this end, we are at pains Business model resource remained under pressure and the 2017 to entrench a performance-based culture across Our decentralised business model ensures local TAC was set at 14 000mt (2016: 14 000mt). all management structures and into the wider involvement on entity level and our people’s buy- Bidfish helps manage the national fish resource workforce. in. Each individual business commits to sustainable through its longstanding commitment to good business practice. Local enthusiasm on entity level To achieve sustainable profit, costs must be industry practice. The division honours all official is reflected in focused efforts in areas such as rigorously managed. Every asset must contribute limits and practices. energy efficiency, waste management and to our growth and our bottom line. If not, asset recycling. Our crews focus on by-catch reduction. Onboard disposal is indicated and appropriate action is controls exceed minimum legal requirements. taken. Smart business practice and environmental practice go hand in hand. Our teams seek a win- The numbers confirm our rigorous resource We encourage local initiative in the pursuit of both win outcome, whereby business efficiencies management and scrupulous application of gear savings and opportunities. The energy of the accompany community and environmental gains. restrictions, thereby keeping the harvesting of people of Bidvest Namibia is the primary driver of juveniles to a minimum. What’s more, the fishing our performance and long-term growth. Stakeholders techniques used by our midwater trawlers Stakeholders are not only our employees and Strategic growth helps drive diversification and minimise impacts on coral and the seabed. shareholders. They also include customers, vice versa. Focus on a narrow operational base can consumers, communities, suppliers, unions, Compliance with dumping and wastage guidelines add to business risks. However, growth and investors, industry bodies, interest groups, is rigorous. diversification carry their own challenges in
Bidvest Namibia Annual Integrated Report 2017 27 Sustainability report – continued
Other environmental factors Optimum efficiency in the operation of cold storage which gives young entrants to the job market Waste management systems is another priority. practical workplace experience. Another component A culture of environmental awareness and of the new Group initiative is our participation in the responsible, eco-friendly behaviour is evident across 2016 2017 % change internship programme run by the Namibian Group businesses. Our employees take pride in University of Science and Technology and the achieving savings by applying the mantra of “reduce, Kilowatt University of Namibia. recycle, reuse”. The Group’s youth development programme also At sea, the responsible treatment of waste material -13% stands ready to sponsor students who plan to attend is standard working practice as waste is stored 4 960 368 4 336 307 government’s new vocational training centres across onboard for recycling when back in port. Namibia. 2016 2017 % change Food safety Another crucial feature of the programme is a Food quality, freshness and safety remain a source planned automotive academy for young people of competitive advantage and are a priority for our eager to embark on a career in the motor industry. Litres people and managers. Planning for this exciting development entails collaboration and consultation with the Namibian -1% Food is a highly regulated industry and our teams ensure rigorous compliance with safety standards. Training Authority and its Key Priority Skills Funding 16 937 855 16 719 934 initiative. International standards are maintained as our The Bidvest Namibia Youth Development Programme Water consumption foodservice and FMCG businesses work closely with international brands. We ensure products are now provides a comprehensive framework for the Water management was even more of a priority in support of initiatives such as these. 2017 as widespread drought resulted in water properly stored, expiry dates are respected and restrictions across Namibia. product integrity assured. Our Group remains one of the largest employers in Compliance with product specifications laid down by the Namibian private sector and in 2017 employed Ships in our fleet are known for responsible water 3 481 (2016: 2 738) staff members. management while our land-based businesses brand principals is rigorous. made strenuous efforts to reduce consumption. Modern warehouse management and product Employment equity tracking systems ensure prompt stock rotation. Bidvest Namibia complies with all employment 2016 2017 % change equity legislation; specifically, the Affirmative Action Rigorous stock turn and stock control help to prevent Act. We are an equal opportunity employer and take or reduce food waste. Any disposal of foodstuffs is pride in our efforts to train and develop Namibians Kilolitres carried out in line with local authority requirements for leadership roles in the Namibia economy. and certifications. Workplace diversity is a strategic imperative for us. -47% The cold chain – where applicable – is maintained 135 457 71 236 We continue the practice of sharing information on throughout the storage and distribution cycle. our recruitment needs with the Ministry of Labour in line with the Employment Services Act. Fuel All Bidfish vessels hold HACCP certification and Group gasoline usage fell in 2017 to 499 395 litres safety certifications from the Department of Maritime In addition, we maintain our long-running (2016: 533 919 litres). Intermediate fuel oil usage Affairs and the Russian Maritime Register which commitment to non-discriminatory training and was 16,1 million litres (2016: 15,8 million litres) covers the physical suitability of the vessels to development, without regard for race, gender or while heavy fuel oil usage was 0,6 million litres conduct safe fishing operations. disability. (2016: 1,1 million litres). Diesel consumption of As per law all fishermen have six-monthly health Each decentralised business submits annual 4,4 million litres was logged (2016: 5,4 million inspections and certificates declaring they are fit to affirmative action plans and reports to the litres). work at sea. Employment Equity Commissioner and continues to Sluggish levels of economic activity contributed to Our people offer development opportunities to those from lower usage. Further reductions in the size of the designated groups. 2017 horse-mackerel fleet should contribute to further 2016 % change Our Namibianisation programmes have helped to reductions in consumption in 2018. ensure that people from previously disadvantaged Continual efforts to improve operational efficiency Number groups increasingly take responsible positions. will also help to further contain fuel usage. Black Namibians constitute the vast majority of Our vehicle fleets benefit from proper maintenance employees. Men predominate, though women 3 481 programmes, regular replacement of vehicles and 2 738 27% increasingly take on supervisory and managerial the implementation of vehicle tracking and driver roles. monitoring to ensure acceptable fuel consumption Performance is driven by our innovative and Employment of those with disabilities remains a levels and the safe and responsible use of the resourceful people. Constant improvement is priority. assets. the goal. Phased Namibianisation of officer grades on our The Bidfish fishing fleet is also well maintained. In the quest for higher productivity and motivation, fishing vessels continues. businesses across the Group constantly examine 2016 2017 % change new ways of improving recognition and staff Industrial relations communication. There were no strikes during the review period – a Litres reflection of the Group’s positive relationship with Bidvest Namibia supports the aims of the Namibia the trade unions. Local relationships between Training Authority (NTA) and pays the government -18% management and workers were also positive. Our training levy introduced in 2015. decentralised business model keeps managers 5 971 261 4 873 352 We are deeply committed to the development and close to local issues. training of the nation’s young people and in 2017 Health Energy management launched the Bidvest Namibia Youth Development No work-related fatalities were recorded. Group- Rising utility bills make energy costs an obvious Programme, an initiative characterised by close wide, a total of 159 (2016: 67) lost-time incidents target in our drive to improve operational efficiency. collaboration with government agencies. was logged. Wherever possible, our businesses maximise natural light and adopt energy-efficient lighting and air A key element is our support of the two-year Our businesses comply with all laws and standards conditioning. Commercial Advancement Training Scheme (CATS), governing worker health and safety. Appropriate
28 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
environmental controls are mandatory across In addition, our divisions equip our people with The NCT’s primary areas of intervention are regional the Group. specific skill sets designed to foster their personal development, employee programmes and general development and lead to increased job satisfaction. social investment. Scrupulous compliance with labour law is one For example, in 2017 Freight and Logistics launched reason our union relationships have been so positive During 2017 the following amounts were spent in its Customer Service Movement, a vehicle for for so many years. the various categories: customer awareness training covering all elements We endeavour to create and maintain a safe and of professional customer service and cross-selling. Community development N$3,6 million healthy workplace. We supply all necessary safety Total spend on training across the Group amounted Education N$2,7 million and protective equipment and engage in ongoing to N$6,3 million (2016: N$6,9 million). Health N$14 000 safety training. Natural resources N$467 000 We also institute regular awareness programmes to 2016 2017 % change ensure our people know the relevant standards and Multiple interventions procedures and their safety responsibilities. N$ In cooperation with the office of the Deputy Prime Minister, continued support was given in 2017 to the HIV/Aids has been a focus area for many years. -8% Ondera model farm at Oshikoto, a key component of Group companies decide on appropriate a wide-ranging San resettlement programme. interventions in each working environment. 6 870 670 6 328 441 Initial focus is on plot cultivation and basic farming Bidvest Namibia also partners with like-minded Staff retention skills, but the intention is to encourage small-scale organisations and from time to time cooperates with commercial farming. Support for horticulture is Staff retention levels are generally high, reflecting third parties on health, safety and wellness issues. backed by provision of cattle and assistance with our record as a responsible employer who pays stock-rearing. Safety market-related wages, offers quality training and Some of our operations involve inherent safety risks, fosters career development. Official recognition eg fishing on the high seas and logistic services in NCT successes are so meaningful they were recently We focus on the identification of high-potential staff. port and over long distances. highlighted in feedback to the Poverty Eradication Junior managers are alerted to opportunities for Programme driven by President Hage Geingob. Bidfish assigns safety officers to all vessels. Larger further development and given the training and work vessels have full onboard health and safety experience to equip them for a role in middle and, Efforts to combat poverty are high on the agenda of committees. Regular firefighting, first-aid and safety ultimately, senior management. the Governors’ Forum. Several regional governors at courses are run. Officers take advanced courses and this gathering acknowledged the difference being undergo personal survival training. Firefighting Succession planning is undertaken across the made by the NCT. training and basic medical training are mandatory Group, providing further scope for ambitious go- for navigation and engineering officers. getters who are keen to reach executive positions. It was praised in particular for its assistance with water supply to informal settlements, its support for Officer training in radio communication is obligatory. Appropriate remuneration fosters talent retention a Penduke Trust-led aquaponics project and its and an independent remuneration committee financial backing for Aisha Training Academy. Regular fire drills are carried out on all vessels and determines executive remuneration. The Group emergency procedures are tested and reviewed. monitors pay levels in various industries to ensure Erongo governor Cleopas Mutjavikua listed the A regular health and fitness check-up by a medical remuneration at Bidvest Namibia remains attractive. recipients of funds from Namsov’s contribution to practitioner is mandatory for seagoing crew. regional development in his region and noted: Unionised employees receive increases in line with Training and development “Namsov has been a key pillar in the social wage agreements reached with the various trade transformation of our people.” Our purpose-built Walvis Bay Training and unions. Development Centre is a key asset in our effort to Governor Festus Uitele of Omaheke described continually develop our people. Use is also made of Recruitment is aligned with the provisions of the Namsov support for various projects, from assistance a satellite centre in Windhoek. Affirmative Action Act and the Employment Services with vegetable and produce gardens, to poultry Act. All positions are graded on the Patterson Several customised training courses were run in rearing, small business development and help for a grading system. local kindergarten. 2017 to support the strategy of retaining customers through enhanced service standards. We are a performance-minded business. We reward Oshana governor Clemence Kashuupulwa, in his excellence, initiative and hard work. Performance is capacity as Governors’ Forum chairperson, said “the Up to class 5 for navigation and class 4 for incentivised through bonuses, awards and payment fishing giant has become a torch bearer of regional engineering, Namsov makes use of training facilities for reaching and\or exceeding targets. development”. at NAMFI (the Namibian Maritime and Fisheries Institute). Above that level, Bidfish conducts some Corporate social investment SME development officer training at the Cape Peninsular University of 2016 2017 % change The Group remains active in small business Technology (South Africa), in collaboration with development. A Bidvest Namibia Enterprise NAMFI. Development Fund was set up some time ago. CSI N$ Loans from the fund (at attractive rates) provide Namsov also invests annually in the SA-based short-term working capital for small businesses. In training of one deck officer and one engineering many cases, this ensures their continued student. Total spending for this programme until 15 761 670 23 802 594 51% participation in the economy. The fund demonstrates June 2017 was N$3,5 million, of which N$0,4 million our support for entrepreneurship and assists in job was spent in 2017. creation. Our CSI in 2017 amounted to N$23,8 million (2016: Namibianisation of seagoing engineering and N$15,8 million). Company initiatives navigation personnel at the highest level is driven by Contributions by the Group and NCT are Group investment is complemented by individual continued collaboration with the Russian naval complemented by initiatives at individual companies. academy in Kaliningrad. contributions by the people of Bidvest Namibia and the employee-driven Pandula Trust. Manica, for one, devotes 1,5% of after-tax profit to The investment over several years has been CSI initiatives. The Company supports health and The trust channels money to a wide range of considerable and by 2017 amounted to education initiatives, youth development, the N$9,3 million. In 2017, N$0,5 million was spent community efforts, often after input from our people environment, enterprise development and the Walvis as some of the officers continue with part-time who are close to community needs. Bay Sunshine Centre, a shelter for children with studies in Kaliningrad to obtain higher levels of Another source of community support is the Namsov special needs and a haven for abused women and accreditation. Community Trust. The NCT is a 10% Namsov children. It also assists Swakopmund’s Mondesa Government’s Commercial Advancement Training shareholder and vehicle for numerous upliftment Youth Organisation, another channel for bringing Scheme is supported by many Group companies. efforts. help to children with special needs.
Bidvest Namibia Annual Integrated Report 2017 29 Operational review – Bidvest Namibia Fisheries Holdings (Bidfish)
Macro-factors when an export levy was introduced. An additional It was therefore decided to sell the MFV Namibian Results were extremely disappointing. Pressure substantial cost arose when income taxes were Star. Late in the period, we completed the sale of was severe on revenue, profit and cash flow as applied to foreign crew. this vessel from the Namsov fleet to a New Zealand a consequence of “headwinds” from several company. The proceeds bolster our 2017 bottom This series of developments had a severe impact directions. line by an amount of N$9,7 million. on results. The division suffered one of the most The fish size mix remained under pressure, challenging years in recent memory. Profit fell We have made a strategic decision to interrogate competition intensified as fish volumes from substantially and some jobs were lost. all cost drivers and contain all expenses. One consequence is that we will only enter the foreign sources rose in markets traditionally Strategic response served by the division, market prices remained secondary quota market at levels that appear Low private sector quotas have become enduring depressed in most categories and margins reasonable to us. Bidding up quota prices is features of our market. Our traditional response suffered. Horse-mackerel prices (in USD terms) fell unsustainable in the long term. We do not wish to has been to maximise fleet utilisation for as long as to levels last seen in 2009. add fuel to the fire. possible by buying additional quotas (purchasing Fishing for horse-mackerel remains the core from government’s Fishcor and other right- Quotas activity of the division. holders). This drives up operational costs as high In the 2017 calendar year, a TAC of 340 000mt quota demand ensures that secondary market was determined. Bidfish received 33 609mt from Depressed fish prices are directly linked to falling prices are bid higher, year after year. This resulted this allocation and purchased another 13 000mt in personal income levels and the introduction of in vessels operating at or below the profit line. the secondary market (down from 41 637mt of competitive protein products such as blue whiting purchased quota in 2016). and chicken in markets across Africa. Economic Our view was that our modern fishing fleet was a growth has stalled and families are exploring all national asset that should be kept at optimum The Ministry of Fisheries continued its practice forms of cheap protein, buying less and buying capacity to support African food security. We also of announcing allocations at various times of the down. felt it was important to protect fishing industry year. In 2016, three announcements were made. jobs. In 2017, allocations were notified in January In the past, frequent depreciation of the South and June. African rand and the linked Namibian dollar However, the pattern of recent years cannot be provided a “windfall” once the proceeds of our fish ignored. Pressure on profit and margins rises every No new information was received on the progress exports were repatriated into home currency. This year. of the previously announced review of criteria for year a stronger rand ensured no such boost to our right and quota allocations and the development of We must assure long-term business sustainability bottom line. a right and quota allocation scorecard to make in the face of this challenge. This can only be official processes more transparent and Simultaneously, we saw a significant increase in achieved by aligning our asset base with probable predictable. The 2017 quota allocations were still expenses as inflation rose. New taxes and levies activity levels. This may result in vessels being sold issued on a pro rata basis. added to the cost of doing business while export or laid up for a period. earnings were further squeezed late in the period
Gerrie Hough Managing director Age: 45 Qualification: CA(SA), CA(Nam), CIS, MBL (Unisa) Appointed: 1 December 2016
Gerrie, a qualified chartered accountant, attained his master’s at the University of South Africa’s Business School in 2004. Before being appointed as MD of Namsov, Gerrie attended to the function of finance director of this division. He gained extensive experience in the fishing industry, being the general manager of finance and administration for the NovaNam Limited group of companies, a primary operator in the Namibian hake fishing industry, before moving to Bidvest.
30 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
With little clarity and an uncertain planning horizon, it became difficult to effectively allocate our own Trading profit Revenue resources and manage fleet activity. A stop-start – decline to – decline to pattern became the norm – initial fishing for one’s own quota, idle time, followed by fishing for N$39,856 million N$1 081,932 million purchased quotas and more idle time.
Fleet downtime added to cost pressures, though Trading profit (N$’million) Revenue (N$’million) the contracting of a fishing research quota helped to lift fleet utilisation levels. Carapau 250,000 1 100,000 1 081,932 1 089,247
Carapau Fishing, in which we have equal equity 197,443 200,000 980,000 with three other indigenous Namibian horse- mackerel right-holders, also specialises in fishing 150,000 860,000 for horse-mackerel and was impacted by similar challenges to those faced by Namsov. It 100,000 740,000 concentrated on expense containment in a difficult 50,000 39,856 620,000 year. Profit fell. Pilchards 0 500,000 2017 2017 Pilchard operations were hard hit as the resource 2016 2016 remained under severe pressure, resulting in poor catches and consequent pressure on margins. The 2016 pilchard TAC was announced at 14 000mt, The 2017 pilchard TAC was announced at Sustainability of which 4 800mt was contracted to the Group. 14 000mt of which 4 000mt is kept in reserve. 2016 2017 % change The research allocation of 4 000mt was purchased 4 800mt was contracted to the Group. to augment these volumes. As a result of the To keep costs in check, cooperation with another Kilolitres pressure on the resource, the 2016 fishing season private-sector player was extended. Our focus was -69% began much later and the vessels spent more time offshore operations. Our collaborator focused 99 055 30 799 fishing for smaller catches. Only 1 725mt of the onshore. This meant our canning factory remained 4 880mt quota was landed. closed for pilchard operations, though some kW
-41% 2 722 760 1 617 788
Number
-25% 838 632
CSI N$
13 756 883 21 318 597 55%
Litres
-25% 4 088 533 3 070 881
N$
-11% 3 449 290 3 053 070
Litres
-1% 16 937 855 16 719 934
Bidvest Namibia Annual Integrated Report 2017 31 Operational review – Bidvest Namibia Fisheries Holdings (Bidfish) – continued
horse-mackerel canning was undertaken to fulfil a Zimbabwe-focused poverty eradication contract.
Despite stringent cost control, the pilchard business recorded significant losses. Sardinella Pesca Fresca, the Angolan business specialising in sardinella fishing and processing, maintained pleasing progress and returned a profit. Maintenance and investment were stepped up. To ensure optimal efficiency, the jetty was enlarged while after year-end, good progress was made on the installation of a larger boiler, the upgrade of the fishmeal discharge system and the upgrade of the fishmeal plant. Skilled technical staff are being employed in an effort to minimise unnecessary delays caused by breakdowns in the factory, fishmeal plant and on board the vessels.
One of the vessels is ageing, but is undergoing market. By year-end, operations in South Africa retrenchment of 18 permanent staff while major maintenance and repair to ensure a two- and Mauritius were close to break-even point. 650 temporary factory workers lost seasonal job vessel operation. Maintenance facilities in Angola opportunities. are limited. Full repair often means a vessel has to Equity investment be taken out of service and sent to Namibia, Strong progress was reported by Industria Three permanent sea-going staff lost their lengthening downtime. Alimentar Carnes De Moçambique, the sales and positions as Tetelestai Mariculture scaled back its distribution company in which Bidfish took a 40% operations. Further gains are targeted in the coming year, equity stake in the previous period. The business, though the business faces challenges in the form Training based in Maputo, Mozambique, sells a wide range of a devalued kwanza and high maintenance costs. Despite pressure on costs, the division continued of food products, including meat, chicken and fish. Even so, the Pesca Fresca turnaround strategy to invest in the development of its people. The remains on track. The Company offers Bidfish companies an 2017 training cost was N$2,446 million (2016: important distribution channel into the Mozambican N$3,793 million). Oysters market while its diversified range has strong Tetelestai Mariculture, the oyster-farming Skills training, career development and safety are appeal for African consumers looking for affordable business, made pleasing progress with efforts to focus areas and we maintain close relationships sources of protein. cut costs and stem the rate of loss. with the Namibian Maritime and Fisheries Institute, The firm continues to secure organic growth. the Cape Peninsular University of Technology and Offshore operations have been shut down and Operations are doing well. Cold store facilities the Russian naval academy. lagoon operations have been minimised. Offshore were commissioned in Beira. oyster cultivation was bedevilled by worrying levels We contribute significantly to the country’s of cadmium in the water and animals while sulphur Job pressures Namibianisation strategy by supporting the challenges contributed to high mortality rates at The effort to rightsize divisional operations in line development of Namibian naval officers. the lagoon site. with current levels of activity is delivering The education and accreditation of properly trained significant savings. Regrettably, the smaller base Cultivation is now concentrated on the salt-pan navigation and engineering officers is a long-term has meant job losses. site near Walvis Bay. Mortality rates were cut and commitment demanding substantial investment. cost efficiencies achieved. Bidfish is a responsible employer and endeavoured To date, we have funded the development of wherever possible to reduce the impact through 10 officers. All took up responsible positions on Strategically, the decision was made to focus on non-replacement of staff. vessels in our fleet. Seven continue with part-time profitable business with existing customers rather studies at the naval academy in Kaliningrad to than invest in a larger operational base. The Reduction in the size of the Namsov fleet clearly further their studies and obtain higher levels of business has been rightsized in line with this had implications for jobs, though the impact on accreditation. strategy. A small loss was recorded. permanent staff was kept to a minimum. However, temporary staff were not re-employed once their We are proud of this investment and the strides Glenryck contracts expired. Fifty temporary posts were made by the young Namibians who take full Efforts to revitalise the Glenryck brand made affected. Permanent employees were reallocated advantage of this programme. encouraging progress. Market share gains in the to other vessels. Only four permanent jobs were first year of trading exceeded expectations, Community commitment lost. confirming the underlying strength of this pilchard Bidfish and Namsov Community Trust continue to brand. Bidfish acquired the brand’s Africa rights Lower activity levels at United Fishing Enterprises, contribute to the development of underresourced more than a year ago. the pilchard business, and the prolonged closure communities across Namibia. We not only commit of its Walvis Bay canning factory resulted in the to poverty alleviation, we provide funding to help A new company, Glenryck South Africa, was drive numerous grassroots initiatives. launched to support growth in this important
32 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
The division and its developmental partners are active in projects as diverse as training and education for disadvantaged children, water reticulation for informal settlements, food security and the cultivation of backyard gardens, the seeding of start-up businesses in marginalised communities and assistance for the San. Future Bidfish is fast positioning itself for a new future.
Fishing industry challenges are expected to persist for some time to come. Resources and quotas will almost certainly remain under pressure. Our task is to create a new base for sustained growth by controlling costs while ensuring our assets are properly aligned with current business volumes and the volumes we can reasonably expect in the coming years.
Though profits were subdued and some costs remained stubbornly high, our people put in a resilient performance in 2017 as they optimised the few opportunities that came their way.
The level of loss at loss-making operations has been much reduced while profitable operations are leaner and better able to respond to market shifts.
In the year to come, we plan to cut costs even further while preparing the way for a return to improved levels of profitability.
Bidvest Namibia Annual Integrated Report 2017 33 Operational review – Bidvest Namibia Commercial and Industrial Services and Products
Macro-factors Debtors management became key as cash flow The Oshikango branch was closed. However, new The economic climate in Namibia negatively constraints kept many customers under pressure. stores opened in Outapi and Tsumeb in the north affected all entities in this division, except for The process became a balancing act as prudent of the country. The flagship Windhoek store was Minolco. controls had to be maintained while extending rebranded and relocated to larger premises. The repayment periods for customers with solid Keetmanshoop branch in south-central Namibia Drought had a severe impact on the construction repayment records who had been hit by was also revamped. industry. Work halted at many sites. This had government’s spending clampdown. knock-on effects at several businesses as Plumblink construction sector contractors are an important Security was stepped up after one of the entities The bathroom, kitchenware and plumbing supplies customer category. was targeted by cyber criminals. The Company’s business made its first full-year contribution to the automated phone systems were hacked, enabling division. Pleasing progress was made as the start- Government austerity measures affected volumes criminals to route international calls through the up moved close to break-even point on a monthly while late payments by official departments switchboard. This resulted in a N$1,4 million basis. created cash flow pressures. Clearly, the pressure negative impact on this year’s trading profit. was felt when directly serving public sector Strong momentum was achieved by the initial customers. Additional indirect pressures occurred Strategic development Windhoek store as sales staff demonstrated the in the business-to-business environment as many Late in the period, we acquired Prestige Namibia benefit of specialisation and much improved stock of our private sector customers work on cleaning business. This entity was previously run availability. They rapidly created a firm customer government projects. by the Services division of our parent company, base among local plumbers who were previously Bidvest South Africa. By taking over Prestige served by general suppliers of building materials. Strategic response Namibia we have kept 508 workers in employment, Our cost base came under intense scrutiny as A second Plumblink branch was opened in taking our divisional staff complement to 992. management teams looked for savings and Swakopmund and had a promising start. Growth efficiencies. The back-to-basics strategy The realignment creates new opportunities in an potential in northern Namibia is under scrutiny. championed in the previous period remained important area of the outsourced services industry. Kolok Initial soundings among Prestige customers in place. The business did well to achieve a measure of confirm the operation’s profit potential. Investment continued in growth, systems and sales growth in a difficult market. Margin pressure infrastructure, but a strong business case had to Waltons was intense. Kolok faced challenges in the first be made before capital was committed. Staffing The team put in another pleasing performance. three quarters in the form of heavy discounting as levels were reviewed, though outright The new MD and his managers did well and products came on to the market at below cost. finished the year strongly. To maintain momentum, retrenchments were minimised. Cost efficiencies were achieved and staff numbers it is necessary to constantly refresh the product Strong emphasis was placed on sales and fell. Staff training was stepped up and renewed mix – a major challenge as the business stocks customer service as growth became a function of focus put on customer service to protect 10 000 different SKUs. The team did well to market share gains. Many of our businesses made market share. achieve sales success in the face of sluggish pleasing progress in highly competitive markets. demand.
Theo Mberirua Acting managing director of Bidvest Namibia Commercial and Industrial Services and Products Age: 54 Qualification: BSc (Mercy College, New York), MBA (Accounting) (Baruch College of the City University of New York) Theo has held senior executive positions at several major corporates, including Namibia Breweries, Lonrho, Telecom and Standard Bank and has lectured on business subjects in both the USA and Namibia. He was a member of the Presidential Economic Advisory Council. In addition, Theo is part of the executive team at the Namibia Chamber of Commerce and Industry and is a former chairperson of the SADC Banking Association. He joined Bidcom as commercial and business development director in April 2012.
34 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
A stable Namibian dollar meant there were no windfall gains from currency movements. Trading profit Revenue Volumes improved in the final quarter as the – decline to – decline to market showed signs of moving back to price N$16,764 million N$473,665 million stability. New lines were being tested as the year came to a close. Minolco Trading profit (N$’million) Revenue (N$’million) The team had another superb year as Minolco emerged as the division’s star performer. 25,000 495,000 Longstanding emphasis on customer service and 22,894 490,134 490,000 technical training paid dividends as capital 20,000 spending on new office automation solutions was 16,764 485,000 cut by all customers. Leases on existing equipment 15,000 were extended and customer relationships 480,000 10,000 deepened as highly trained teams helped clients 475,000 473,665 get the most out of their existing capital investment. 5,000 470,000 Growth was achieved nationwide. Once again, high levels of customer retention underpinned growth. 0 465,000 2017 2017 Training was stepped up. Personal development 2016 2016 was encouraged and assistance given to staff looking to obtain their driver’s licence. Two interns are again putting strong emphasis on personal In this economic climate, the manufacturing arm were given the opportunity to gain practical work service. Our knowledgeable staff performed well in did well to avoid factory lay-offs. experience. this environment, growing volumes and profit. The catalogue was improved and new products Rennies Travel Further investment was made in product and introduced. Training continued as the business Our travel business put in another strong customer service training. looked to establish a firm base ahead of any uptick performance by maximising opportunities flowing Cecil Nurse in business activity. from higher tourist inflows. Previously, visitors from Construction industry challenges impacted the the UK and Europe accounted for most tourist business. In effect, water shortages shut down the volumes. Today, Namibia is becoming increasingly Sustainability sector. As no new buildings were being completed, popular with visitors from east and north America the office furniture project pipeline dried up, 2016 2017 % change as new national carriers enter our market. putting an instant brake on Cecil Nurse volumes. It is also apparent that online bookings are no Profit was significantly reduced. Kilolitres longer making big inroads into volumes. Travellers
7 268 8 286 14%
Litres
327 780 344 173 5%
kW
-8% 811 045 748 949
Number
420 974 132%
N$
488 683 735 308 50%
CSI N$
278 590 464 549 67%
Bidvest Namibia Annual Integrated Report 2017 35 Operational review – Bidvest Namibia Commercial and Industrial Services and Products – continued
Steiner Fundamental changes have been made to the Staff development is complemented by the The business made continued progress. Two years business. The turnaround strategy will continue in ongoing effort to improve workplace safety. No of market education are beginning to pay off. the coming period. significant safety incidents were reported. Steiner now has a solid customer base and Prestige Community continued to grow volumes in its core business Takeover was only effective from 1 June, but Support for community initiatives is built into (provision of corporate hygiene services) while management spent several months prior to that standard practice at business units within the expanding its dust and pest control offering to familiarising themselves with the business. Though division. Collaboration with the Mister Sister mobile branches outside the Windhoek hub. Prestige Namibia has been loss-making for some health service continued at Cecil Nurse and Kolok. In the fourth quarter, a new branch opened in time, the business has nationwide reach and an This ensures basic health cover for lower paid Ongwediva in the north of Namibia. established book of business. At the time of workers. Waltons launched a successful effort to takeover this entity was incurring marginal losses extend medical aid to employees, removing the Training was stepped up and job growth achieved. on a monthly basis. need for NGO interventions. Management was further strengthened. The team plans to move into profit in the coming year. The strategy is to create a sense of partnership Future with customers. Many customers appreciate it is in Trading conditions show little sign of improvement. Voltex their interest that contracts are put on a sustainable However, the division is looking for further gains. A brake was applied to the previously steep rate of basis, ensuring quality office cleaning solutions at Most of the “pain” appears to be behind us at losses. A completely new management team is fair rates. Renegotiation of loss-making contracts Voltex. Kolok and Cecil Nurse are positioned for a now in place. is a priority. better 2018. Steiner is also well placed and Inventory levels were reviewed and stringent Plumblink is making promising progress. Waltons New investment in equipment and uniforms will be controls introduced. Buying processes were and Rennies will look to keep up recent momentum necessary as it is essential to build staff morale as revamped. A new warehouse and stock control while star performer Minolco has good prospects part of the effort to improve service quality and system has been set up with the ability to anticipate of continued growth. Prestige requires focused grow the business. In the coming year, demand patterns and improve stock availability. attention, but represents a strategic opportunity. management plans to get this entity on its way We plan to put the business on a firm footing Training investment focused on customer service. back to profitability. “Face time” with customers rose as the sales team in 2018. Training became increasingly proactive. Expenses are rigorously managed, but training Unfortunately, the turnaround strategy rolled out was not affected and budgets were maintained just as the national economy slowed and across the division. Training support for new construction came to a halt. Debtors management managers and supervisors was a priority. became a growing challenge.
36 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
NAMIBIA
KatimaKatima MuliloMulilo Oshikango Rundu Oshakati Ongwediva Ondangwa
Tsumeb Grootfontein Otjiwarongo
Windhoek
Swakopmund Gobabis Walvis Bay
Lüderitz Keetmanshoop
Namibia Bidvest Namibia Commercial and Industrial Services and Products
YROWH[
Namibia
Bidvest Namibia Annual Integrated Report 2017 37 Operational review – Bidvest Namibia Automotive
Macro-factors Affordability challenges mounted when motor Traditionally, when new vehicle sales stall, the pre- During the financial year, the automotive industry manufacturers across all marques and vehicle owned market ticks higher. This creates another faced extreme pressure. Comparing year-to-date types announced significant price increases on all opportunity to balance the business and efforts new vehicle sales across the Namibian motor new model introductions, more than negating the were made to step up used vehicle sales. However, industry between the end of June 2017 and the effect of a more stable Namibian dollar. longstanding challenges are evident in this end of June 2016, accumulated sales fell 24,41%. marketplace. Our new vehicle sales for the 12 months – the core New vehicle volumes in the first six calendar of our business – dropped to the lowest level in For many years, “grey” vehicle imports have been months are also at the lowest level for this period five years. a feature of Namibia’s used car market. Importers in the last five years. bring in large volumes, affecting the ability of a Strategic response Results were disappointing across all the division’s franchise to market its used vehicle stock. The Our dealerships in Windhoek and Walvis Bay sell franchises as the business experienced a double- situation is further complicated by some South and support models from the Ford, Mazda, digit drop in both revenue and profit. African vehicle fleets that sell ageing stock directly LandRover and Jaguar ranges. into Namibia when they defleet. The impact of much reduced spending by However, in the downturn experienced in government departments, businesses and Despite these challenges, efforts are ongoing to 2016/2017, buyers did not simply amend their consumers was compounded by legislative create a more compelling used vehicle sales purchase behaviour and “shop” the ranges by changes that were material for all companies in proposition. We also strengthened our moving down the affordability curve. In many the credit retail sector. management team by the addition of a used car cases, they stopped buying altogether. specialist manager. The number of used car Amendments to the National Credit Act (NCA), This does not represent a complete market exit, salesmen was also increased. effective from July 2016, made a minimum 10% however. In effect, purchasing is delayed and deposit on new car purchases mandatory, while We implemented a number of initiatives in an effort vehicle replacement cycles are extended. This repayment periods were capped at a maximum of to maximise sales. We increased our attendance at creates potential for increased service and repair 54 months. marketing events and agricultural and tourism work at our service centres. Owners can also be expos across Namibia and put on displays in The amendments also banned the practice of expected to “renew and refurb” their ride by adding shopping malls. We also secured additional including residual values in purchase price and new accessories and refreshing vehicle aesthetics. showroom space in the southern part of Windhoek. credit offerings. This results in customisation opportunities in the “aftermarket”. We strengthened the focus on digital and social Interest rates also increased. The net effect was to media platforms. McCarthy South Africa has a drive up monthly repayment levels, deterring new Reliance on new vehicle sales can therefore be strong background in this area and is assisting us vehicle buying. reduced by optimising sales of labour, parts and as we seek a higher profile on platforms such as accessories. This received focused management Facebook and Twitter. McCarthy also assisted attention, supported by increased investment in during the installation and upgrade of the Namibian facilities and training. Call-a-Car website.
Allan Duncan Acting Managing Director of Bidvest Namibia Automotive Franchise CEO – Jaguar, Land Rover, Ford – McCarthy Motor Holdings
Age: 47 Qualification: NHDP Mechanical Engineering Bidvest Executive Development Programme – Gordon Institute of Business Science Appointed: 1 October 2016 Alan has 27 years of experience in the automotive industry, having spent some time in each area applicable to the industry, from warranties to sales, from export sales to key account management. His experience was obtained at various original equipment manufacturers, dealerships and brands until he found his home at McCarthy Motor Holdings 10 years’ ago. He has been the Franchise CEO for Jaguar, Land Rover, Ford & Mazda for the last nine years.
38 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
At showroom level, marketing teams sought to optimise all opportunities flowing from new vehicle introductions.
At Jaguar LandRover, the first Jaguar SUV made its debut, the new Jaguar XF came into our market and the new F-type special vehicle was introduced. The Ford Focus RS was launched along with the Ford Everest SUV. However, much of the activity centred on upgrades and facelifts rather than all new models.
Significant cost increases were a feature of the first half. They related to facility upgrades, rising wages, increased staffing costs and training. As the second half came to a close, new efficiencies came through as management sought to better align the cost base with a much changed market.
In the face of depressed trading conditions, teams at all centres put in a robust performance. The In March, a new offsite fitment centre was opened Safety training is another focus area. Jaguar LandRover dealership received recognition to pursue opportunities in the automotive A health and safety officer has been appointed and in the form of a “Most Improved Dealer of the Year” accessories market. By the end of the fourth makes daily safety checks at various operations. award from its brand principals. Ford teams were quarter, it had moved into profit. Our Walvis Bay An independent service provider was also recognised as the most successful in Namibia in premises were given a new corporate identity and appointed during the year to run regular safety the parts sales category and came third in South a facilities upgrade. audits. This will enable us to identify areas for Africa in their dealership category. Jobs improvement. Targeted awareness initiatives and Sales activity Core staff remained stable. However, 20 new jobs training courses can then be run. Our sales of new vehicles fell by 29,13% to were created as we broadened our representation, Community commitment 1 141 units (2016: 1 610 units). Used vehicle increased the focus on workshop quality and used All efforts in support of the wider community were sales held firm at the same level as last year, vehicle retailing and employed staff at our satellite maintained. We continue to provide a Ford Ranger with a dip of 1,49% to 265 units (2016: 269 units), facility and fitment centre. Some management 4x4 to the national effort to combat rhino poaching. despite the decline in new vehicle volumes. teams were strengthened. A new dealer principal Another sponsored vehicle is made available to the Stronger consumer interest in pre-owned stock was appointed in Walvis Bay and a new service Lady Pohamba Hospital. This enables rapid was especially evident toward the end of manager came on board. response to accidents and other emergencies. the period. Training Various initiatives are undertaken by our New investment Training and retraining are continuous. dealerships, including clothing, food and blanket A major revamp was completed at our Windhoek Our brand principals conduct regular customer collection and distribution in support of Ford dealership. The upgrade included the new satisfaction surveys. For us, consistent government’s national drive to combat poverty. and used vehicle showrooms, workshops and improvement across these scorecards is a customer service facilities. We also made changes Future business imperative. This entails strategic to service centre workflows, part of our effort to We cannot look for an uptick in the national commitment to customer service and technical drive ongoing efficiency and productivity economy to drive improvements in our business as training. improvements. no growth or low growth is expected for some Dealership personnel are sent on regular courses time. Therefore, our focus will be on efficiency Our facilities are now comparable to the mega run at the South African training facilities provided gains while looking to optimise every marketplace dealerships in South Africa, ensuring a comparable by our principals. Staff also participate in online opportunity. Priorities include improved inventory brand experience when customers enter Ford courses. Equipment and facilities have been control and steps to contain funding costs. franchises. provided to enable classroom and workstation Efforts will be strengthened to achieve growth in Furthermore, we opened a satellite facility in the training on this pattern. workshop volumes and productivity. Used vehicle southern part of Windhoek where we display the Plans for significantly expanded in-house, sales and returns and parts sales are areas of same mix of vehicles as our main showroom. We Namibia-based training are being drawn up. focused management attention. This will lessen also have space for the display of commercial units McCarthy South Africa also provides opportunities the reliance on new vehicle sales and ensure our as we have secured the Ford commercial franchise for some workshop staff to attend the McCarthy cost absorption model is optimised for current for Windhoek. training centre in South Africa. These initiatives are economic conditions. supported by the Namibia Training Authority.
Bidvest Namibia Annual Integrated Report 2017 39 Operational review – Bidvest Namibia Automotive – continued
Pressure is expected to remain on new vehicle sales. A more stringent NCA creates challenges, Trading profit Revenue but our sales teams have now adapted to the new – decline to – decline to reality and will vigorously pursue all opportunities for growth. Replacement cycles cannot be N$23,028 million N$701,012 million extended indefinitely. Our recently upgraded facilities give us a strong platform from which to Trading profit (N$’million) Revenue (N$’million) serve customers as they re-enter the market.
The full-year contribution of our fitment centre and
anticipated volumes from our new satellite 45,000 42,620 760,000 755,152 operation in Windhoek will prove beneficial. The 40,000 750,000 beefed-up presence in the commercial vehicle 35,000 740,000 sector also improves the balance of our business. 30,000 730,000 25,000 23,028 720,000 Our focus in 2018 will be on stabilising the 20,000 710,000 revenue decline while seeking profit growth 701,012 15,000 700,000 through higher productivity and greater operational 10,000 690,000 efficiency. 5,000 680,000 0 670,000 2017 2017 2016 2016
Sustainability
2016 2017 % change
Kilolitres
2 555 9 239 262%
Litres
-42% 340 754 199 008
kW
422 393 590 800 40%
Number
234 247 6%
N$
540 868 591 600 9%
CSI N$
683 793 1 015 309 48%
40 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Operational review – Bidvest Namibia Freight and Logistics
Macro-factors and gas industry had to be matched by similar IT investment was maintained as our increasingly As a leading provider of freight, logistics and right sizing at Freight and Logistics. sophisticated systems contribute to service quality marine services, the division is vulnerable to any improvements. The goal was the creation of a leaner business downturn in national and regional economic able to react quickly to every opportunity, whether Opportunistic mindset activity. Lower retail sales, muted trading activity, in oil and gas, distribution services or transit cargo. Another key aspect of divisional strategy is our falling demand for African commodities and stalled enhanced ability to react quickly to market domestic investment in infrastructure and mining Rebalancing work began in 2016 and gathered opportunities. Again, there are solid indications we all impact transit volumes and our business. pace in 2017 as trading conditions deteriorated are achieving our objectives. rapidly. By year-end, the division’s previous oil In 2017, all of these adverse factors were felt by industry bias had been corrected while savings Work on renewable energy resources (wind farms the national economy, with substantial knock-on and efficiencies were being delivered across all and solar energy installations) is ongoing in the effects at Freight and Logistics. parts of the business. Leaner structures have now Lüderitz area. The division has no direct It became apparent the moribund state of the been put in place. responsibility for any of these projects, but has offshore gas and oil industry – in both Namibia and been successful in delivering support services to Clear focus on four activities (marine services, Angola – represents the new reality. Buoyant oil the project teams. freight and logistics, cargo management, and prices can no longer be relied on to provide a trading) had been established in 2016. This Marine services welcome boost for Namibia’s national economy framework was retained and proved its worth as The business was severely impacted by lack of and the division’s bottom line. growth in market share was witnessed in several offshore activity by the oil industry and the fall-off As a result, revenue was substantially down, sectors. in port visits by bulk carriers as demand for African commodities remained low. though the fall in profit was less severe than the Service quality top-line decline as a result of stringent cost Customer service and client retention became key Demand fell in all categories – ships agency and management. as trading conditions worsened and competition husbandry services, chandeling, crew transfers, Strategic response intensified. launch service and ships’ repair. Management The business benefited from early management worked to cut costs and create efficiencies. There were no major project tenders during the actions to cushion the impact of shifts in the review period, though the term of the previously Freight and logistics national economy. won tender for short-haul logistics services and Teams worked to align assets and staffing with a In the previous period, it became clear the division warehouse storage for the Swakop uranium mine reduced customer base. As a result of cost had to be rebalanced. During the oil boom, our was extended. We retained the business, containment and productivity improvements, the business had geared up to meet the growing confirmation our client service focus is achieving trucking business remained profitable despite a demands of the oil companies and associated its objectives. continued drop in revenue, largely attributable to a offshore exploration teams. Scaling down in the oil significant fall in corridor business (traffic between Namibia’s major urban centres and ports and other southern African countries).
Michael Wayne Samson Managing director: Freight and Logistics Age: 57 Qualification: BCom, Dip Acc, Management Development and CA Appointed: Mike joined Manica Group Namibia on 26 October 2015 Mike was financial director of Manica Zimbabwe and left in 1997. In 2006, Mike started a bottled water company in South Africa which was subsequently sold. He was appointed as the managing director of Nampak Cartons, Nigeria, from 2013 to 2015.
Bidvest Namibia Annual Integrated Report 2017 41 Operational review – Bidvest Namibia Freight and Logistics – continued
Cargo management The dramatic fall-off in ships visits to Namibian Trading profit Revenue ports had severe effects on our terminals business – decline to – decline to and stevedoring services. Management and unions N$11,658 million N$264,493 million worked on new structures to reduce fixed staffing costs. This entailed a repositioning of permanent stevedoring jobs and greater recourse to flexible Trading profit (N$’million) Revenue (N$’million) working arrangements.
The expected increase in grain volumes to support
drought relief work in Zimbabwe failed to 11,900 320,000 11,873 materialise. 309,862 11,850 310,000 300,000 However, by year-end, pleasing efficiency gains 11,800 290,000 and cost savings were being delivered. 11,750 280,000 Trading 11,700 270,000 11,658 264,493 Bunkering volumes were largely static, though the 11,650 260,000 business unit won the contract to meet the fuel 11,600 250,000 requirements of a major fishing fleet. 11,550 240,000 Activities relating to the supply of industrial, 2017 2017 2016 2016 automotive and marine lubricants achieved pleasing growth. A Botswana branch was opened and the product mix was widened when a new oil Training Sustainability brand was introduced to meet demand for an We maintained our training effort as our reshaped 2016 2017 % change affordable option to complement the existing range business relies on knowledgeable people to deliver of quality offerings. a competitive advantage. Kilolitres Job pressures We embarked on a strong customer awareness -53% Permanent staff numbers fell as there was no training initiative (our Customer Service Movement) automatic replacement of employees who left the and employees across the division received 6 988 3 289 Company. Where possible, jobs were changed to a training on all key elements of professional Litres more flexible variable cost staffing model. customer service and optimised cross-selling across the Manica range of services. Industrial relations remained positive. There were 6% no strikes and trade unions took a realistic view of Some of our activities carry an inherent level of risk 310 244 328 551 changing economic conditions as port activity and safety training remained a focus area. kW remained low for protracted periods.
962 908 1 235 922 28%
Number
637 903 42%
N$
-30% 1 715 391 1 193 608
CSI N$
-75% 296 882 75 354
42 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Maintaining a safe workplace is a business imperative at the division. There were no major accidents and we achieved a 27% fall in safety incidents. We believe the reduction is largely the result of safety awareness training and the in- depth focus on specific themes each month. Community commitment The division maintained its relationship with the Namibian University of Science and Technology (NUST) and the University of Namibia (UNAM). We provide internships in logistics, finance and human resources for students requiring practical work experience to complement their tertiary education.
The division continues to devote 1,5% of after-tax profits to health, education, the environment, youth development, educational bursaries and sport. Employee contributions to marginalised communities, individually or through the Pandula Trust, remain a feature of our business.
We remain members of the Walvis Bay Corridor Group (WBCG) Health Helpdesk and continue to drive HIV/Aids awareness and support training for peer educators. We also provide premises for the WBCG clinic.
Specific community interventions include the provision of baby formula for babies at the Walvis Bay state hospital and support for the Walvis Bay Sunshine Centre, a haven for children with special needs and their mothers. We also support the Mondesa Youth Organisation in Swakopmund, another initiative to assist special needs children. Future Depressed economic conditions can be expected to continue for some time. We therefore believe that container traffic and bulk cargoes will remain at low levels. However, we are confident our rebalanced business now has the nimble structure necessary to maximise trading opportunities in a cost-efficient manner.
Efficiency gains will continue to be sought.
Customer service levels show continued improvement and customer retention has been good in a highly competitive environment.
Any isolated losses have been contained and expenses are expected to fall now restructuring costs have been absorbed. We therefore look to maintain overall levels of profitability while preparing the way for renewed growth in the medium and long term.
Bidvest Namibia Annual Integrated Report 2017 43 Operational review – Bidvest Namibia Food and Distribution
Macro-factors The breadth of the division’s range provides a T&C Consumers felt the pressure as the economic measure of recession proofing as we can respond The FMCG distribution business maintained its to the call for affordable food and non-food lines slowdown affected wages and employment. relationships with leading brands, including Nestlé, when demand for premium products stalls. Tourist inflows improved in some areas, providing Unilever, Hudson & Knight, SC Johnson, Beiersdorf, However, in the current recession, there were a measure of relief for some restaurants, hotels Illovo and Lion Match, and introduced several new instances of consumers not only switching brands, and lodges. However, this sole highlight in the lines as changing shopping patterns became but ceasing purchases altogether until major evident. These included yoghurts, energy drinks, hospitality sector could not offset the trading promotions rolled out. challenges caused by the general downturn in the personal care products and carbonated soft drinks. domestic economy. The division stepped up promotional activities and Some lines were discontinued as demand became achieved some short-term successes only to see sluggish in several categories. Sales reporting Pressures were felt across our business and volumes dip significantly once a sales drive came became more dynamic. Activity is tracked daily as revenue fell in real terms. The division recorded to an end. a service to customers, while providing data to small growth of 2,9%. The result was the erosion of margins. assist delivery and stockholding efficiency. The incidence of out-of-home eating fell as T&C received several “best distributor” awards Namibian consumers tightened their belts. Some Cost control and efficiencies had to become a focus point. Four trucks were removed from the from brand principals, recognition of our extensive restaurants were severely affected and some vehicle fleet and not replaced as smarter footprint and quality commitment. restaurant closures occurred. scheduling and routing systems were introduced. Caterplus No new store openings were seen across the quick Efforts were taken to optimise inventory levels Our foodservice supplier to the catering and service restaurant chains. Swakopmund’s Platz am through the newly implemented system. Even so, hospitality industries increased its ambient product Meer mall opened, but otherwise there were no customer claims increased and stock write-offs offering and introduced new speciality retail significant additions to retail infrastructure. became significant. As the year progressed, products. Efforts gathered pace in the second half to increase market share and better exploit Downtrading became common and competition management engaged in a balancing act, looking to cut stock-related costs while preserving Caterplus’s position as the multi-temp leader with intensified. customer service levels (stock-in-trade). Namibia’s most extensive footprint. Strategic response By year-end, some improvement in working capital Stock control in the warehouses remained a A key challenge affected premium ranges in our management and cash flow was apparent. challenge and an area of focus. Further brand basket. One range that in recent years had However, the efficiencies and the related stock improvements are targeted following investment achieved in excess of 20% annualised growth saw issues still negatively affected the division’s bottom into an expiry and lot control system for the growth slashed by more than half. line. In the final quarter, dedicated supply chain warehouse. Efforts to significantly reduce food Consumers not only traded down, they blurred focus demonstrated the potential for significant waste were given priority. category distinctions as they sought cheaper gains in efficiency and service quality. However, these benefits will only be reflected in the figures Jobs alternatives. For instance, bubble bath foam from a The permanent headcount fell by 38 employees to in the coming year. low-cost range was bought by some consumers 465 as a result of the strategy to cut costs and for, among other uses, washing dishes and Reviews were conducted to decide what increase productivity. Some positions were filled by cleaning clothes, affecting sales of classic management tools were needed to drive further temporary employees in anticipation of further dishwasher and washing powder brands. efficiencies and to determine the best fit for efforts to reduce costs, especially in our supply various product ranges. chain operations.
HenryH Francois Feris ManagingM director: Food and Distribution Age:A 49 Qualification:Q BCom (Unam/Unisa) and BCom (Hons) (Unisa) HenryH has held senior positions in the financial, human resourcere and general management disciplines at leading NamibianN corporates, including Standard Bank, Rossing UraniumU Mine, Namibia Breweries and Pick n Pay Namibia. HeH was appointed as managing director since 2004 within the OhlthaverO & List group of companies. HisH managerial experience covers the financial, mining, manufacturing,m hospitality and retail industries. He also possessesp additional qualifications in the field of industrial psychology.p HenryH was a board member of Team Namibia (2015) and chairmanc of Namibia’s Retail Charter (FMCG) task group. He joinedjo Bidvest Namibia in January 2015.
44 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Training Training investment was maintained, with strong emphasis on system training, customer service and product training.
Food safety and awareness remain pivotal issues for us. Staff are trained to ensure high standards of hygiene and food packaging integrity while adhering to all World Health Organisation protocols, municipal regulations and the guidelines laid down by brand principals.
Workplace safety is a continuing priority. No workplace accidents involving personal injury were recorded. Community commitment We remain committed to environmental protection and are making a strenuous effort to reduce “food miles” and fuel usage through optimised vehicle fleet utilisation.
Future efficiencies through improved routing and The overriding aim is a return to solid profit, scheduling. irrespective of trading conditions, which may Trading loss remain difficult for some time. The challenge Better stock control, improved order fulfilment in (N$8,175 million) therefore is to reduce waste, especially in stock- tandem with smart routing is intended to optimise related costs, reduce operational running costs vehicle loads per “run”. and improve our trade execution in terms of sales The previous manual system for vehicle Trading (loss)/profit (N$’million) and merchandising. maintenance scheduling, licensing and fuel usage Volume growth may be difficult to achieve. has been phased out. A new automated system is Therefore, the continuous search for good product expected to deliver ongoing savings while giving 25,000 range additions remains a priority. We will strive to management “live” data day by day. Fuel supply 19,546 optimise the top line and promotional activity will arrangements have also been renegotiated for 20,000 be stepped up. Efforts to protect margins will be improved efficiencies. 15,000 intensified. Further efforts will be made to deepen the 10,000
Renewed emphasis on expense management is partnership with customers. Simultaneously, even 5,000 closer partnership will be fostered with brand already evident. Efforts to align the cost base with 0 turnover growth will be a continuing feature of the principals as ongoing collaboration is necessary in business. the current recession if premium positioning and (5,000) margins are to be protected while reducing stock- (10,000) (8,175) Staffing, warehouse infrastructure and the vehicle related costs from customers. 2017 fleet will be reviewed as we look to create a more 2016 agile business. Outsourcing options will be A nimbler, more efficient division is a prerequisite if investigated in certain parts of the business. a return to profit is to be achieved. We have the strategy to achieve this objective. In 2018, we plan Revenue Investment will continue and was apparent at year- to put it in place. end as new systems came on stream. – increase to A new stock forecasting tool will make it possible N$1 232,682 million to anticipate the demands of our customers. Our aim is to obviate lost sales through incomplete Revenue (N$’million) order fulfilment – instead of perhaps meeting 85%+ of a late order it is hoped to meet it in full. The ultimate objective is to maintain a 95% service 1 240,000 level to customers every month. 1 232,682 1 230,000 New systems make it possible to achieve a tight stock control cycle. Significant reduction in stock 1 220,000 losses in the warehouses has been targeted and 1 210,000 was achieved in comparison to the previous year. 1 200,000 1 197,802 A newly installed vehicle control and planning system is already achieving fleet utilisation 1 190,000
1 180,000 2017 2016
Bidvest Namibia Annual Integrated Report 2017 45 Operational review – Bidvest Namibia Food and Distribution – continued
Sustainability
2016 2017 % change
Kilolitres
19 504 19 443 0%
Litres
903 950 928 329 3%
kW
-6% 4 664 4 382
Number
496 565 14% NAMIBIA N$ Katima Mulilo -1% Oshikango 417 653 413 245 Rundu Oshakati CSI N$ Ongwediva Ondangwa
Tsumeb 593 044 628 261 6% Grootfontein
Otjiwarongo
Windhoek Gobabis Swakopmund Walvis Bay
Lüderitz Keetmanshoop
Namibia Namibia
Bidvest Namibia Food and Distribution
46 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Operational review – Financial Services – Namibia Bureau de Change
Namibia Bureau de Change (NBDC) dealings therefore broadening Bidvest Namibia’s Not only does NBDC cater for inbound tourists in Bidvest Namibia bought 49% of NBDC effective footprint in the tourism industry. It has branches at forex dealings but also for Namibians wanting to 15 July 2015. The major shareholder is Bidvest the Hosea Kutako International Airport, Windhoek go abroad with their unique World Traveller Card Bank who ensures, with its dedicated expertise, city centre, Walvis Bay and opened a new branch which is internationally recognised. that NBDC remains competitive and driven in the in Swakopmund during the year. market. NBDC is a specialist in foreign exchange
Bidvest Namibia Annual Integrated Report 2017 47 Financial director’s review
“Our financial strategy focuses on cost control, internal efficiencies and optimising synergies.”
Theresa Weitz, financial director
Overview Trading profit from the horse-mackerel division losses in the startup phase, but the brand is Bidvest Namibia experienced a very challenging declined by 72,5%. The decrease in gross profit growing well. financial year. All divisions performed at lower from horse-mackerel fishing is the main reason for Automotive had a tough year and experienced a levels than in the previous period. Fishing division’s the fall in the Group’s overall gross profit margin steep fall in sales in the new vehicle market. The profits were severely impacted by external market from 19,0% to 15,1%. decline was attributable to the downturn of the pressures and environmental factors. All the other Another horse-mackerel vessel was sold during Namibian economy and changes to the National divisions experienced pressure on revenue as a the 2017 financial year for USD4,7 million. To Credit Act that make the conditions for lending to result of Namibia’s recession. operate more efficiently, it has become essential to new vehicle buyers more onerous. As a result, Although the Fishing division’s revenue was almost streamline the division, aligning the size of the fleet fewer consumers can fund a new vehicle purchase. on par with the previous year, trading profit to own-quota availability. The focus has shifted to used vehicles, but sales of declined by 79,8% to N$39,8 million for the year The Namibian pilchard resource is also under pre-owned stock failed to offset the fall-off in the under review. great strain and a very low quota allocation did not new vehicle market. However, we have not lost Fishing for horse-mackerel is still the core activity justify the full operation of our cannery. Instead, we market share. of the Fishing division and its revenue was pooled resources with another local cannery. This division’s results cover the full 12 months in significantly impacted by continuing pressure on Unfortunately, losses were still made by our the 2016-17 year, compared to the 11 months the horse-mackerel resource. This resulted in pilchard operations. These losses absorbed a covered in the previous year. The actual decline in smaller fish sizes being landed while lower fish substantial amount of profit from the horse- Automotive’s turnover was 15,6% year on year tonnages were recorded per day. The average hard mackerel operation. while the division’s contribution to the Group’s currency price per ton declined and the exchange Angola generated profits, but less than the trading profit fell by 46% to N$23,0 million. rate strengthened, further compounding revenue previous year as a result of increased vessel repair pressures. Freight and Logistics revenue declined by 14,6% costs. Oysters incurred losses for the financial due to a stagnant oil and gas industry and the lack In addition, costs increased significantly as a result year, though the loss was inflated by a number of of other project activity. As a result of cost savings of higher quota purchase costs as less of the once-off costs following the down-sizing of this and the streamlining of the division, the trading division’s own quota allocation was available for business. profit dropped by only 1,8% to N$11,7 million. The harvesting during our financial year – partly the Glenryck South Africa is a new addition to the division’s reduced size enables cost bases to be result of lower quota allocations being made Fishing division. This entity was launched to rigorously controlled without impacting service available to commercial operators in 2016 and market the Glenryck brand that was acquired delivery to clients. However, the division is ready timing factors relating to the fishing of own versus during the previous period. Glenryck South Africa for action should a large project appear on its purchased quota in the second six months of that acquires pilchards, cans them on contract and horizon. This division is well managed and year. Quotas are allocated per calendar year, then sells the canned product in South Africa, controlled and has proven that when times are creating a mismatch with our reporting period. Namibia and Mauritius. The business incurred tough, one can streamline for a new norm.
48 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Management committed to make structures leaner
Revenue decreased by 2% Operating profit All assets are measured on to N$3,8 billion decreased by 66,2% to return basis N$98,9 million
Trading profit declined by Significant decline in Fishing All other divisions experienced 68,6% to N$92,5 million division’s operating profit, pressure on revenue the result of multiple external factors
The Food and Distribution division’s revenue failed Most businesses in the Commercial and Industrial Financial position to grow in line with expectation. The principal Products and Services division performed well in Bidvest Namibia’s balance sheet remains strong challenge involved stock-related costs and internal challenging circumstances. Revenue was down and the Company has sufficient cash resources for inefficiencies. The division recorded a trading loss on the prior year by 3,4% at N$473,7 million, potential acquisitions. of N$8,2 million, which is a 141,8% decrease on reflecting the recessionary state of the national Property, plant and equipment purchases totalled the prior year’s profit of N$19,5 million. However, economy. Trading profit declined by 26,8% to N$59,0 million. Replacement capital expenditure the previous year’s figures included the N$7 million N$16,8 million. Minolco performed very well. at all businesses was maintained. settlement received from Namibian Poultry Voltex still generated losses despite management Industries. interventions to turn the business around. Net working capital decreased by N$13,6 million. Plumblink, which only opened in Namibia last year, This is a result of lower activity in Fishing and Various initiatives have been implemented to performed in line with expectations and a new Freight and Logistics. Provisions for doubtful correct the inefficiencies that plagued the division branch was opened at the coast. debtors and obsolete stock are adequate. in 2016-17. These include software programmes for better fleet management and more effective Bidvest Namibia Prestige Cleaning was acquired, The Group remains focused on cost control, re-ordering systems for improved stock control. effective 1 June 2017, and a management team working capital management and the generation was appointed from within the current Bidvest of acceptable returns on funds employed. Unfortunately, a brand principal within the Namibia pool of employees. Significant focus is being directed at operations perishables sector has given notice that their where performance is below expectation. distribution agreement will come to an end, Namibia Bureau de Change remains a leading effective from 31 August 2017. This will result in a foreign exchange transaction services provider Business risks loss of revenue of N$200 million per annum. and widened its footprint with the opening of a There is significant pressure on profitability in a Restructuring of the relevant business unit has coastal branch. number of our businesses. already begun. Savings are also expected from improved control of damaged items and better management of stock expiry dates.
Bidvest Namibia Annual Integrated Report 2017 49 Financial director’s review – continued
The Fishing division’s profitability is under strain, Sustainability and the business is being right-sized in line with Bidvest Namibia has always committed to lower quota allocations while loss-making entities sustainable business practice and since inception are being scaled down. has behaved with a sense of responsibility to the community, the environment and our people. Due to the recession in Namibia, revenue in our commercial businesses remains under pressure. In the 2017 financial year, CSI spend increased Even revenue growth in line with inflation is far from N$15,8 million to N$23,8 million (including from certain as consumers and businesses are disbursements by the Namsov Community Trust). reducing their spending. Growth then becomes a Namsov Community Trust is a 10% shareholder in function of gains in market share. Lower sales Namsov and lower dividends affected the level of activity puts pressure on profitability and costs its CSI spend. need to be cut to keep expenses in line with We are a responsible corporate citizen and revenue. In the past financial year, we have been emphasise the need for accountability, fairness able to successfully implement significant cost and transparency in our dealings with all savings at Freight and Logistics and we are stakeholders. In our view, strategy, sustainability currently busy rightsizing business units and and risk are inseparable. containing costs in our other divisions. Efforts to grow revenue through an increase in market share Voluntary announcement are also a priority. On 18 August 2017, a voluntary announcement was made, advising shareholders that the Challenging economic conditions also have the Company has entered into discussions which, if effect of increasing credit risk. Bidvest Namibia is successfully concluded, may have a material effect therefore putting increased focus on debtor on the Group’s share price. management.
To bring greater balance to our overall business, Future There is little indication of rapid recovery in we continue to pursue acquisition opportunities or Namibia’s economic climate and within the market look to start businesses that reflect the broad segments in which Bidvest Namibia is active. Even spread of activities for which our holding company greater attention will therefore be given to is known in South Africa. efficiency improvements. Management is Currency risk is an integral part of business committed to making structures leaner and more operations at a Group with international exposure. effective across all our businesses. All assets are To balance such exposure, we ensure that assets being thoroughly measured on a returns basis and, and liabilities in foreign currency are matched. where necessary, corrective action is being taken. Bidvest Namibia’s decentralised and entrepreneurial business model continues to prove itself. Our head office structures remain lean. We are a big business, but we have an entrepreneurial spirit and a small business culture. Theresa Weitz Financial director
50 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS Value added statement
Wealth distribution 2017 (N$’million) Wealth distribution 2016 (N$’million)
(3)
22 95 122 Employees 139 120 Dividends to shareholders and non-controlling interest 19 Finance cost and borrowings 596 598 165 Central and local government
Reinvested in operations
2017 2016 Note N$’000 N$’000
Revenue 3 776 448 3 858 596 Paid to suppliers for materials and services (2 983 764) (2 856 110) Value added 792 684 1 002 486 Income from investments 4 38 426 38 058 Total wealth created 831 110 1 040 544 WEALTH DISTRIBUTION Salaries, wages and other employment costs 1 597 977 595 728 Providers of capital Dividends to shareholders 46 630 114 455 Dividends to non-controlling interest 72 981 50 354 Finance cost on borrowings 21 962 18 750 Central and local government 2 95 010 138 959 Total distributions 834 560 918 246 Reinvested in the Group to maintain and develop operations: (3 450) 122 298 Amortisation, depreciation and impairments 81 430 84 469 Deferred taxation (27 087) (32 477) Undistributed profit for the year attributable to owners of the parent 3 980 69 767 Undistributed income attributable to non-controlling interest (61 773) 539
Total wealth distributed 831 110 1 040 544 Notes to the value added statement 1. Salaries, wages and other employment costs Salaries, wages, overtime payments, commissions, bonuses and allowances 542 258 540 648 Employer contributions 55 719 55 080 597 977 595 728 2. Central and local governments Current normal company taxation 84 413 120 725 Quota levies and royalty fees 7 450 15 402 Rates and taxes paid on properties 3 147 2 832 95 010 138 959 3. Additional amounts collected on behalf of central and local government Value added tax collected on revenue 527 886 513 869 Customs and excise duties 48 181 37 361 Pay-as-you-earn deducted from remuneration paid 98 067 73 852 Non-resident shareholders’ tax deducted from dividends paid 1 233 3 054 675 367 628 136 4. Income from investments Dividends received on other investments 4 007 2 175 Finance income 34 419 35 883 38 426 38 058
Bidvest Namibia Annual Integrated Report 2017 51 Nine-year review
Financial history 2017 2016 2015
Extract from financial statements (N$’000) Revenue 3 776 448 3 858 596 3 534 769 Trading profit 92 521 294 887 409 655 Net finance income 12 457 17 133 27 111 Attributable profit 61 818 235 114 412 466 Shareholders’ interest 2 229 780 2 303 911 2 278 030 Total assets 3 086 850 3 160 024 3 024 579 Funds employed** 1 374 709 1 485 273 1 436 838 Cash generated by operations 185 067 388 187 531 746 Wealth created by trading operations* 831 110 1 040 544 1 215 976 Employee benefits and remuneration 597 977 595 728 577 896
Share statistics Headline earning per share (cents) 22,4 86,2 103,2 Ordinary distribution per share (cents) 10,0 38,0 56,0 Distribution cover (times) 3 3 3 Distribution yield (%) 1 45 Earnings yield (%) 3 812 Net tangible asset value per share (cents) 737 734 769 Share price (cents) High 10,49 10,51 13,28 Low 7,78 10,45 10,99 Closing (30 June) 7,86 10,50 10,99 Market capitalisation (N$’million) 1 665 951 2 225 507 2 329 363 Volumes traded (’000) 2 100 8 559 2 261 Volumes traded as % of weighted number of shares 1 41
Ratios and statistics Return on total shareholders’ interest (%) 4 13 18 Return on average funds employed (%) 6 20 29 Trading profit margin (%) 2 812 Interest cover 5 14 15 Current asset ratio 2,7 2,8 3,6 Quick asset ratio 2,0 2,1 2,8 Number of employees 3 481 2 738 3 305 Revenue per employee (N$’000) 1 085 1 409 1 070 Value added per employee (N$’000) 239 380 368 Number of shares in issue (’000) 211 953 211 953 211 953 Number of weighted shares in issue (’000) 211 953 211 953 211 953
Exchange rate comparisons Rand/US dollar Closing rate 12,94 14,77 12,12 Average rate 13,55 14,39 11,41 * Value added statement only prepared from 2012 onwards. ** Funds employed – total assets excluding cash and cash equivalents, taxes (current and deferred) and goodwill less total liabilities excluding taxes (current and deferred).
52 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
2014 2013 2012 2011 2010 2009
3 703 495 3 294 235 2 730 667 1 918 804 1 608 101 1 387 590 501 313 601 497 646 616 544 922 368 869 284 496 16 298 15 690 17 606 6 085 1 253 3 402 343 742 426 505 460 880 384 079 229 680 183 344 2 065 162 1 959 047 1 711 976 1 401 728 1 156 007 655 795 2 764 518 2 778 557 2 468 625 1 940 353 1 724 735 1 073 018 1 372 372 1 199 271 1 038 630 680 991 564 526 414 208 413 761 585 583 625 123 545 332 431 704 240 378 1 158 871 1 204 599 1 203 998 – – – 550 960 483 638 435 779 365 669 315 896 263 301
116,0 129,5 140,3 120,0 87,4 79,0 63,0 69,0 63,0 54,0 36,0 15,0 3 3 3 3 3 7 56675 not listed yet 9 10 13 16 12 not listed yet 688 638 578 500 410 240
12,73 12,71 10,71 8,20 7,20 not listed yet 12,50 10,71 8,02 7,20 6,99 not listed yet 12,73 12,51 10,71 8,02 7,20 not listed yet 2 698 162 2 651 532 2 270 017 1 659 763 1 490 062 not listed yet 1 304 4 340 2 935 1 846 1 561 not listed yet 12111 not listed yet
24 31 38 39 32 43 39 54 75 88 75 69 14 18 24 28 23 21 21 27 26 63 183 54 3,8 3,0 3,0 3,2 2,5 1,8 2,9 2,4 2,4 2,7 2,0 1,3 3 239 3 203 3 110 2 690 2 568 1 998 1 143 1 028 878 713 626 694 358 376 387 – – – 211 953 211 953 211 953 206 953 206 953 163 303 211 953 211 953 209 862 206 953 192 363 163 303
10,70 10,24 8,33 6,75 7,62 8,27 10,32 8,86 7,77 6,98 7,61 9,28
Bidvest Namibia Annual Integrated Report 2017 53 Segmental reporting
The segment information for the reportable segments for the year ended 30 June 2017 is as follows:
Commercial and Industrial Corporate Freight and Services Food and Total Services Fishing Automotive Logistics and Products Distribution N$’000 N$’000 N$’000 N$’000 N$’000 N$’000 N$’000 30 June 2017 Total segment revenue 3 951 918 78 151 1 083 727 701 915 376 076 479 331 1 232 718 Inter-segment revenue (175 470) (55 487) (1 795) (903) (111 583) (5 666) (36) Revenue from external customers 3 776 448 22 664 1 081 932 701 012 264 493 473 665 1 232 682 EBITDA 180 365 13 195 93 118 25 480 15 872 32 549 151 Depreciation on property, plant and equipment (71 955) (3 553) (37 341) (2 380) (5 961) (14 455) (8 265) Amortisation and impairment of intangibles (9 475) (168) (7 912) (72) (154) (976) (193) Operating profit/(loss) 98 935 9 474 47 865 23 028 9 757 17 118 (8 307) Share of profit of joint venture (82) – (82) – – – – Share of profit of associates 7 834 935 6 899 – – – – Finance income 34 419 1 869 28 679 899 972 1 145 855 Finance costs (21 962) (631) (2 890) (13 642) (792) (2 176) (1 831) Profit/(loss) before tax 119 144 11 647 80 471 10 285 9 937 16 087 (9 283) Total assets (excluding current and deferred taxation) 3 079 036 319 384 1 529 173 331 913 282 688 238 492 377 386 Total assets include: Additions to property, plant and equipment, goodwill and intangible assets 60 501 11 538 16 244 3 397 2 124 19 466 7 732 Total liabilities (excluding current and deferred taxation) 717 087 14 230 164 658 166 343 109 755 107 092 155 009
Total assets include assets classified as held for sale of N$36,6 million relating to the fishing segment. No liabilities are associated with the asset held for sale.
Revenue per segment Profit/(loss) before tax per segment (N$’million) (N$’million)
23
(9) 12 16 1 233 1 082 10 2017 2017 10 Corporate Services 474 701 80 264 Fishing
Automotive
Freight and Logistics
16 Commercial and Industrial 2 Services and Products 11 17 23 1 089 Food and Distribution 1 198 34 2016 2016
490 755 236 310
54 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
The segment information for the reportable segments for the year ended 30 June 2016 is as follows: Commercial and Industrial Corporate Freight and Services Food and Total Services Fishing Automotive Logistics and Products Distribution N$’000 N$’000 N$’000 N$’000 N$’000 N$’000 N$’000 30 June 2016 Total segment revenue 3 999 175 65 330 1 093 352 756 460 390 674 495 265 1 198 094 Inter-segment revenue (140 579) (48 931) (4 105) (1 308) (80 812) (5 131) (292) Revenue from external customers 3 858 596 16 399 1 089 247 755 152 309 862 490 134 1 197 802 EBITDA 375 598 4 223 246 860 44 144 19 087 33 625 27 659 Depreciation on property, plant and equipment (71 302) (3 713) (41 151) (1 464) (6 865) (9 983) (8 126) Amortisation of intangibles (11 457) (192) (9 729) (65) (291) (789) (391) Operating profit 292 839 318 195 980 42 615 11 931 22 853 19 142 Share of profit of joint venture 2 873 – 2 873 – Share of profit of associates 10 517 1 363 9 154 – Finance income 35 883 1 850 30 775 1 303 270 1 454 231 Finance costs (18 750) (1 088) (2 575) (10 250) (1 694) (995) (2 148) Profit before tax 323 362 2 443 236 207 33 668 10 507 23 312 17 225 Total assets (excluding current and deferred taxation) 3 150 141 282 588 1 599 449 359 279 284 274 243 578 380 973 Total assets include: Additions to property, plant and equipment, goodwill and intangible assets 272 982 13 715 83 888 130 650 9 003 20 008 15 718 Total liabilities (excluding current and deferred taxation) 676 390 14 143 112 078 179 076 111 039 106 887 153 167
Total assets include assets classified as held for sale of N$50,6 million relating to the fishing segment. No liabilities are associated with the asset held for sale.
Total assets (excluding current and deferred taxation) Total liabilities (excluding current and deferred taxation) (N$’million) (N$’million)
14
377 319 155 165 238
283 2017 2017 107 Corporate Services 332 1 529 166 110 Fishing
Automotive
Freight and Logistics
Commercial and Industrial 14 Services and Products 381 283 112 Food and Distribution 153 244
284 2016 2016 107 179 359 1 599 111
Bidvest Namibia Annual Integrated Report 2017 55 Corporate social investment
“Decentralisation, one of our business philosophies, includes corporate social investment. Each entity contributes to initiatives they can identify with, seeking harmony with people, society and the environment. This creates a diverse and country-wide spread of social responsibility.”
International expert training was provided to a disabled student, aiding him to obtain his Master’s degree in the field of Global Logistics and Supply Chain Management, in Hamburg, Germany. Salmon Kambunga will be returning to Namibia after two years abroad and plough back his expert knowledge into Manica.
Book prizes were handed to eight coastal schools in Swakopmund, Walvis Bay and Luderitz. The schools were specifically chosen based on attendance of the staff’s children of Manica.
“His House Hospice” was supported by teams of the Manica Group while attending their biathlon sports event. Manica also used the event to donate a large amount.
56 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Namsov Community Trust – a 10% shareholder of our horse mackerel company Community Trust Namsov Fishing Enterprises (Pty) Ltd, uses its dividends receivedr to help uplift a variety of communities around Namibia. In an effort to erode poverty across the nation, the NAMSOV Community Trust has committed N$1,5 million per region, to be rolled out in three financial years starting in 2015 as part of its corporate social responsibility. Many projects were enabled during this generous gesture, such as Water Supply Project in Moses/ Garoëb Constituency; Aquaponics Project for Penduka Trust in Samora Machel Constituency; Aisha Training Academy to name but a few. All regions deployed the monies received in educational activities, community development and sports initiatives. Many lives were positively affected.
HRG Rennies Travel Namibia supports initiatives identified by their employees that align themselves to its own principles such s,a sports initiatives, support of school events attended by its employee’s children. Annually a charity is chosen to be the benefactor of the SAGES golf day which is also supported by Rennies.
An avid swimmer attempted the English Channel as the first Namibian to raise funds for the “Cancer Care Namibia Fund”, which aids cancer patients in financing their treatments and medical expenses. Rennies supported this wonderful cause.
Waltons supports where they deem fit donating from their line of products, e.g. stationery, information technology products and many more. This year, their mascot took part in the Private School Swakopmund Big Walk along the beach. The students were thrilled to walk with this cheerful companion.
Bidvest Namibia Annual Integrated Report 2017 57 Contents
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 59 Statement of directors’ responsibilities and approval 59 Declaration by company secretary 60 – 62 Independent auditor’s report 63 – 67 Directors’ report 68 – 77 Accounting policies 78 Statements of financial position 79 Statements of profit or loss and other comprehensive income 80 – 81 Statements of changes in equity 82 Statements of cash flows 83 – 114 Notes to the financial statements 115 Shareholders’ diary 116 Administration
58 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Statement of directors’ responsibilities and approval for the year ended 30 June 2017
The directors are required by the Companies Act of Namibia (Companies Act) to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the Company and of Bidvest Namibia Limited and its subsidiaries (the Group) as at the end of the financial year and the results of their operations and cash flows for the year then ended, in conformity with International Financial Reporting Standards (IFRS) and the Companies Act. The external auditors are engaged to express an independent opinion on the annual financial statements.
The annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.
The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the ompanyC and by the Group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the directors set the standards for the internal control aimed at reducing the risk of error or loss in a cost-effective manner. The standards include the proper delegation of responsibilities within an acceptable level of risk. These controls are monitored throughout the Group and all employees are required to maintain the highest ethical standards in ensuring the Group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group. While operating risk cannot be fully eliminated, the Company and the Group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.
The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal ancialfin control can provide only reasonable, and not absolute, assurance against material misstatements or loss.
The directors are satisfied that the Company and Group have access to adequate resources to continue in operational existence for the foreseeable future.
The external auditors, Deloitte & Touche, have audited the separate financial statements and consolidated annual financial statements, and their report is presented on pages 60 to 62.
The Group annual financial statements and annual financial statements of the Company are set out on pages 68 to 114 which have enbe prepared on the going concern basis, were approved by the board of directors and are hereby signed on its behalf:
Lindsay Ralphs Sebulon Kankondi Chairman Chief executive officer
24 August 2017 24 August 2017
Declaration by company secretary
In my capacity as company secretary, I hereby confirm, that for the year ended 30 June 2017, the Company has lodged with the Registrar of Companies, all such returns as are required in terms of this Act and that all such returns are true, correct and up to date.
Veryan Hocutt Company secretary
24 August 2017
Bidvest Namibia Annual Integrated Report 2017 59 Independent auditor’s report
To the members of Bidvest Namibia Limited Opinion We have audited the consolidated and separate financial statements of Bidvest Namibia Limited and its subsidiaries (the Group) set out on pages 59 to 114, which comprise the consolidated and separate statements of financial position as at 30 June 2017 and the consolidated and separate statements fo profit or loss and other comprehensive income, the consolidated and separate statements of changes in equity and the consolidated and separate statements of cash flows for the year then ended and notes to the financial statements, including a summary of significant accounting policies and the directors’ report.
In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of the Group as at 30 June 2017 and their consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Companies Act of Namibia. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the consolidated and separate Financial Statements section of our report. We are independent of the Group in accordance with the Public Accountants’ and Auditors’ Act 1951 (as amended) (PAAB Act) and other independence requirements applicable to performing audits of financial statements in Namibia.
We have fulfilled our other ethical responsibilities in accordance with the PAAB Act code of ethics and in accordance with other ethical requirements applicable to performing audits in Namibia. The PAAB Act code of ethics is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming ouropinion thereon and we do not provide a separate opinion on these matters.
Key audit matter (KAM) – Group How the matter was addressed in the audit
KAM 1: Assessment of the recoverable value of goodwill
Goodwill constitutes 8% of the Group’s total assets and Our audit work for goodwill included evaluating the design and implementation of key controls around the arises as a result of the acquisitive nature of the Group. impairment review process, evaluating the appropriateness of the cash-generating units to which goodwill is allocated and challenging the key assumptions used in directors’ future cash flow forecasts with particular As disclosed in note 2, goodwill of N$244 million is focus on the growth rate and discount rate. allocated to cash-generating units, identified according to operating segments. The growth rate used in the cash flow model has been independently assessed for each significant segment by us with comparison to economic and industry forecasts as well as the condition of the local economy, The directors conducted the annual impairment test to specifically the expected Gross Domestic Product growth rate and inflation rate to actual revenue growth. assess the recoverable amount of goodwill in respect of the 2017 financial year consistent with the Group’s policy. The weighted average cost of capital (discount rate) has been assessed based on the funding capacity of This assessment is performed with reference to a value-in- the Group and in comparison to data obtained independently taking into account the segment’s specific use calculation for each operating segment. operating markets.
The determination of the recoverable amount of the cash- Furthermore, we performed a sensitivity analysis on the key inputs to establish those assumptions to which generating unit is subjective as significant estimation and the valuation is highly sensitive. This was performed in order for us to determine the extent to which the key key assumptions are required, in particular regarding assumptions needed to change in order to cause an impairment. We considered the likelihood of such forecast future cash flows, future growth rates, the changes occurring and concluded that the key assumptions applied in the cash flow model were reasonable. discount rates applied and the determination of the level at We verified the mathematical accuracy of the cash flow forecast and compared the inputs used in the cash which impairments should be assessed. As such this has flow forecasts against historical performance and in comparison to budgeted amounts in respect of each been noted as a key audit matter. significant cash-generating unit. We concluded that inputs used in the cash flow forecast for these cash- generating units are appropriate.
We evaluated the directors’ assessment of impairment indicators against current local economic conditions, challenges in the local market, the Group’s historical performance, future budgets, as well as expected future outlook.
Overall, we found the cash flow models, allocation of goodwill to operating segments, assumptions applied in the goodwill impairment assessments and the determination of objective evidence of impairment to be appropriate. We concur with the directors’ assessment that no material impairment was required.
The disclosure in relation to the impairment reviews, assumptions applied and goodwill were considered appropriate.
60 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Key audit matter (KAM) – Group How the matter was addressed in the audit
KAM 2: Assessing the carrying value of the investment in associates
As reflected in note 4, the Group has a 40% shareholding We evaluated the key facts and judgements made in the directors’ assessment with relevant documentary in an associate, Industria Alimentar Carnes de Moçambique evidence and by taking into account future plans and budgets and assessing the reasonableness of the Limitada of N$67,2million. assumptions used. The assessment of the recoverable amount of the We assessed the estimates, judgements and assumptions made by the directors in accordance with the investment involves the directors’ judgement and estimates requirements of IAS 36 Impairment of Assets. around the inputs to the cash flow projections used and the Based on the fair value determined by the directors, it was concluded that no impairment of the carrying valuation of land and buildings. As a result, this has been value of the investment was required. noted as a key audit matter. We are satisfied that the related disclosures are sufficient.
KAM 3: Fishing segment assets
The Fishing segment of the Group has typically been the We considered the directors’ plans to respond to the adverse external factors noted. most significant contributor to the Group’s revenue and The directors obtained independent valuations for the affected assets and determined that there was no profit in prior years. impairment necessary in the current financial year. The independent valuators and the valuations received This segment has been significantly adversely impacted by were critically evaluated against current market evidence available in respect of similar properties in severe external market and environmental factors as well Walvis Bay. as a shortage of own quota allocations. The directors have The directors’ assessment of the residual values of the vessels and the estimates and judgements applied responded to these external factors noted which has in respect of setting the residual values were evaluated against prior experience and industry norms taking impacted on amounts and disclosures provided in the into account the fair values at the end of the vessel’s useful life. consolidated financial statements. Independent expectations of the assumptions used by the directors in computing the recoverable amounts Due to the judgement involved in the assessment of of the assets were developed. residual values of vessels, recoverable amounts of segment assets, determining the carrying value of non- The relevant judgements and estimates applied by the directors in assessing the impact of any of the current assets held for sale, accounting for complex quota impairment indicators were assessed and tested. purchase agreements and whether or not to raise deferred The assumptions and judgements applied by the directors in the assessment of the probability of future tax assets on estimated tax losses incurred in certain taxable income in the loss making subsidiaries were evaluated when considering the implication on deferred subsidiaries in the Fishing segment, this is considered to tax assets. be a key audit matter. The estimates, assumptions and judgements applied by the directors in deciding to reflect the MFV Sunfish as a non-current asset held for sale as required by IFRS 5 Non-Current Asset held for Sale and Discontinued Operations were assessed against the factual evidence supported by appropriate board resolutions. Contractual obligations in respect of quota purchase agreements entered into were assessed to determine whether the terms and conditions of the contracts have been complied with and whether contractual commitments and contingencies have been accounted for and disclosed appropriately. We are satisfied with the accounting treatment, assessment of the asset balances, the recoverable amounts of assets at year-end and the related disclosures in respect of the division as reflected in the statement of financial position.
Separate financial statements We have determined that there are no Key Audit Matters identified in respect of the separate financial statements of Bidvest Namibia Limited. Other information The directors are responsible for the other information. The other information included in the annual financial statements, comprises the statement of directors’ responsibilities and approval and the declaration by the company secretary which is made available to us before the date of this report. The following other information included in the annual integrated report: chairperson’s review, chief executive’s review, corporate governance report, risk committee report, audit committee report, remuneration committee report, sustainability report, operational reviews, financial director’s review, value added statement and eight-year review is expected to be made available to us after the date of this report. Other information does not include the consolidated and separate financial statements, the directors’ report, segmental report and our auditor’s report thereon. Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to and after the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Bidvest Namibia Annual Integrated Report 2017 61 Independent auditor’s report – continued
Responsibilities of the directors for consolidated and separate financial statements The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of Namibia and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group’s and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and/or Company, to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the consolidated and separate financial statements Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: – Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. – Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control. – Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. – Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and/or the Company to cease to continue as a going concern. – Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the isclosuresd and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. – Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities withinhe t Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, related safeguards. From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit fo the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless laws or regulations preclude public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Deloitte & Touche Registered Accountants and Auditors Chartered Accountants (Namibia) ICAN practice number: 9407 Per: Ramsay Mc Donald Partner PO Box 47 Windhoek, Namibia 25 August 2017
Partners: E Tjipuka (managing partner), RH Mc Donald, H de Bruin, J Cronjé, A Akayombokwa, AT Matenda, J Nghikevali, G Brand*, M Harrison* * Director Associate of Deloitte Africa, a Member of Deloitte Touche Tohmatsu Limited
62 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Directors’ report for the year ended 30 June 2017
The directors have pleasure in presenting their annual report which forms part of the Group annual financial statements and annual financial statements of the Company for the year ended 30 June 2017. Nature of business The Company is the holding company of two main subsidiaries, Bidvest Namibia Fisheries Holdings (Proprietary) Limited (Bidfish)and Bidvest Namibia Commercial Holdings (Proprietary) Limited (Bidcom).
Bidvest Namibia Management Services (Proprietary) Limited, Bidvest Namibia Property Holdings (Proprietary) Limited and Bidvest Namibia Information Technology (Proprietary) Limited are also direct subsidiaries of the holding company. Bidvest Namibia Management Services (Proprietary) Limited and Bidvest Namibia Property Holdings (Proprietary) Limited act solely as support companies for the Bidvest Namibia Group, Bidvest Namibia Information Technology (Proprietary) Limited acts mainly as a support company for the Bidvest Namibia Group and also provides services to companies outside the Group. These companies receive administration income, receive rental income from subsidiaries in the Group as well as directors’ fees, if applicable, from all underlying entities and incur related support, staff and administration expenses. Bidvest Namibia Information Technology (Proprietary) Limited also receives income from companies outside the Group.
Bidvest Namibia Commercial Holdings (Proprietary) Limited (Bidcom) has operational arms including cleaning services, stationery and office furniture, electrical supplies, food services, office solutions, printer consumables, freight management services, travel management services, vehicle dealership and foreign exchange services.
Bidvest Namibia Fisheries Holdings (Proprietary) Limited (Bidfish) has operational arms mainly in the fishing industry. Results of operations The results of operations and state of affairs of the Group and the Company are fully set out in the attached consolidated and separate annual financial statements and do not in our opinion require further comment. Acquisition of subsidiary in the current year The Group acquired 100% shareholding in Bidvest Prestige Cleaning (Proprietary) Limited (Prestige) with effect 1 June 2017. Prestige was acquired from The Bidvest Group Limited. Going concern The directors have satisfied themselves that no material uncertainty, that casts significant doubt about the ability of the Group and the Company to continue as a going concern has been identified and they have a reasonable expectation that the Group and the Company have adequate financial resources to continue in operational existence for the foreseeable future. Therefore, these financial statements have been prepared on a going concern basis. Events after the end of the reporting period The Group through its subsidiary, Taeuber & Corssen SWA (Proprietary) Limited, lost a distribution agreement with Parmalat with effect from 31 August 2017. Authorised and issued share capital There were no changes to the authorised and issued share capital during the year under review. Dividends Dividends amounting to N$46,6 million (2016: N$114,5 million) were declared and paid by the Company during the year under review. Segmental analysis Management has determined the operating segments based on the reports reviewed by the executive committee that are used to make strategic decisions. The committee considers the business from a product perspective.
Segmental results include revenue and expenses directly relating to a business segment but excludes net finance charges and taxation which cannot be allocated to any specific segment. Segmental trading profit is defined as operating profit excluding items of a capital nature and is the basis hichon w management’s performance is assessed.
Segment operating assets and liabilities include property, plant and equipment, investments, inventories, trade and other receivables, trade and other payables and post- retirement obligations, but excludes current taxation and deferred taxation. Intangible assets are allocated to the cash-generating unit in the segment to which they relate.
Fishing derives revenue from its horse-mackerel, monk and pilchard fishing rights in Namibia and Angola. The division also derives revenue from its Glenryck rights and shares in profits from its distribution agreement in Mozambique.
Industrial and Commercial Products supplies electrical equipment and consumables, stationery, office equipment and furniture, printer consumables and hardware, travel, foreign exchange and copier services, plumbing, sanitaryware, brassware and allied products and cleaning services.
Food and Distribution services supplies foods to the hospitality, wholesale and retail industries in Namibia.
Freight and Logistics provides ships agency, clearing and forwarding, stevedoring, container handling, general warehousing, airport services and fuel bunkering services.
Automotive supplies new and used motor vehicles, parts, accessories and after-sales service.
Bidvest Namibia Annual Integrated Report 2017 63 Directors’ report – continued for the year ended 30 June 2017
Corporate Services includes corporate services provided to the Group.
Sales between segments were carried out on terms and conditions as agreed between the parties. The revenue from external parties is measured in a manner consistent with that in the statements of comprehensive income.
The executive committee assesses the performance of the operating segments based on a measure of adjusted EBITDA. This measurement basis excludes the effects of non-recurring expenditure from the operating segments such as restructuring costs, legal expenses and goodwill impairments when the impairment is the result of an isolated, non-recurring event. Since the strategic steering committee reviews adjusted EBITDA, the results of discontinued operations are not included in the measurement of adjusted EBITDA.
The full segmental report is set out on pages 54 and 55. Information about directors’ service contracts Each of the executive directors has a contract of appointment from Bidvest Namibia Limited, containing terms that are normal for such contracts. Interest of directors and senior key personnel in share capital The interests, direct and indirect, of the directors and officers are as follows: Ordinary shares
Beneficial Indirect
At 1 July 2016 17 901 926 110 000 Comprising: Non-executive directors 201 100 110 000 Executive directors SI Kankondi 1 377 200 – Senior key personnel 16 323 626 – At 30 June 2017 10 789 743 10 000 Comprising: Non-executive directors 201 100 10 000 Executive directors SI Kankondi 1 377 200 – Senior key personnel 9 211 443 – Directors’ interests in contracts No material contracts in which the directors have an interest were entered into in the current year other than the transactions detailed in note 36 to the financial statements. Shareholders’ spread An analysis of holdings extracted from the register of ordinary shareholders at 30 June 2017 is listed below: Percentage of Number of share capital shareholders (nearest 1%)
The Bidvest Group Limited 1 52% Public: Companies 20 8% Trusts 5 0% Individuals 518 1% Pension and Provident Funds 50 25% Non-public: Directors 5 1% Broad Based Economic Empowerment partner Ovanhu Investments (Proprietary) Limited – related party 1 13% 600 100%
64 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Directors’ remuneration The remuneration paid or accrued to directors while in office of the Company during the year ended 30 June 2017 can be analysed as follows: Bonuses Pension and Fees for Basic salary accrued medical aid services and allowances leave paid contributions Total N$’000 N$’000 N$’000 N$’000 N$’000
30 June 2017 Executive directors SI Kankondi – 2 723 – 493 3 216 T Weitz – 1 398 – 338 1 736 – 4 121 – 831 4 952 Non-executive directors P Steyn 606 606 M Mokgatle-Aukhumes 154 154 H Müseler 358 358 MK Shipanga 373 373 JD Davis 259 259 1 750 1 750 30 June 2016 Executive directors SI Kankondi – 2 748 – 319 3 067 T Weitz – 1 419 – 237 1 656 J Arnold – 2 373 3 344 1 196 6 913 – 6 540 3 344 1 752 11 636 Non-executive directors P Steyn 288 288 M Mokgatle-Aukhumes 145 145 H Müseler 360 360 MK Shipanga 353 353 JD Davis 57 57 B Eimbeck 69 69 1 272 1 272
Number of Average price Directors’ long-term incentives options N$
Executive directors SI Kankondi 250 000 10,74 T Weitz 125 000 10,74 375 000 10,74
These options were granted to directors on 23 May 2013 and 22 May 2015. Options vest in three tranches on the third, fourth and fifth years’ anniversaries respectively from the grant date and expire within 10 years of their issue, or one month after the resignation of the director. 2017 2016 Directors’ share-based payment expense N$’000 N$’000
SI Kankondi 123 170 J Arnold – 143 T Weitz 61 85 184 398 Major shareholders According to the share register, the following are the only shareholders beneficially holding, directly or indirectly, in excess of 5% of the share capital at 30 June 2017: Percentage holding
The Bidvest Group Limited 52% Ovanhu Investments (Proprietary) Limited 13% Government Institution Pension Fund 11%
Bidvest Namibia Annual Integrated Report 2017 65 Directors’ report – continued for the year ended 30 June 2017
Subsidiaries Principal subsidiary undertakings Total comprehensive income/(loss)
Effective Issued holding share capital 2017 2016 % N$ N$’000 N$’000
The Bidvest Namibia Limited subsidiaries are all incorporated in Namibia, except for Comet Investments Capital Incorporated, a company registered in the British Virgin Islands, Frigocentre Limitada and Pesca Fresca Limitada which are registered in Angola and Glenryck South Africa (Proprietary) Limited a company registered in South Africa. By the Company Bidvest Namibia Commercial Holdings (Proprietary) Limited 100,00 100 10 814 38 901 Bidvest Namibia Fisheries Holdings (Proprietary) Limited 100,00 1 613 113 789 111 177 Bidvest Namibia Foreign Exchange (Proprietary) Limited 100,00 100 – – Bidvest Namibia Information Technology (Proprietary) Limited 100,00 100 1 615 384 Bidvest Namibia Property Holdings (Proprietary) Limited 100,00 5 000 5 345 3 292 Bidvest Namibia Management Services (Proprietary) Limited 100,00 100 5 995 3 219 Through subsidiaries Atlantic Harvesters of Namibia (Proprietary) Limited 69,55 300 4 764 4 924 Bidvest Namibia Automotive (Proprietary) Limited 100,00 1 000 (22) (49) Bidvest Namibia Commercial and Industrial Services and Products (Proprietary) Limited 100,00 200 405 (574) Bidvest Namibia Plumblink (Proprietary) Limited 100,00 100 (2 469) (1 289) Bidvest Prestige Cleaning (Proprietary) Limited 100,00 100 75 – Carheim Investments (Proprietary) Limited 100,00 4 000 (1 204) 1 177 Caterplus Namibia (Proprietary) Limited 100,00 1 (12 130) (170) Cecil Nurse (Namibia) (Proprietary) Limited 100,00 100 798 3 666 Comet Investments Capital Incorporated 69,55 762 1 285 4 852 Diroyal Motors (SWA) (Proprietary) Limited 100,00 4 000 6 518 23 102 Elzet Development (Proprietary) Limited 100,00 100 432 115 Frigocentre Limitada^^ 34,74 76 243 – – Glenryck South Africa (Proprietary) Limited^^^^ 51,00 120 (1 467) – GSA Trading Namibia (Proprietary) Limited^^^ 51,00 100 – – Kolok (Namibia) (Proprietary) Limited 100,00 100 343 2 559 Lenkow (Proprietary) Limited 100,00 2 000 4 034 3 828 Lubrication Specialists (Proprietary) Limited 100,00 200 (953) (107) Luderitz Bay Shipping & Forwarding (Proprietary) Limited 100,00 100 547 621 Manica Group Namibia (Proprietary) Limited 100,00 279 187 5 754 201 Matador Enterprises (Proprietary) Limited 100,00 1 000 (3 462) 17 179 Minolco (Namibia) (Proprietary) Limited 100,00 100 7 536 5 660 Monjasa Namibia (Proprietary) Limited 57,00 100 2 149 1 923 Mukorob Pelagic Processors (Proprietary) Limited 69,55 19 014 – 815 Namfish Pelagic Industries (Proprietary) Limited 69,55 100 – 1 874 Namibian Sea Products (Proprietary) Limited 69,55 46 997 005 (76) 8 552 Namsov Fishing Enterprises (Proprietary) Limited 69,55 100 000 52 888 194 284 Namsov Industrial Properties (Proprietary) Limited 69,55 1 000 160 201 Ocean Fresh (Proprietary) Limited 69,55 2 – – Orca Marine (Proprietary) Limited 60,00 100 397 (106) Pesca Fresca Limitada* 34,08 152 486 – – Rennies Travel (Namibia) (Proprietary) Limited 100,00 1 000 5 167 4 840 Sarusas Development Corporation (Proprietary) Limited 69,55 1 000 207 (311) Starting Right Investments Two Zero Five (Proprietary) Limited 69,55 100 2 412 2 301 Taeuber & Corssen SWA (Proprietary) Limited 100,00 6 000 000 (276) (10 960) T&C Properties Namibia (Proprietary) Limited 100,00 8 000 7 564 6 562 T&C Trading (Proprietary) Limited 100,00 4 000 508 2 248 Tetelestai Mariculture (Proprietary) Limited 69,55 100 (4 431) 2 298 Trachurus Fishing (Proprietary) Limited^ 69,55 60 524 15 238 (7 792) Twafika Fishing Enterprises (Proprietary) Limited 52,23 1 000 (64) 591 United Fishing Enterprises (Proprietary) Limited 69,55 4 000 (31 475) (21 156) Voltex (Namibia) (Proprietary) Limited 100,00 100 (10 347) (12 848) Waltons Namibia (Proprietary) Limited 100,00 6 4 774 8 233 Walvis Bay Stevedoring Company (Proprietary) Limited 55,00 100 (5 043) (2 014) Walvis Bay Airport Services (Proprietary) Limited 100,00 5 000 (583) (135) Woker Freight Services (Proprietary) Limited 100,00 28 636 1 508 5 608
66 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Total comprehensive income/(loss)
Effective Issued holding share capital 2017 2016 % N$ N$’000 N$’000
Associates Carapau Fishing (Proprietary) Limited 17,39 4 000 9 667 30 137 Industria Alimentar Carnes De Moçambique Limitada 27,82 117 834 328 11 206 2 021 Namibia Bureau de Change (Proprietary) Limited 49,00 500 000 1 907 2 781 Joint venture !OE#GAB Fishing Enterprises (Proprietary) Limited 34,78 100 – – * The Group has de facto control as a result of the management agreement between Comet Investment Capital Incorporated and Pesca Fresca Limitada. ^ The Group has a direct shareholding of 84% in Trachurus Fishing (Proprietary) Limited. ^^ The Group has a direct shareholding of 99% in Frigocentre Limitada through its de facto control of Pesca Fresca Limitada. ^^^ The company’s name was changed from Shelfco Investments One Five Three (Proprietary) Limited. ^^^^ The company is managed by Simply Pesche (Proprietary) Limited through a management agreement.
Holding company The Company is a subsidiary of The Bidvest Group Limited, a company registered in the Republic of South Africa and listed on the Johannesburg Stock Exchange (JSE). Directors and secretary The following persons were directors of the Company during the year and up to the report signing date: Date appointed /resigned Nationality
SI Kankondi (Chief executive) Appointed: 10 August 2007 Namibian M Mokgatle-Aukhumes Appointed: 10 August 2007 Namibian HH Müseler Appointed: 10 August 2007 Namibian PC Steyn Appointed: 17 January 2007 South African MK Shipanga Appointed: 21 August 2009 Namibian T Weitz (Financial director) Appointed: 18 August 2011 Namibian LP Ralphs (Chairman) Appointed: 26 February 2014 South African JD Davis Appointed: 1 December 2015 South African HP Meijer Appointed: 17 February 2017 South African
The company secretary is V Hocutt whose business and postal addresses are: Business address Postal address 1 Ballot Street PO Box 6964 Windhoek Ausspannplatz Namibia Windhoek Namibia Auditors Deloitte & Touche will continue in office in accordance with section 278(2) of the Companies Act of Namibia. Approval of annual financial statements The annual financial statements were approved by the board of directors and authorised for issue on 24 August 2017.
Bidvest Namibia Annual Integrated Report 2017 67 Accounting policies for the year ended 30 June 2017
1. Summary of significant accounting policies The principal accounting policies applied in the preparation of these separate and consolidated financial statements are set out below. These accounting policies have been consistently applied to all years presented, unless otherwise stated. 2. Basis of preparation The consolidated and separate financial statements of Bidvest Namibia Limited have been prepared in accordance with, and comply with International Financial Reporting Standards (IFRS), adopted by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB, Financial Pronouncements as issued by the Financial Reporting Standards Council and the Companies Act of Namibia, 2004. The financial statements are prepared in accordance with the going concern principle under the historical cost basis, except for biological assets and financial instruments, which are stated at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
It is important to note that this financial information has been prepared in accordance with IFRS that are effective 30 June 2017. Standards and interpretations that are not yet effective and will be adopted in future years as they become effective for the Group are listed in note 41. The directors and management have not yet assessed the implications of standards and interpretations that are not yet effective.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Although estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances (the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources), the actual outcome may differ from these estimates in note 38.
The financial statements are presented in Namibia dollar (N$), which is the Group’s functional currency. All financial information has been rounded to the nearest thousand unless stated otherwise.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 3. New and revised accounting standards The Group adopted the following amendments to standards with an initial application date of 1 July 2016: IFRS 7 Financial Instruments: Disclosures – Amendments resulting from Annual Improvements 2012 – 2014 Cycle IFRS 7 was amended to clarify when servicing arrangements are in the scope of its disclosure requirements on continuing involvement in transferred financial assets in cases when they are derecognised in their entirety.
The Group did not transfer any financial asset during the current financial year. Future transfers will be treated based on theamended standard. IFRS 11 Joint Arrangements – Amendments regarding the accounting for acquisitions of an interest in a joint operation The amendments require business combination accounting to be applied to acquisitions of interests in joint operations that constitute a business combination.
The Group did not acquire any interest in joint operations. Future acquisitions will be treated based on the amended standard. IFRS 12 and IFRS 10 Consolidated Financial Statements – Amendments regarding the application of the consolidation exception IASB issued Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28). Clarity was given on how to account for investment entities.
The Group does not have investment entities, as a result the amendment had no impact. IAS 1 Amendments resulting from the disclosure initiative It has been made explicit that companies should disaggregate line items on the statement of financial position and in the statement of profit or loss and other comprehensive income if this provides helpful information to users and those line items specified by IAS 1 on the statement of nancialfi position can be aggregated if they are immaterial.
The adoption of the changes to this statement has had no impact on the Group. No adjustment has been made to the results for the year ended 30 June 2017. IAS 16 Property, plant and equipment – Amendments bringing bearer plants into the scope of IAS 16 Bearer plants are now in the scope of IAS 16 Property, Plant and Equipment for measurement and disclosure purposes.
The amendment had no impact on the Group. IAS 19 Employee Benefits – Amendments resulting from Annual Improvements 2012 – 2014 Cycle IAS was amended to clarify that high-quality corporate bonds or government bonds used in determining the discount rate should be issued in the same currency in which benefits are to be paid.
The amendment had no material impact on the Group.
68 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
3. New and revised accounting standards (continued) IAS 27 Separate Financial Statements Amendments reinstating the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity’s separate financial statements.
The amendment had no impact on the Group. IAS 38 Intangible Assets The amendment introduces a rebuttable presumption that the use of revenue-based amortisation methods for intangible assets is inappropriate.
The amendment had no impact on the Group. 4. Consolidation (a) Business combinations The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. (b) Subsidiaries Subsidiaries are all entities (including special purpose entities) controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The term Group refers to the consolidated results of Bidvest Namibia Limited and all its subsidiaries.
Inter-company transactions, balances and unrealised gains of transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
The investment in subsidiaries are recognised at cost less accumulated impairment in the separate financial statements of the Company. (c) Non-controlling interests Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the date ofacquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. (d) Interest in equity-accounted investees The Group’s interests in equity-accounted investees comprise interests in associates and a joint venture.
Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement and have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The Group’s share of its equity-accounted investees’ post-acquisition profits or losses are recognised in the statement of comprehensive income, and its share of post-acquisition movements in reserves are recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an equity-accounted investee equals or exceeds its interest in the equity-accounted investee, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the equity-accounted investee.
The Group determines at each reporting date whether there is any objective evidence that the investment in equity-accounted investee is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the equity-accounted investee and its carrying value and recognises the amount in profit or loss.
Unrealised gains on transactions between the Group and its equity-accounted investees are eliminated to the extent of the Group’s interest in the equity- accounted investees. Unrealised losses are also eliminated in the same way as unrealised gains, unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group. Dilution gains and losses arising in investments in equity-accounted investees are recognised in either profit or loss or other comprehensive income.
The Group has elected to eliminate unrealised gains or losses resulting from transactions between the Group and its equity-accounted investees against the underlying assets.
Bidvest Namibia Annual Integrated Report 2017 69 Accounting policies – continued for the year ended 30 June 2017
5. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive committee that makes strategic decisions.
The reportable segments of the Group have been identified based on the nature of the businesses. This basis is representative fo the internal structure for management purposes.
“Segmental operating profit” includes revenue and expenses directly relating to a business segment but exclude net finance charges and taxation which cannot be allocated to any specific segment.
“Segmental trading profit” is defined as operating profit excluding items of a capital nature and is the basis on which management’s performance is assessed.
Segment operating assets and liabilities include property, plant and equipment, investments, inventories, trade and other receivables, trade and other payables, banking assets and liabilities, insurance funds and post-retirement obligations but excludes current taxation and deferred taxation. Intangible assets are allocated to the cash-generating unit in the segment to which they relate. The segment report is included in the directors’ report. 6. Translation of foreign currencies (a) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (Namibia dollar). The consolidated financial statements are presented in Namibia dollar (N$), which is the Group’s functional and presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Foreign currency gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security, and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation differences on non- monetary financial assets and liabilities such as equities held at fair value through profit and loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available for sale are includedin the available-for-sale reserve in other comprehensive income. (c) Group companies The results and financial position of all the Group entities that have a functional currency different from the presentationcurrency are translated into the presentation currency as follows:
(i) Assets and liabilities: each statement of financial position balance presented is translated at the closing rate at the date of that statement of financial position;
(ii) Income and expenses: each statement of comprehensive income presented is translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the date of the transactions); and
(iii) All resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operation and of borrowings and other instruments designated as hedges of such investments, are taken to other comprehensive income. When a foreign operation is partially disposed of such that control, significant influence or joint control is lost or sold in its entirety, exchange differences that were recorded in other comprehensive income are recognised in the profit or loss as part of the gain or loss on the sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
70 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
7. Property, plant and equipment All property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/(losses) on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the carrying amount of the asset or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Depreciation is calculated on the straight-line method to write off the cost of each asset to its residual value over its estimated useful life as follows: Item Useful life
Buildings 48 – 84 years Plant and machinery 3 – 20 years Office furniture, fittings and equipment 3 – 10 years Motor vehicles 4 years Fishing vessels dry docking and fishing equipment 3 – 10 years Computer equipment 3 years Fishing vessels 25 – 55 years Rental assets in field 3 years
Depreciation is generally recognised in profit or loss.
Land is not depreciated as it is deemed to have an indefinite life.
Refits of fishing vessels which relate to separate components are capitalised when incurred, and amortised over their useful lives.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where horter,s the term of the relevant lease.
The residual values and useful lives of the assets are reviewed, and adjusted if appropriate on a prospective basis, at each financial year-end. The residual value of an item of property, plant and equipment is the amount it estimates it would receive currently for the asset if the asset were already of the age and in the condition expected at the end of its useful life. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Repairs and maintenance are generally charged to expenses during the financial period in which they are incurred. However, major renovations are capitalised and included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are recognised within profit or loss. 8. Intangible assets (a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/ associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in “intangible assets”. Goodwill on acquisition of associates is included in “investments in associates” and is tested for impairment as part of the overall balance. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash- generating units that are expected to benefit from the business combination in which the goodwill arose identified according to operating segment. The recoverable amount of cash-generating units to which goodwill is allocated is estimated annually on 31 March each year. (b) Trademarks and licences and fishing quota rights Acquired trademarks and licences are shown at historical cost. Fishing quota rights, trademarks and other intangible assets have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of the intangible assets over their estimated useful lives (5 to 20 years). An intangible asset is recognised when it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably.
Bidvest Namibia Annual Integrated Report 2017 71 Accounting policies – continued for the year ended 30 June 2017
8. Intangible assets (continued) (c) Computer software Costs associated with maintaining computer software programs are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the required criteria are met. Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Computer software development costs that are recognised as assets are amortised over their estimated useful lives which does not exceed seven years.
The amount related to the amortisation of intangible assets is included under administration expense in the profit or loss. 9. Financial instruments 9.1 Financial assets 9.1.1 Classification The Group classifies its financial assets as subsequently measured at either amortised cost or at fair value through profit or loss on the basis of both the entity’s business model for managing financial assets and the contractual cash flow characteristics of the financial asset. Financial assets are measured at amortised cost if both of the following conditions are met: the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and the contractual term of the financial asset give rise on specified dates to cash flows that are solely payments of principalnd a interest on the principal amount outstanding. If a measurement or recognition inconsistency is eliminated or significantly reduced by designating a financial asset as measured at fair value through profit or loss, the Group has the discretion to elect this option at the financial asset’s initial recognition. Classification is not based on an instrument-by-instrument approach, but is determined at a higher level of aggregation.
This classification is determined at initial recognition of a financial asset. At this point, the Group may make an irrevocableelection to present in profit or loss subsequent changes in fair value of an investment in an equity instrument that is not held for trading.
Trade and other receivables are classified as financial assets at amortised cost.
9.1.2 Recognition and measurement Initial measurement Regular purchases and sales of financial assets are recognised on the trade date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in profit or loss.
Derecognition Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Subsequent measurement Financial assets at fair value are subsequently carried at fair value. Financial assets at amortised cost are carried at amortised cost using the effective interest method. Realised and unrealised gains or losses arising from changes in the fair value of a financial asset that is measured at fair value and is not part of a hedging relationship shall be recognised in profit or loss within “realised gains/(losses) on financial assets” or “unrealised gains/(losses) on financial assets” in the period in which they arise, unless the financial asset is an investment in an equity instrument and the entity has elected to present gains and losses on that investment in other comprehensive income. Gains or losses on a financial asset that is measured at amortised cost and is not part of a hedging relationship shall be recognised in profit or loss when the financial asset is derecognised, impaired or reclassified, and through the amortisation process. Dividend income from financial assets at fair value and financial assets at amortised cost is recognised in profit or loss as part of investment income when the Group’s right to receive payments is established. Interest on financial assets at fair value and financial assets at amortised cost calculated using the effective interest rate method is recognised in profit or loss as part of investment income. 9.2 Financial liabilities 9.2.1 Classification The Group classifies its financial liabilities as at fair value through profit or loss or as financial liabilities at amortisedst. co The Group has the option to classify the financial liability as at fair value through profit or loss if it is held for trading or if the prerequisites in IAS 39 par 9(b) are met and it is designated upon initial recognition at fair value through profit or loss. Trade and other payables are classified as financial liabilities at amortised cost.
72 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
9. Financial instruments (continued) 9.2.2 Recognition and measurement Initial measurement Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. They are initially recognised at fair value plus, in the case of financial liabilities not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the liability. Financial liabilities carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in profit or loss. Derecognition Financial liabilities are derecognised when they are extinguished – the obligation specified in the contract is discharged or cancelled or expires. The difference between the carrying amount of the financial liability derecognised and consideration paid/payable is recognised in profit or loss. Subsequent measurement Financial liabilities at amortised cost are carried at amortised cost using the effective interest method. Financial liabilities at fair value are subsequently carried at fair value, unless the exceptions in IAS 39 par 47 apply. Gains or losses on a financial liability that is measured at amortised cost and is not part of a hedging relationship shall be recognised in profit or loss when the financial liability is derecognised, impaired or reclassified, and through the amortisation process. Realised and unrealised gains or losses arising from changes in the fair value of a financial liability that is measured at fair value and is not part of a hedging relationship shall be recognised in profit or loss within “realised gains/(losses)” on financial liabilities or “unrealised gains/(losses) on financial liabilities” in the period in which they arise. 10. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. 11. Impairment of financial assets The Company and the Group assesses at each financial year-end whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the Company and the Group uses to determine that there is objective evidence of an impairment loss include: – significant financial difficulty of the issuer or obligor; – a breach of contract, such as a default or delinquency in interest or principal payments; – the Company, for economic or legal reasons relating to the borrower/debtor’s financial difficulty, granting to the borrower/debtor a concession that the lender would not otherwise consider; – it becomes probable that the borrower/debtor will enter bankruptcy or other financial reorganisation; – the disappearance of an active market for that financial asset because of financial difficulties; or – observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including: adverse changes in the payment status of borrowers in the portfolio; and national or local economic conditions that correlate with defaults on the assets in the portfolio.
The Company first assesses whether objective evidence of impairment exists. (a) Assets carried at amortised cost The amount of the loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the original effective interest rate of the financial asset. The carrying amount of the financial asset is reduced and the amount of the loss is recognised in profit or loss. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Company may measure impairment on the basis of an instrument’s fair value using an observable market price.
Receivables with a short duration are not discounted. (b) Equity instruments for which the entity has elected to present gains and losses in other comprehensive income In the case of equity instruments for which the entity has elected to present gains and losses in other comprehensive income, a significant or prolonged decline in the fair value of the instrument below its cost is also evidence that the assets are impaired. If any such evidence exists, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial sseta previously recognised in profit or loss – is removed from equity and recognised in profit or loss. (c) Reversals of impairment If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss, unless the investment is an equity instrument and the entity has elected to present gains and losses on that investment in other comprehensive income, in which case impairment losses recognised in profit or loss on equity instruments are reversed through other comprehensive income.
Bidvest Namibia Annual Integrated Report 2017 73 Accounting policies – continued for the year ended 30 June 2017
12. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on either the first-in, first-out (FIFO) method or average costs basis. The cost of the finished goods comprises raw materials, direct labour, other direct cost and related production overheads, but excludes orrowingb costs. Net realisable value is the estimate of the selling price in the ordinary course of business, less the cost of completion and selling expenses. 13. Biological assets Biological assets consist of oysters.
Biological assets are stated at fair value less estimated point-of-sale cost. The fair value of oysters is determined using the present value of expected net cash flows from the oysters, discounted using a pre-tax market determined rate. Fair value changes are recognised in profit or loss.ll A expenses incurred in establishing and maintaining the assets are recognised in profit or loss. All costs incurred in acquiring biological assets are capitalised.Finance charges are not capitalised. 14. Trade and other receivables Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they rea presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. 15. Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. 16. Impairment of non-financial assets Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment at each reporting date. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of the fair value less cost to sell of the asset and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels at which there are separately identifiable cash flowscash-generating ( units). Non- financial assets other than goodwill that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. Impairment losses and reversal of impairment losses are recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or a cash-generating unit. 17. Non-current assets held-for-sale Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use are classified as held-for-sale and are carried at the lower of carrying value and fair value less cost to sell. Immediately before classification as assets held- for-sale, the measurement of the assets (and all assets and liabilities in a disposal group) is determined in accordance with applicable IFRS. Then, on initial classification as assets held-for-sale, non-current assets and disposal groups are recognised at the lower of the carrying amounts and fair value less costs to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, and employee benefit assets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held-for-sale and subsequent gains or losses on remeasurement are recognised in the profit or loss. Gains are not recognised in excess of any cumulative impairment loss.
A discontinued operation results from the sale or abandonment of an operation that represents a separate major line of business or geographical area of operations and of which the assets, net profit or loss and activities can be distinguished physically, operationally and for financial reporting purposes. A subsidiary acquired exclusively with the view to resale is also classified as a discontinued operation. Classification as a discontinued operation cursoc upon disposal or when the operation meets the criteria to be classified as held-for-sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is restated as if the operation had been discontinued from the start of the comparative period. 18. Share capital and equity An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Ordinary shares and non-redeemable preference shares with discretionary dividends are classified as equity. Other shares, including mandatory redeemable preference shares, are classified as liabilities.
Incremental cost directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.
74 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
19. Current and deferred income tax The tax expense for the year comprises current and deferred tax. Tax is recognised in the profit or loss, except to the extentthat it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the financial year-end in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not recognised if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the financial year-end and are xpectede to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 20. Trade and other payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. 21. Provisions and contingent liabilities Provisions are recognised when the Group has a legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will occur, and where a reliable estimate can be made of the amount of the obligation. Where the effect of discountingis material, provisions are discounted. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.
The Group discloses a contingent liability when: – it has a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or – it is not probable that an outflow of resources would be required to settle an obligation; or – the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognised as a liability. 22. Borrowings Borrowings are recognised initially at the fair value of the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the year-end. 23. Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s and Company’s activities and includes net billings, commission related to clearing and forwarding transactions, fees earned for services rendered and payments received in exchange for goods. Revenue is shown net of value added tax, returns, rebates and discounts and after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefitswill flow to the entity and when specific criteria have been met, for each of the Group’s activities as described below. The amount of revenue is not consideredto be reliably measured until all contingencies relating to the sales, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement and there is no continuing involvement of management.
Where the Group acts as an agent and is remunerated on a commission basis, only net commission income, and not the value of the business handled, is included in revenue.
Bidvest Namibia Annual Integrated Report 2017 75 Accounting policies – continued for the year ended 30 June 2017
23. Revenue recognition (continued) Revenue is recognised as follows: (i) Sale of goods Revenue from the sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to het buyer. (ii) Rendering of services Revenue arising from rendering of services is based on the stage of completion determined by reference to services performed to date as a percentage of total services to be performed. (iii) Interest income Interest income is recognised on a time proportion basis using the effective interest rate method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flows discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate. (iv) Rental income Rental income is recognised over the period of the lease on a straight-line basis. (v) Dividend income Dividends are recognised when the right to receive payment is established. (vi) Commissions and fees earned Where the Company acts as an agent and is remunerated on a commission basis, only net commission income and not the value of the business handled, is included in revenue. 24. Finance charges Finance charges comprise interest payable on borrowings calculated using the effective interest rate method. The interest expense component of finance lease payments is recognised in profit or loss using the effective interest rate method.
Finance charges directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. 25. Leases Leases that transfer substantially all the risks and rewards of ownership of the underlying asset to the Group are classified sa finance leases. Assets acquired in terms of finance leases are capitalised at the lower of fair value of the respective assets and the present value of the minimum lease payments at inception of the lease, and depreciated over the estimated useful life of the asset. The capital element of future obligations under the leases is included as a liability in the statement of financial position. Lease payments are allocated using the effective interest rate method to determine the lease finance cost, which is charged against income over the lease period, and the capital repayment, which reduces the liability to the lessor.
Assets effectively disposed of under finance leases are treated as receivables, and are presented at amount equal to the net investment in the lease. Lease receipts are apportioned between capital and finance income portions using the interest rate implicit in each lease.
Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases.Operating leases, which have a fixed determinable escalation, are charged against income on a straight-line basis. Leases with contingent escalations are expensed as and when incurred. 26. Employee benefits Short-term employee benefits The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacationleave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted. The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absences occur. The expected cost of profit-sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance. Profit-sharing and bonus plans The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the Group’s shareholders after certain adjustments. The Group recognises an accrual where contractually obliged or where there is past practice that has created a constructive obligation. Defined contribution plans Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.
76 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
26. Employee benefits (continued) Other post-employment obligations Certain companies in the Group provide post-retirement healthcare defined benefits to their retirees. The entitlement to theseenefits b is usually conditional on the employee remaining in service up to retirement age and is applicable to employees employed prior to 31 December 1998. The expected costs of these benefits are accrued over the period of employment. The post-retirement value shown is the proportion of the total accrued liability as at the valuation date, assuming that the liability accrues uniformly over the member’s working lifetime, where the total accrued liability is calculated as the discounted value of the expected benefits that become payable after retirement based on the assumptions regarding the expected increase in medical aid premiums and the expected number of debts and withdrawals. The cost is actuarially determined. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged to other comprehensive income. The obligations are valued annually by independent actuaries.
The Group’s obligation for post-retirement medical aid benefits to past and current employees is actuarially determined and provided for in full. The movement is recognised through other comprehensive income. Statutory termination obligations The statutory termination obligations are classified as a defined benefit and are payable on death, retrenchment and at retirement at age of 65. Severance pay payable upon retirement at age of 65, as per the Labour Act, is applicable to the Group, as the employees have a normal retirement age of 65 in some of the entities. The obligation for severance benefits is calculated in respect of all employees that qualify in terms of the Labour Act, and is provided for in full. The cost of providing the benefits is determined using the projected unit credit method, with actuarial valuations being carried out at het end of each reporting period. The movement for the year is recognised in profit or loss when it is incurred. 27. Dividends to shareholders Dividends to shareholders are accounted for once they have been approved by the board of directors. 28. Share-based payments The Bidvest Namibia Share Incentive Scheme grants options to acquire shares in the Company to executive directors and management. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options is measured using the Black-Scholes-Merton model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve. 29. BEE ownership transaction Equity instruments issued to a BEE partner at less than fair value are accounted for as share-based payments.
The difference between the fair value of the equity instruments issued and the consideration received is accounted for as an expense in profit or loss at the date the goods and services are received, with a corresponding increase in equity. No service or other conditions exist for BEE partners. A restriction on the BEE partner to transfer the equity instrument subsequent to its vesting is not treated as a vesting condition, but is factored into the fair value determination of the instrument.
The fair value is measured using the Monte Carlo option pricing valuation model. The valuation technique is consistent with generally acceptable valuation methodologies for pricing financial instruments, and incorporates all factors and assumptions that knowledgeable willing participants would consider in setting the price of the equity instrument. 30. Headline earnings per share The Group presents headline earnings per share in accordance with the SAICA circular 2 of 2015.
Bidvest Namibia Annual Integrated Report 2017 77 Statements of financial position at 30 June
Group Company
2017 2016 2017 2016 Notes N$’000 N$’000 N$’000 N$’000
ASSETS Non-current assets Property, plant and equipment 1 790 606 864 213 – – Intangible assets 2 37 574 47 685 – – Goodwill 2 244 254 244 311 – – Investment in subsidiaries 3 – – 363 377 363 377 Investment in joint venture 4 – – – – Investment in associates 4 90 228 83 374 – – Other financial assets 6 – 12 714 – 12 714 Deferred tax assets 13 1 772 7 956 – – Trade and other receivables 9 36 203 55 445 – – 1 200 637 1 315 698 363 377 376 091 Current assets Inventories 7 528 233 486 560 – – Biological assets 8 2 705 3 413 – – Short-term portion of lease receivables 5 34 608 – – Other financial assets 6 12 714 – 12 714 Trade and other receivables 9 556 946 557 088 477 401 514 198 Current tax assets 25 6 042 1 927 – – Cash and cash equivalents 10 742 986 744 167 36 917 7 153 1 849 660 1 793 763 527 032 521 351 Assets classified as held for sale 11 36 553 50 563 – – 1 886 213 1 844 326 527 032 521 351 Total assets 3 086 850 3 160 024 890 409 897 442 EQUITY AND LIABILITIES Capital and reserves attributable to equity holders Share capital 12 2 120 2 120 2 120 2 120 Share premium 12 660 272 660 272 660 272 660 272 Other reserves 45 026 52 946 16 988 16 988 Retained earnings 1 137 488 1 133 355 210 948 217 980 1 844 906 1 848 693 890 328 897 360 Non-controlling interest in equity 3 384 874 455 218 – – Total equity 2 229 780 2 303 911 890 328 897 360 Non-current liabilities Deferred tax liabilities 13 137 857 170 946 – – Post-employment obligations 14 16 956 16 036 – – Borrowings 16 10 230 17 398 – – Operating lease liability 30 1 444 1 070 – – 166 487 205 450 – – Current liabilities Trade and other payables 15 459 200 409 092 45 36 Borrowings 16 229 223 232 186 – – Short-term portion of finance lease liability 31 34 608 – – Current tax payable 25 2 126 8 777 36 46 690 583 650 663 81 82 Total liabilities 857 070 856 113 81 82 Total equity and liabilities 3 086 850 3 160 024 890 409 897 442
78 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Statements of profit or loss and other comprehensive income for the year ended 30 June
Group Company
2017 2016 2017 2016 Notes N$’000 N$’000 N$’000 N$’000
Revenue 18 3 776 448 3 858 596 39 254 158 818 Cost of sales 18 (3 204 399) (3 127 135) – – Gross profit 572 049 731 461 39 254 158 818 Administration expenses (485 416) (451 642) (432) (841) Other income 19 12 302 13 020 – – Operating profit 21 98 935 292 839 38 822 157 977 Finance income 22 34 419 35 883 1 139 1 437 Finance costs 23 (21 962) (18 750) – – Share of (loss)/profit of a joint venture 4 (82) 2 873 – – Share of profit of associates 4 7 834 10 517 – – Profit before income tax 119 144 323 362 39 961 159 414 Income tax expense 25 (57 326) (88 248) (363) (458) Profit for the year 61 818 235 114 39 598 158 956 Other comprehensive income Items that will not be reclassified to profit or loss Actuarial gains/(losses) on post-employment obligations 14 153 (212) – – Items that are or may be reclassified subsequently to profit or loss Movement on translation of foreign subsidiary (16 851) 24 198 – – Total comprehensive income for the year 45 120 259 100 39 598 158 956 Profit attributable to: Equity holders of the Company 50 610 184 222 39 598 158 956 Non-controlling interest 11 208 50 892 – – 61 818 235 114 39 598 158 956 Comprehensive income attributable to: Equity holders of the Company 42 483 195 867 39 598 158 956 Non-controlling interest 2 637 63 233 – – 45 120 259 100 39 598 158 956 Basic earnings per share (cents) 28 23,88 86,92
Bidvest Namibia Annual Integrated Report 2017 79 Statements of changes in equity for the year ended 30 June
Share Share Retained capital premium earnings N$’000 N$’000 N$’000
Group Balance at 1 July 2015 2 120 660 272 1 074 061 Comprehensive income Profit for the year – – 184 222 Other comprehensive income for the year – – (212) Total comprehensive income – – 184 010 Transactions with equity holders Employee share option scheme – value of employee services – – – Acquisition of non-controlling without a change in control (10 261) Dividends declared and paid – – (114 455) Total transactions with equity holders – – (124 716) Balance at 30 June 2016 2 120 660 272 1 133 355 Comprehensive income Profit for the year – – 50 610 Other comprehensive income for the year – – 153 Total comprehensive income – – 50 763 Transactions with equity holders Employee share option scheme – value of employee services – – – Dividends declared and paid – – (46 630) Total transactions with equity holders – – (46 630) Balance at 30 June 2017 2 120 660 272 1 137 488
Share Share Retained capital premium earnings N$’000 N$’000 N$’000
Company Balance at 1 July 2015 2 120 660 272 173 479 Comprehensive income Profit for the year – – 158 956 Total comprehensive income – – 158 956 Transactions with equity holders Dividend declared and paid – – (114 455) Total transactions with equity holders – – (114 455) Balance at 30 June 2016 2 120 660 272 217 980 Comprehensive income Profit for the year – – 39 598 Total comprehensive income – – 39 598 Transactions with equity holders Dividend declared and paid – – (46 630) Total transactions with equity holders – – (46 630) Balance at 30 June 2017 2 120 660 272 210 948
80 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Attributable to equity holders of the parent
Foreign Share- BEE Non- currency based share-based controlling translation payment payment interest Total reserve reserve reserve Total in equity equity N$’000 N$’000 N$’000 N$’000 N$’000 N$’000
19 909 2 200 16 988 1 775 550 502 480 2 278 030
– – – 184 222 50 892 235 114 11 857 – – 11 645 12 341 23 986 11 857 – – 195 867 63 233 259 100
– 1 992 – 1 992 – 1 992 (10 261) (60 141) (70 402) – – – (114 455) (50 354) (164 809) – 1 992 – (122 724) (110 495) (233 219) 31 766 4 192 16 988 1 848 693 455 218 2 303 911
– – – 50 610 11 208 61 818 (8 280) – – (8 127) (8 571) (16 698) (8 280) – – 42 483 2 637 45 120
– 360 – 360 – 360 – – – (46 630) (72 981) (119 611) – 360 – (46 270) (72 981) (119 251) 23 486 4 552 16 988 1 844 906 384 874 2 229 780
Attributable to equity holders of the parent
BEE share-based payment reserve Total N$’000 N$’000
16 988 852 859
– 158 956 – 158 956
– (114 455) – (114 455) 16 988 897 360
– 39 598 – 39 598
– (46 630) – (46 630) 16 988 890 328
Bidvest Namibia Annual Integrated Report 2017 81 Statements of cash flows for the year ended 30 June
Group Company
2017 2016 2017 2016 Notes N$’000 N$’000 N$’000 N$’000
Cash flows from operating activities Cash receipts from customers 3 780 160 3 896 969 – – Cash paid to suppliers and employees (3 595 093) (3 508 782) (401) (837) Cash generated/(absorbed) by operations 32 185 067 388 187 (401) (837) Finance income 22 34 419 35 883 1 139 1 437 Finance costs (excluding post-retirement medical obligation) 23 (20 746) (17 671) – – Dividends received 19 4 007 2 175 39 254 158 818 Dividends paid to equity holders 29 (46 630) (114 455) (46 630) (114 455) Dividends paid to non-controlling interest (72 981) (50 354) – – Income tax paid 33 (95 296) (108 914) (373) (432) Net cash (outflow)/inflow from operating activities (12 160) 134 851 (7 011) 44 531 Cash flows from investing activities Acquisition of subsidiary, net of cash acquired 39 – (205 334) – – Acquisition of equity-accounted investees 4 – (70 467) – – Intangible assets acquired 2 (1 488) (25 211) – – Property, plant and equipment acquired 1 (58 550) (120 669) – – Proceeds on disposal of property, plant and equipment 68 556 8 032 – – Net cash inflow/(outflow) from investing activities 8 518 (413 649) – – Cash flows from financing activities Borrowings (repaid)/raised 16 (12 751) 24 015 – – Repayments from/(loans to) related parties 9 19 474 44 219 36 775 (234 877) Acquisition of non-controlling interest – (14 372) – – Net cash inflow/(outflow) from financing activities 6 723 53 862 36 775 (234 877) Net increase/(decrease) in cash and cash equivalents 3 081 (224 936) 29 764 (190 346) Foreign exchange differences 35 (6 882) 6 973 – – Cash and cash equivalents Balance at the beginning of the year 673 070 891 033 7 153 197 499 Cash and cash equivalents Balance at the end of the year 10 669 269 673 070 36 917 7 153
82 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Notes to the financial statements for the year ended 30 June
Land and Fishing Other buildings vessels assets Total N$’000 N$’000 N$’000 N$’000
1. Property, plant and equipment 1.1 Group 30 June 2017 Opening net book amount 378 722 254 380 231 111 864 213 Acquisition through a business combination (note 39) – – 862 862 Exchange differences (6 107) (3 982) (3 223) (13 312) Additions 20 727 2 142 36 144 59 013 Disposals (456) (1 043) (10 163) (11 662) Depreciation (13 509) (386) (58 060) (71 955) Reclassified as held-for-sale – (36 553) – (36 553) Transfers 190 – (190) – Closing net book amount 379 567 214 558 196 481 790 606 Cost 425 461 263 615 472 409 1 161 485 Accumulated depreciation (45 894) (49 057) (275 928) (370 879) Closing net book amount 379 567 214 558 196 481 790 606 Group 30 June 2016 Opening net book amount 273 335 338 415 216 918 828 668 Acquisition through a business combination 69 000 – 3 107 72 107 Exchange differences 8 071 (1 560) 5 915 12 426 Additions 34 931 7 552 78 186 120 669 Disposals (999) (34 616) (12 177) (47 792) Depreciation (10 255) (4 848) (56 199) (71 302) Reclassified as held-for-sale – (50 563) – (50 563) Transfers 4 639 – (4 639) – Closing net book amount 378 722 254 380 231 111 864 213 Cost 413 502 313 932 480 885 1 208 319 Accumulated depreciation (34 780) (59 552) (249 774) (344 106) Closing net book amount 378 722 254 380 231 111 864 213
1.2 Land and buildings A register of land and buildings is available for inspection at the registered office of the Company by members or their duly authorised representatives. The property in Lenkow (Proprietary) Limited has been bonded in favour of Ford Finance South Africa for the amount of N$6,0 million by registering a mortgage bond over Erf 52. The property has a carrying value of N$83,5 million. A fishing vessel with a carrying value of N$33,9 million has been pledged as security on a loan from Banco Fomento de Angola. Leasehold improvement payable to Oryx Properties Limited is secured by a leasehold property with a carrying value of N$3,3 million.
Bidvest Namibia Annual Integrated Report 2017 83 Notes to the financial statements – continued for the year ended 30 June
Office furniture/ equipment Plant and and computer machinery Vehicles equipment Total N$’000 N$’000 N$’000 N$’000
1. Property, plant and equipment (continued) 1.3 Other assets consist of: Group 30 June 2017 Opening net book amount 165 055 35 299 30 757 231 111 Acquisition through a business combination (note 39) 428 272 162 862 Exchange differences (2 699) (371) (153) (3 223) Additions 12 620 9 530 13 994 36 144 Disposals (8 666) (1 292) (205) (10 163) Depreciation charge for the year (39 689) (8 795) (9 576) (58 060) Transfers – – (190) (190) Closing net book amount 127 049 34 643 34 789 196 481 Cost 293 186 87 267 91 956 472 409 Accumulated depreciation (166 137) (52 624) (57 167) (275 928) Closing net book amount 127 049 34 643 34 789 196 481 Group 30 June 2016 Opening net book amount 154 921 33 399 28 598 216 918 Acquisition through a business combination 2 152 – 955 3 107 Exchange differences 5 111 629 175 5 915 Additions 52 453 11 512 14 221 78 186 Disposals (10 302) (1 431) (444) (12 177) Depreciation charge for the year (39 298) (8 810) (8 091) (56 199) Transfers 18 – (4 657) (4 639) Closing net book amount 165 055 35 299 30 757 231 111 Cost 317 056 83 125 80 704 480 885 Accumulated depreciation (152 001) (47 826) (49 947) (249 774) Closing net book amount 165 055 35 299 30 757 231 111
84 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Computer software, trademarks and warehouse Fishing Goodwill development rights Total N$’000 N$’000 N$’000 N$’000
2. Intangible assets 2.1 Group 30 June 2017 Opening net book amount 244 311 25 939 21 746 291 996 Impairment (57) – – (57) Exchange differences – – (2 181) (2 181) Additions – 1 488 – 1 488 Amortisation – (4 080) (5 338) (9 418) Closing net book amount 244 254 23 347 14 227 281 828 Cost 246 020 39 396 76 641 362 057 Impairment (1 766) – (168) (1 934) Accumulated amortisation – (16 049) (62 246) (78 295) Closing net book amount 244 254 23 347 14 227 281 828 Group 30 June 2016 Opening net book amount 118 918 4 437 23 284 146 639 Impairment (1 709) – – (1 709) Acquisition through a business combination 127 102 214 – 127 316 Disposals – – (390) (390) Exchange differences – – 4 677 4 677 Additions – 25 211 – 25 211 Amortisation – (3 923) (5 825) (9 748) Closing net book amount 244 311 25 939 21 746 291 996 Cost 246 020 37 905 84 524 368 449 Impairment (1 709) – (168) (1 877) Accumulated amortisation – (11 966) (62 610) (74 576) Closing net book amount 244 311 25 939 21 746 291 996
Bidvest Namibia Annual Integrated Report 2017 85 Notes to the financial statements – continued for the year ended 30 June
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 2. Intangible assets (continued) 2.2 Goodwill allocation Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to the operating segment. An operating segment-level summary of the goodwill allocation is presented below: Fishing 19 886 19 886 – – Freight and Logistics 40 228 40 228 – – Food and Distribution 49 881 49 913 – – Commercial Industrial and Products 5 448 5 473 – – Properties 6 163 6 163 – – Automotive 122 648 122 648 – – 244 254 244 311 – – 2.3 Goodwill impairment tests The recoverable amount of a CGU is determined based on value-in-use calculations. The carrying amounts of the fishing, freight and logistics, food and distribution, commercial industrial and products, properties and automotive divisions were determined to be lower than their recoverable amounts of N$2 billion, N$175 million, N$384 million, N$114 million, N$90 million and N$249 million respectively. These calculations use pre-tax cash flow projections based on budgets approved by management covering a four-year period. In determining the rates used, management have taken into account industry specific risks and the economic outlook. Cash flows beyond the four-year period are extrapolated using the growth rates stated below: All segments Growth rate 4% – 8% 6% – 8% Growth in perpetuity after forecast period 4% – 8% 6% – 8% Internal rate of return (WACC)/discount rate 11% 11% 3. Investment in subsidiaries Unlisted share investment Bidvest Namibia Fisheries Holdings (Proprietary) Limited 359 363 359 363 Bidvest Namibia Foreign Exchange (Proprietary) Limited – – Bidvest Namibia Commercial Holdings (Proprietary) Limited – – Bidvest Namibia Management Services (Proprietary) Limited – – Bidvest Namibia Information Technology (Proprietary) Limited – – Bidvest Namibia Property Holdings (Proprietary) Limited 4 014 4 014 363 377 363 377 The carrying amounts of subsidiaries are shown net of impairment losses. For more information on the subsidiary undertakings refer to the directors’ report. Refer to the directors’ report for the full segmental report.
86 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
3. Investment in subsidiaries (continued) Composition of the Group Number of wholly owned Place of subsidiaries incorporation Segments and operation 2017 2016
Fishing Walvis Bay 13 13 Freight and Logistics Walvis Bay 5 5 Services Windhoek 4 3 Industrial and Commercial Products Windhoek 6 5 Food and Distribution Windhoek 4 4 Automotive Windhoek 3 3 Corporate Services Windhoek 8 8 Number of non-wholly owned subsidiaries
Segments 2017 2016
Fishing Walvis Bay 5 4 Freight and logistics Walvis Bay 3 3 Comprehensive income/(loss) Proportion of non-controlling allocated to non-controlling Accumulated non-controlling interests interests interests
2017 2016 2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000
Details of non-wholly owned subsidiaries that have material non-controlling interests Name of subsidiary Namsov Fishing Enterprises (Proprietary) Limited 30,45% 30,45% 10 768 53 795 333 172 371 125 Glenryck South Africa (Proprietary) Limited 49,00% 0,00% (719) – (719) – Pesca Fresca Limitada 51,00% 51,00% 1 337 5 050 47 503 77 472 Trachurus Fishing (Proprietary) Limited 0,00% 0,00% – (7 974) – – Twafika Fishing Enterprises (Proprietary) Limited 24,90% 24,90% (16) 147 (54) 817 Walvis Bay Stevedoring Company (Proprietary) Limited 45,00% 45,00% (1 246) (911) 3 432 4 678 Monjasa Namibia (Proprietary) Limited 36,44% 36,44% 924 827 1 367 1 222 Orca Marine (Proprietary) Limited 40,00% 40,00% 160 (42) 63 (96) Oshivelelwa Trading Enterprises (Proprietary) Limited 50,00% 50,00% – – – – 11 208 50 892 384 764 455 218 The Group has de facto control over Pesca Fresca Limitada, incorporated in Angola, as a result of the management agreement.
Bidvest Namibia Annual Integrated Report 2017 87 Notes to the financial statements – continued for the year ended 30 June
Proportion of ownership interest
2017 2016 2017 2016 4. Investment in joint venture and associates Joint venture !OE#GAB Fishing Enterprises (Proprietary) Limited 50% 50%
N$’000 N$’000 N$’000 N$’000
The Group’s share of (loss)/profit (82) 2 873 – – Carrying amount of the Group’s interest in joint venture – – – – Proportion of ownership interest
2017 2016 2017 2016
Associates Carapau Fishing (Proprietary) Limited 25% 25% Namibia Bureau de Change (Proprietary) Limited 49% 49% Industria Alimentar Carnes Moçambique Limitada 40% 40%
N$’000 N$’000 N$’000 N$’000
Share of profit Carapau Fishing (Proprietary) Limited 2 417 8 346 – – Namibia Bureau de Change (Proprietary) Limited 935 1 363 – – Industria Alimentar Carnes Moçambique Limitada 4 482 808 – – The Group’s share of profit 7 834 10 517 – – Investment in associates Carapau Fishing (Proprietary) Limited 13 154 10 736 – – Namibia Bureau de Change (Proprietary) Limited 9 794 9 840 – – Industria Alimentar Carnes Moçambique Limitada 67 280 62 798 – – Carrying amount of the Group’s interest in associates 90 228 83 374 – – Reconciliation of movement in associates Opening balance 83 374 3 203 – – Acquired during the year – 70 467 – – Share of current year profit 7 834 10 517 – – Dividend received (980) – – – Elimination of unrealised (profit)/loss – (813) – – Carrying amount of the Group’s interest in associates 90 228 83 374 – – All associates and the joint venture, with the exception of Namibia Bureau de Change (Proprietary) Limited, are involved in activities related to the fishing division. Namibia Bureau de Change (Proprietary) Limited is involved in financial service activities.
88 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Namibia Industria Carapau Bureau Alimentar Fishing de Change Carnes (Proprietary) (Proprietary) Moçambique Total Limited Limited Limitada N$’000 N$’000 N$’000 N$’000
4. Investment in joint venture and associates (continued) Summarised financial information of the associates are set out below: 30 June 2017 Current assets 138 477 54 600 12 258 71 619 Non-current assets 249 482 126 659 967 121 856 Current liabilities 136 853 62 212 1 127 73 514 Non-current liabilities 61 461 61 432 29 – Revenue 680 691 230 645 10 349 439 697 Profit for the year 22 781 9 667 1 908 11 206 Other comprehensive income for the year –––– Total comprehensive income for the year 22 781 9 667 1 908 11 206 Summarised financial information of the associates are set out below: 30 June 2016 Current assets 226 220 39 028 12 420 174 772 Non-current assets 261 310 138 832 567 121 911 Current liabilities 218 162 54 006 808 163 348 Non-current liabilities 76 838 75 906 16 916 Revenue 385 519 236 682 10 365 138 472 Profit for the year 34 939 30 137 2 781 2 021 Other comprehensive income for the year –––– Total comprehensive income for the year 34 939 30 137 2 781 2 021 The above financial information has been equity accounted in the Group’s results. The joint venture is not material to the Group and therefore no disclosure was made thereof. Industria Alimentar Carnes Moçambique Limitada’s functional currency is Mozambique Metical.
Bidvest Namibia Annual Integrated Report 2017 89 Notes to the financial statements – continued for the year ended 30 June
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 5. Finance lease receivables Gross finance lease receivable – within one year 34 619 – – Amounts receivable under finance leases 34 619 – – Less: Unearned finance income – (11) – – Present value of finance lease receivables 34 608 – – Current assets 34 608 – – 34 608 – – Minolco (Namibia) (Proprietary) Limited signed an agreement with Standard Bank Namibia Limited to cede the rights relating to rental agreements signed between Minolco (Namibia) (Proprietary) Limited and customers to Standard Bank Namibia Limited while maintaining the service obligations related thereto. The average lease period is less than one year and the average effective borrowing rate is the prime interest rate. 6. Other financial assets Non-current other financial assets Loan to other entity (i) – 12 714 – 12 714 Current other financial assets Loan to other entity (i) 12 714 – 12 714 – (i) The loan was provided to the Namibia Procurement Fund and carries interest at fixed rate of 5,5% and is repayable as a single bullet payment on 30 September 2017. The fair value of the loan is N$12,5 million (2016: N$11,5 million) at the Namibian prime rate of 10,75% (2016: 10,75%). 7. Inventories Finished goods 314 299 302 456 – – Raw material 6 416 – – – New vehicles 70 739 74 159 – – Used vehicles 26 399 16 346 – – Demonstration vehicles 22 772 15 540 – – Parts and accessories 99 173 90 022 – – 539 798 498 523 – – Less: Provision for obsolete inventory (11 565) (11 963) – – 528 233 486 560 – – Carrying value of inventory at net realisable value (included above) 14 217 10 625 – – The cost of inventories recognised as an expense during the year was N$2,4 billion (2016: N$2,4 billion). Financial interest registered over the vehicles to secure the floor plan liabilities. 8. Biological assets Opening balance 3 413 4 064 – – Value changes caused by Birth and growth of animals 9 898 9 493 – – Increase due to purchases 1 249 2 408 – – Mortalities (4 854) (4 887) – – Samples/donations (10) (21) – – (Loss)/profit due change in fair value (167) 538 – – Decrease due to sales (6 824) (8 182) – – Oysters 2 705 3 413 – – Current 2 705 3 413 – – Biological asset consists of oysters. The Group is exposed to a number of risks relating to its growing of oysters arising from environmental and climatic changes, toxic algae blooms and other contamination of water space. The Group has extensive processes in place to monitor and mitigate these risks.
90 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 9. Trade and other receivables Trade receivables – third parties 384 660 374 560 – – Trade receivables – related parties (note 36) 13 011 14 772 – – Less: Allowance for impairment (15 189) (19 233) – – Trade receivable 382 482 370 099 – – Related-party loans (note 36) 66 418 83 708 477 398 514 173 Other receivables 87 805 87 438 3 25 Less: Allowance for impairment (24 758) (26 132) – – Financial instruments trade and other receivables 511 947 515 113 477 401 514 198 Prepayments 25 467 54 312 – – Receiver of Revenue – VAT 55 735 43 108 – – Non-financial instruments trade and other receivables 81 202 97 420 – – 593 149 612 533 477 401 514 198 Non-current assets 36 203 55 445 – – Current assets 556 946 557 088 477 401 514 198 593 149 612 533 477 401 514 198 Trade receivables are provided for based on estimated irrecoverable amounts from the sale of goods or rendering of services, determined by reference to past default experience. Included in the Group’s trade receivables balance are debtors with a carrying amount of N$102,9 million (2016: N$66,4 million) which were past due at the reporting date but not impaired. The Group has not provided for these as there has not been a significant change in credit quality. The ageing of amounts past due but not impaired is as follows: Past due 0 – 30 days 57 830 47 529 – – Past due 31 – 90 days 29 653 13 647 – – Past due 91 – 180 days 9 214 1 879 – – Past due 181 + days 6 243 3 387 – – 102 940 66 442 – –
Movement in the Group’s allowance for impairment of trade receivables are as follows: Balance at the beginning of the year (19 233) (11 170) – – Net provisions raised during the year (107) (5 277) – – Bad debts written off during the year 3 818 2 072 – – Exchange difference 550 (771) – – Assumed through a business combination (217) (4 087) – – (15 189) (19 233) – –
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. Trade receivables amounting to N$11,5 million (2016: N$26 113) were placed under liquidation during the year. At 30 June 2017 the carrying amounts of accounts receivable approximate their fair values due to the short-term maturities of these assets. Another receivable amounting to N$13,6 million (2016: N$13,6 million) was reflected as a receivable from Merit Investments (Proprietary) Limited at year-end relating to facilitation fees paid in respect of the quota purchased from the Namibia Fish Consumption Promotion Trust. Management have provided for this receivable as they regard it as doubtful. In addition other receivables include an amount of N$11,2 million (2016: N$12,5 million), which has been fully provided for, relating to amounts owed by RJ Industrial for assets removed by the interim management of Pesca Fresca Limitada during prior years in which they had assumed the role of management of that company.
Bidvest Namibia Annual Integrated Report 2017 91 Notes to the financial statements – continued for the year ended 30 June
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 10. Cash and cash equivalents For the purposes of the statement of cash flows the year-end cash and cash equivalents comprise the following: Bank and cash balances 705 290 717 355 620 7 153 Money market funds Bank Windhoek Corporate Fund 19 497 14 862 18 167 – Old Mutual Unit Trust Corporate Fund 18 130 – 18 130 – IJG Securities EMH Prescient Unit Trust Fund 69 11 950 – – 742 986 744 167 36 917 7 153 Bank overdraft (note 16) (73 717) (71 097) – – Cash and cash equivalents 669 269 673 070 36 917 7 153 Bank overdraft facilities amounting to N$280,7 million (2016: N$254,0 million) are secured by suretyships given by the Group (37.1(c) for detail on the overdraft facilities). The money market funds can be converted to cash within a notice period of 24 hours. At 30 June 2017, the carrying amounts of cash and cash equivalents approximate the fair values due to its short-term maturities. 11. Asset classified as held-for-sale Fishing vessel 36 553 50 563 – – The Group disposed of a fishing vessel, MFV Namibian Star, during the current financial period which was classified as held-for-sale for the first time in the 2016 financial period, a profit of N$9,7 million was recognised on the sale of the vessel. The Group intends to dispose of a fishing vessel within the fishing segment, MFV Sunfish, in the next 12 months. The fishing vessel is being sold as the Group does not have a sufficient fishing quota. No impairment loss was recognised on reclassification of the fishing vessel as the directors expect that the fair value less costs to sell to be higher than the carrying amount. No liabilities are associated with the asset held-for-sale. 12. Share capital, premium and reserves Share capital Authorised share capital 540 000 000 ordinary shares of N$ 0,01 each 5 400 5 400 5 400 5 400 Issued share capital Number of shares issued 2 120 2 120 2 120 2 120 Balance at beginning of year 2 120 2 120 2 120 2 120 Shares issued during the year – – – – Issued share capital 2 120 2 120 2 120 2 120 The unissued ordinary shares are under the control of the directors until the next annual general meeting. Share premium Opening balance 660 272 660 272 660 272 660 272 Issued during the year – – – – Closing balance 660 272 660 272 660 272 660 272
92 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 13. Deferred tax assets/(liabilities) Deferred taxation assets 1 772 7 956 – – Deferred taxation liabilities (137 857) (170 946) – – (136 085) (162 990) – – Movement in deferred tax balances: Opening balance (162 990) (192 410) – – Change in rate – Namibian rate change – 5 965 – – Acquisition through a business combination (182) (2 678) – – Per statement of comprehensive income (temporary differences) (note 25) 27 061 27 177 – – Exchange rate difference – 22 – – Prior period adjustment 26 (666) – – Recognised directly in equity – (400) – – Closing balance (136 085) (162 990) – –
Assets Liabilities Net N$’000 N$’000 N$’000
Tax effect of temporary differences – 2017 Capital allowances on property, plant and equipment (191) (165 081) (165 272) Capital allowances on intangible assets (5) (589) (594) Computed tax losses 1 336 33 963 35 299 Trade and other receivables (86) (2 394) (2 480) Trade, other payables and provisions 17 2 850 2 867 Staff-related allowances and liabilities 662 3 421 4 083 Inventory related – (13 943) (13 943) Operating lease liabilities 39 614 653 Unrealised foreign exchange difference – 3 320 3 320 Other – (18) (18) Net temporary differences subject to deferred tax 1 772 (137 857) (136 085) Tax effect of temporary differences – 2016 Capital allowances on property, plant and equipment (4 521) (181 740) (186 261) Capital allowances on intangible assets (5) (692) (697) Computed tax losses 11 996 34 103 46 099 Trade and other receivables (737) (11 906) (12 643) Trade, other payables and provisions 16 958 974 Staff-related allowances and liabilities 1 265 4 906 6 171 Inventory related (86) (14 645) (14 731) Operating lease liabilities 28 469 497 Unrealised foreign exchange difference – (2 453) (2 453) Other –5454 Net temporary differences subject to deferred tax 7 956 (170 946) (162 990) Deferred income taxes are calculated on all temporary differences under the liability method using a tax rate of 32% (2016: 32%). Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. Management has performed projections to support future taxable profits. The Group did not recognise deferred income tax assets of N$36,0 million (2016: N$12,3 million) in respect of losses amounting to N$112,5 million (2016: N$38,4 million). The assessed losses do not expire, they can be carried forward indefinitely, unless the respective companies cease trading for two consecutive years.
Bidvest Namibia Annual Integrated Report 2017 93 Notes to the financial statements – continued for the year ended 30 June
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 14. Post-employment obligations Total liability recognised in the statement of financial position: Post-retirement medical benefit obligation 13 841 13 447 – – Statutory severance benefits 3 115 2 589 – – 16 956 16 036 – – 14.1 Post-retirement medical benefit obligation Opening balance 13 447 12 800 – – Imputed interest costs 1 216 1 079 – – Payments to medical aid in respect of retired employees (829) (785) – – Actuarial (gains)/losses (153) 212 – – Current service cost 160 141 – – Actuarially determined present value of total obligation 13 841 13 447 – – Certain companies in the Group provide post-retirement medical benefit subsidies to certain retired employees and are responsible for provision of post-retirement medical benefit subsidies to a limited number of current employees. The Group’s policy is to perform a valuation every second year. The last valuation was done during June 2016 by Towers Watson, independent actuaries. The post-retirement value shown is the proportion of the total accrued liability as at the valuation date, assuming that the liability accrues uniformly over the member’s working lifetime, where the total accrued liability is calculated as the discounted value of the expected benefits that become payable after retirement based on the assumptions regarding the expected increase in medical aid premiums and the expected number of deaths and withdrawals. The following key actuarial assumptions were used: Discount rate 9,60% 9,60% – – Healthcare cost inflation 7,00% 7,00% – – Mortality rate: Mortality before retirement has been based on the SA 85-90 mortality table and on the PA(90) ultimate mortality table adjusted less one year of age for post- retirement medical benefits. The post-retirement medical benefit obligation is based on the assumption that the required contributions to the medical aid scheme will increase at a faster rate than the normal inflation rate. The discount rate and the healthcare cost inflation assumptions should be considered in relationto each other. The sensitivity of the liability is illustrated on the assumption of a 1% increase/decrease in the healthcare cost and consumer price inflation compared to the valuation assumptions keeping the investment return assumption constant: 2017 2016
% change % change N$’000 in liability N$’000 in liability
Sensitivity – Group Base liability as at 30 June 2017 13 841 13 447 Discount rate +1% 12 480 (10) 12 125 (10) Discount rate -1% 15 479 12 15 038 12 Medical subsidy inflation rate +1% 15 492 12 15 051 12 Medical subsidy inflation rate -1% 12 447 (10) 12 093 (10) Post-retirement mortality PA(90) – 3 years 14 353 4 13 944 4 Post-retirement mortality PA(90) – 1 years 13 335 (4) 12 955 (4)
94 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Group Company
2017 2016 2017 2016 14. Post-employment obligations (continued) 14.1 Post-retirement medical benefit obligation (continued) Current employees 11 12 Retirees 30 30 Total number of beneficiaries 41 42 This benefit is available to all employees employed prior to 31 December 1998 for Manica Group Namibia (Proprietary) Limited and its subsidiaries and Rennies Travel (Namibia) (Proprietary) Limited. The benefit is available to all employees employed prior to 2004 by Taeuber & Corssen SWA (Proprietary) Limited and its subsidiaries, except for those to whom the liability has been paid out in cash.
N$’000 N$’000 N$’000 N$’000
14.2 Statutory severance benefits Liability recognised in statement of financial position: Defined benefit obligation 3 115 2 589 – – Changes in the present value of the defined statutory severance benefit Opening defined benefit obligation 2 589 3 020 – – Total expense – as shown below 1 061 (152) – – Benefit payments (535) (279) – – Closing defined benefit obligation 3 115 2 589 – – The amounts recognised in the statement of comprehensive income are as follows: Interest cost 137 187 – – Actuarial loss (2 198) (3 206) – – Current service cost 3 122 2 867 – – 1 061 (152) – – The principal actuarial assumptions used for accounting purposes are: Discount rate 9,89% 10,50% n/a n/a Salary increase rate 6,50% 6,10% n/a n/a
N$’000 N$’000 N$’000 N$’000 15. Trade and other payables Trade payables – third parties 335 567 270 988 – – Trade payables – related parties (note 36) 11 336 12 657 – – Accruals 46 025 49 954 – – Unpresented cheques 3 090 2 339 45 36 Contingent consideration – 5 499 – – Customer deposits 12 410 4 993 – – Financial instruments trade and other payables 408 428 346 430 45 36 Accruals – employee liabilities 41 559 52 181 – – Receiver of Revenue – VAT 9 213 10 481 – – Non-financial instruments trade and other payables 50 772 62 662 – – 459 200 409 092 45 36 At 30 June 2017, the carrying amounts of accounts payable approximate their fair values due to the short-term maturities of these liabilities.
Bidvest Namibia Annual Integrated Report 2017 95 Notes to the financial statements – continued for the year ended 30 June
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 16. Borrowings Bank overdraft (note 10) 73 717 71 097 – – Floor plan liabilities (i) 148 186 152 812 – – Secure bank loan (ii) 12 927 20 739 – – Finance lease liabilities (iii) 3 634 3 947 – – Other 989 989 – – 239 453 249 584 – – Non-current assets 10 230 17 398 – – Current assets 229 223 232 186 – – 239 453 249 584 – – (i) The floor plans were provided by Ford Financial Services South Africa (Proprietary) Limited, First National Bank of Namibia Limited and Bank Windhoek Limited. The floor plans carry interest at: Ford Financial Services South Africa (Proprietary) Limited (South African prime plus 2%), First National Bank of Namibia Limited (Namibian prime less 0,75%) and Bank Windhoek Limited (Namibian prime less 0,5%). The floor plans are repayable within 12 months. The floor plan with Ford Financial Services South Africa (Proprietary) Limited is secured by a property in Lenkow (Proprietary) Limited to an amount of N$6 million and N$50 million is secured by a surety given by Bidvest Namibia Limited. A financial interest is registered over vehicles inventory as security for the floor plan liability. (ii) The loan was provided by Banco Fomento de Angola and carries interest at a fixed rate of 11,00% and is repayable over four years. The loan is secured by a fishing vessel, MFV St Padarn, which has a book value of N$33,9 million. The fair value of the loan is N$12,9 million at the Namibian prime rate of 10,75%. (iii) Capitalised finance lease liabilities carry interest at the Namibian prime rate of 10,75% and have repayment terms of between three and seven years. The capitalised finance lease liabilities are secured by a leasehold property with a carrying amount of N$3,3 million. 17. Contingencies and commitments Capital commitments The following commitments were entered into in respect of capital expenditure at year-end: Approved by directors and contracted 16 214 8 416 – – Approved by directors but not yet contracted 82 398 65 076 – – The committed expenditure relates to property, plant and equipment and will be financed by available resources and bank facilities. Commitment to provide loans – 7 458 – 7 458 Contingent liabilities In 2016, Walvis Bay Stevedoring (Proprietary) Limited won its arbitration case which relates to the 64 employees that were retrenched in the 2014 financial year. The union has appealed against the ruling and there is uncertainty whether the arbitration case will result in a favourable outcome. The total exposure to reinstate the affected employees is N$19,8 million. Rennies Travel (Namibia) (Proprietary) Limited issued travel related vouchers of N$1,9 million in favour of its customers for services to be rendered subsequent to the reporting date. This results in a maximum exposure of N$1,9 million in favour of its service providers. The customers were not invoiced for these vouchers at the reporting date. Namsov Fishing Enterprises (Proprietary) Limited is defending a legal case brought by a former employee. If the defence against the case is unsuccessful, then cost claimed by the former employee could amount to N$18 million.
96 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 17. Contingencies and commitments (continued) Guarantees by third parties Guarantee facilities have been arranged for the Group with Standard Bank Namibia Limited and First National Bank Namibia Limited to a maximum exposure of: 98 335 70 982 289 455 232 360 Guarantees in favour of: Customs and Excise 64 383 60 283 – – Maersk (Proprietary) Limited 650 650 – – Erongo Regional Electricity Distributor 148 148 – – Philip Morris South Africa (Proprietary) Limited – 3 100 – – Namibian Ports Authority 5 100 6 300 – – Suretyships for bank overdrafts 26 070 – 289 455 232 360 Other 1 984 501 – – 98 335 70 982 289 455 232 360 Most of the facilities above have been secured by interlinking suretyships provided by the Group and its subsidiaries restricted to the amount of the limit allocated to each subsidiary. The bank overdrafts at the reporting date amounted to N$73,7 million (2016: N$71,1 million) (note 16). The security for the floor plan liabilities provided by the Company at the reporting date amounted to N$148,2 million (2016: N$152,8 million). The Group has issued letters of support to third parties for various subsidiaries in the Group amounting to N$38,5 million. 18. Revenue Sale of goods 3 411 569 3 554 954 – – Rendering of services 310 441 249 810 – – Dividend income – subsidiaries – – 38 000 157 880 Dividend income – local – – 1 254 938 Commissions and fees earned 54 438 53 832 – – 3 776 448 3 858 596 39 254 158 818 Revenue is derived as follows: Revenue including disbursements 4 232 823 4 275 949 39 254 158 818 Disbursements on behalf of principals and clients (456 375) (417 353) – – 3 776 448 3 858 596 39 254 158 818 Related cost of sales: Sale of goods 3 003 415 2 929 966 – – Rendering of services 179 982 176 979 – – Commissions and fees earned 21 002 20 190 – – 3 204 399 3 127 135 – – 19. Other income Profit on disposal of property, plant and equipment 6 331 218 – – Dividend income – local 4 007 2 175 – – Other 1 964 10 627 – – 12 302 13 020 – – 20. BEE share-based payment reserve The BEE ownership transaction charge is recognised as the difference of the net value of the consideration received and the net value of shares issued 16 988 16 988 16 988 16 988
During the 2010 financial year the Bidvest Group Limited concluded agreements with the BEE partners to facilitate the acquisition of an effective interest of 15,46% in Bidvest Namibia Limited. The BEE groups are Endeni Investments (Proprietary) Limited (0,66%) and Ovanhu Investments (Proprietary) Limited (14,80%). The transaction was valued at N$207 360 000 and was financed by the issue of N$170 969 834 A class and N$42 742 460 B class preference shares and a loan from Bid Industrial Holdings (Proprietary) Limited. The fair value recognised at the grant date was N$16 987 708 and was determined using the Monte Carlo simulation.
Bidvest Namibia Annual Integrated Report 2017 97 Notes to the financial statements – continued for the year ended 30 June
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 21. Operating profit Operating profit from continuing operations is stated after charging: Auditors’ remuneration Audit fees 7 687 7 719 – – Other services 665 336 – – 8 352 8 055 – – Share-based payments 360 1 992 – – Depreciation and impairment of property, plant and equipment 71 955 71 302 – – Amortisation and impairment of intangible assets 9 475 11 457 – – Statutory severance benefits – current service cost 3 122 2 867 – – Non-executive directors’ compensation Attendance fees 1 750 1 272 – 407 Operating lease charges Premises 25 956 20 015 – – Equipment and vehicles 8 660 8 070 – – 34 616 28 085 – – Foreign exchange losses/(gains) Realised 3 068 (2 269) – – Unrealised 14 109 (2 876) – – 17 177 (5 145) – – Expenses by nature Administrative fees 4 099 3 528 – – Auditor’s remuneration 8 352 8 055 – – Bad debts written off 3 818 2 072 – – Inventory, materials and consumables 2 430 355 2 375 922 – – Depreciation, amortisation and impairments 81 430 84 469 – – Non-executive directors’ attendance fees 1 750 1 272 – 407 Employee salaries and related benefits 597 977 595 728 – – Foreign exchange gains 17 177 (5 145) – – Fuel and lubricants for fishing vessels 120 947 111 878 – – Operating lease charges 34 616 28 085 – – Other expenses 201 424 238 535 432 434 Port-related costs, cold storage costs 52 575 51 591 – – Quota-related fees 135 115 82 608 – – Royalties paid 180 180 – – Total cost of sales and administration expenses by nature 3 689 815 3 578 777 432 841 22. Finance income Interest income – bank 23 198 22 461 387 672 Interest income – related party 8 607 11 489 62 73 Interest income – other 2 614 1 933 690 692 34 419 35 883 1 139 1 437 Interest income is derived from loans and receivables at amortised cost. 23. Finance costs Cash items Interest expense – bank overdraft 5 710 6 210 – – Interest expense – floor plan 13 612 10 239 – – Interest expense – other 1 424 1 222 – – 20 746 17 671 – – Interest expense is derived from financial liabilities at amortised cost. Non-cash item Interest expense – post-retirement medical obligation 1 216 1 079 – – 21 962 18 750 – –
98 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 24. Staff and retirement benefit costs Salaries and wages paid to employees 567 133 565 509 – – Employer contributions to retirement benefits of current employees 30 844 30 219 – – 597 977 595 728 – – At 30 June 2017 approximately 3 481 (2016: 2 738) staff members were employed by the Group. 25. Income tax Namibian normal tax Current income tax – current year 82 332 120 725 363 458 – prior year (103) – – – 82 229 120 725 363 458 Deferred income tax – current year (27 061) (27 177) – – – change in rate – (5 965) – – – prior year (26) 665 – – (27 087) (32 477) – – Non-Namibian tax Foreign withholding taxes 2 184 – – – 57 326 88 248 363 458 Reconciliation of the tax expense Reconciliation between applicable tax charge and the profit before tax: Profit before tax 119 144 323 362 39 961 159 414 Tax at the applicable tax rate of 32% (2016: 32%) 38 126 103 476 12 788 51 012 Exempt income (8 893) (20 034) (12 561) (50 822) Change in tax rate – (5 965) – – Prior period adjustment (129) 665 – – Non-deductible expenses 374 1 523 136 137 Lower foreign tax rates 77 – – – Withholding tax on foreign income 2 184 – – – Deferred tax asset not raised 25 587 8 583 – – 57 326 88 248 363 328 Income tax assets and liabilities Current tax assets Tax refunds receivable 6 042 1 927 – – Current tax liabilities Income tax payable 2 126 8 777 36 46 26. Retirement benefit information Retirement fund The total value of contributions to the Bidvest Namibia Limited Retirement Fund during the year amounted to: Members’ contributions 15 277 15 612 – – Employer’s contributions 30 844 30 219 – – 46 121 45 831 – – This is a defined contribution plan fund and is regulated by the Pension Fund Act. The fund is valued actuarially on an annual basis. The fund was last valued at 30 June 2016 and its assets were found to exceed its actuarially calculated liabilities. Medical aid funds The total value of company contributions during the year 22 767 22 677 – –
Bidvest Namibia Annual Integrated Report 2017 99 Notes to the financial statements – continued for the year ended 30 June
27. Share-based payments The Bidvest Namibia Share Incentive Scheme grants options to executive directors and senior employees of the Group to acquire shares in the Company. The share option scheme has been classified as an equity-settled scheme and therefore an equity-settled share-based payment reserve has been recognised. Each employee’s share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry no rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The Bidvest Namibia remuneration committee recommends the number of options to be granted during a financial year and provides uidelinesg which include the individual’s performance and the individual’s ability to influence Bidvest Namibia’s results. The Group Chief Executive Officer and Group Financial Director then propose the number of options to be allocated to the various employees, subject to approval by the board of directors. Fair value Exercise at grant price date Number Grant date Expiry date (N$) (N$)
Option series 1. Granted on 23 May 2013 2 015 000 23 May 2013 22 May 2023 11,30 12,55 2. Granted on 22 May 2015 1 477 500 22 May 2015 21 May 2025 9,90 10,99 The average share price of Bidvest Namibia Limited during the year was N$9,20 (2016: N$10,50). Options vest in three tranches on the third, fourth and fifth year’s anniversaries respectively from the initial grant date. Options lapse upon the termination of an option holder’s employment in the Group. Options granted were priced using the Black-Scholes-Merton model. Expected volatility is based on the historical share price volatility.
Inputs to the model: Option series 12
Grant date share price N$12,55 N$10,99 Exercise price N$11,30 N$ 9,90 Expected volatility 45% 30% Option life 5 – 10 years 5 – 10 years Dividend yield 5,04% 5,00% Risk-free interest rate 6,00 – 6,75% 8,00 – 8,93% Reconciliation of movements in share options during the year: 2017 2016
Average Average price price Number (N$) Number (N$)
Option series 1 Beginning of the year 1 461 000 11,30 1 576 000 11,30 Granted during the year – – Resignations (302 000) (115 000) End of year 1 159 000 1 461 000 Option series 2 Beginning of the year 1 327 500 9,90 1 477 500 9,90 Granted during the year – – Resignations (222 000) (150 000) End of year 1 105 500 1 327 500
2017 2016 N$’000 N$’000
Equity-settled share-based payment reserve Balance at the beginning of the year 4 192 2 200 Share-based payment expense recognised relating to share options 1 325 2 180 Resignations (965) (188) Balance at the end of year 4 552 4 192
100 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Group Company
2017 2016 2017 2016 ’000 ’000 ’000 ’000
28. Earnings per share Weighted average number of shares Weighted average number of shares in issue for basic earnings per share and headline earnings per share: 211 953 211 953 – – No adjustments to the weighted average number of shares were considered necessary as outstanding staff share options do not have a dilutive effect. N$’000 N$’000 N$’000 N$’000 Attributable earnings Basic earnings per share are based on profit attributable to equity holders of the Company. 50 610 184 222 – – Basic earnings per share (cents) 23,88 86,92 – – Headline earnings Profit attributable to equity holders of the Company 50 610 184 222 – – Profit on the disposal of property, plant and equipment (4 300) (1 023) – – Bargain purchase (140) – – – Impairment of intangible assets 57 2 267 – – Non-controlling interest in equity 1 262 (2 850) – – 47 489 182 616 – – Headline earnings per share (cents) 22,41 86,16 – – No unissued shares have a dilutive effect. 29. Dividends An interim dividend for the year amounting to N$8,5 million (2016: N$42,4 million) was declared and paid to shareholders registered on 10 March 2017. This amounted to an interim dividend paid of 4,0 cents per share, based on ordinary shares in issue of 211 953 002. A final dividend amounting to N$12,7 million (2016: N$38,2 million) was declared payable to shareholders registered on 1 September 2017, payable on 22 September 2017. This amounts to a final dividend payable of 6,0 cents per share, based on ordinary shares in issue of 211 953 002.
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000
30. Operating leases The Group has entered into various operating lease agreements in respect of premises. Leases which have fixed determinable escalations are charged to profit or loss on a straight-line basis and liabilities are raised for the difference between the actual lease expense and the charge recognised in profit or loss. The liabilities are classified based on the timing of the reversal which will occur when the actual cash flow exceeds the income statement amounts. Operating lease liability 1 828 1 580 – – Less: Current portion included in trade and other payables (384) (510) – – Non-current portion 1 444 1 070 – – Operating lease commitments At year-end, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows: Land and buildings Due within one year 20 467 24 650 – – Due between one year and five years 36 244 28 952 – – Due thereafter 1 804 3 414 – – 58 515 57 016 – – Equipment Due within one year 629 2 073 – – Due between one year and five years 95 4 044 – – 724 6 117 – – Exposure 59 239 63 133 – –
Bidvest Namibia Annual Integrated Report 2017 101 Notes to the financial statements – continued for the year ended 30 June
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 31. Finance lease liability Minimum lease payments due Due within one year 34 619 – – 34 619 – – Less: Future finance charges – (11) – – Present value of minimum lease payments 34 608 – – Current liabilities 34 608 – – 34 608 – – Minolco (Namibia) (Proprietary) Limited signed an agreement with Standard Bank Namibia Limited to cede the rights relating to rental agreements signed between Minolco (Namibia) (Proprietary) Limited and customers to Standard Bank Namibia Limited while maintaining the service obligations related thereto. The average lease period is less than one year and the average effective borrowing rate is the prime interest rate. 32. Cash generated/(absorbed) by operations Profit before income tax 119 144 323 362 39 961 159 414 Adjustments for: Depreciation and impairment on property, plant and equipment 71 955 71 302 – – Amortisation and impairment of intangible assets 9 475 11 457 – – Share-based payments reserve 360 1 992 – – Profit on disposal of property, plant and equipment (6 331) (218) – – Adjustment of intangible assets – 558 – – Finance income (34 419) (35 883) (1 139) (1 437) Dividends received (4 007) (2 175) (39 254) (158 818) Finance costs (excluding retirement medical obligation) 20 746 17 671 – – Bargain purchase (140) – – – Increase/(decrease) in statutory severance obligation 526 (431) – – (Decrease) in post-retirement medical obligation (669) (644) – – Interest on post-retirement medical obligation 1 216 1 079 – – Movement in associates (6 854) (10 517) – – Movement in joint venture 82 (2 873) – – Increase in lease charges for straight-lining of leases 374 220 – – Changes in working capital (excluding the effects of business acquisitions and disposals and exchange rate differences): (Increase)/decrease inventories (43 635) 100 455 – – Decrease biological assets 708 651 – – Decrease/(increase) trade and other receivables 3 712 38 373 22 (5) Increase/(decrease) trade and other payables 52 824 (126 192) 9 9 185 067 388 187 (401) (837) 33. Income tax paid Balance receivable/(due) at the beginning of the year (6 850) 6 321 (46) (20) Current tax for the year (82 229) (120 725) (363) (458) Withholding tax on foreign income (2 184) – – – Assumed in a business combination (117) (1 360) – – Balance due/(receivable) at the end of the year (3 916) 6 850 36 46 (95 296) (108 914) (373) (432) 34. Non-cash flow movement Proceeds on disposal of property, plant and equipment – 56 030 – – Capitalised leased asset 463 – – – 463 56 030 – –
102 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Group
2017 2016 N$’000 N$’000 35. Effects of exchange rate fluctuations on cash and cash equivalents – Group Property, plant and equipment 13 311 (12 426) Intangibles 2 181 (4 677) Movement in foreign currency translation reserve (8 316) 11 857 Minority shareholders (8 571) 12 341 Net borrowings (1 182) (1 029) Trade and other receivables (550) (4 926) Inventories 1 990 (2 151) Trade and other payables (5 745) 7 984 (6 882) 6 973 36. Related-party balances and transactions Relationships During the year the Group, in the ordinary course of business, entered into various sale and purchase transactions with its holding company and all other related parties. The transactions occurred under terms that are negotiated between the parties. The following parties are included as related parties: The Company is controlled by The Bidvest Group Limited, a company registered in the Republic of South Africa and listed on the JSE Limited. All its subsidiaries, associates and joint ventures are considered to be related parties. Please refer to the directors’ report for a list of subsidiaries, associates and joint ventures. Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000
The following persons are included as key management: SI Kankondi M Samson GS Hough T Weitz T Mberirua H Feris W Schuckmann Non-executive directors’ compensation Attendance fees 1 750 1 272 – – Executive directors and key management compensation Salaries and other short-term employee benefits 16 250 20 894 – – Receivable from related parties Loans to related parties Bidvest Namibia Commercial Holdings (Proprietary) Limited – (i) – – 317 148 335 404 Bidvest Namibia Management Services (Proprietary) Limited – (i) – – 10 734 24 753 Bidvest Namibia Property Holdings (Proprietary) Limited – (i) – – 144 995 148 995 Bidvest Namibia Information Technology (Proprietary) Limited – (i) – – 4 521 5 021 Carapau Fishing (Proprietary) Limited – (iv) 66 418 83 708 – – 66 418 83 708 477 398 514 173 Non-current asset 36 203 55 445 – – Current asset 30 215 28 263 – – 66 418 83 708 – – The Group has provided a loan to Carapau Fishing (Proprietary) Limited, an associate company, in which it holds a 25% interest. The loan carries interest at the Namibian prime rate of 10,75% and is repayable over 60 months and is secured by a marine bond over a fishing vessel owned by the associate company that has a carrying amount of N$151,3 million.
Bidvest Namibia Annual Integrated Report 2017 103 Notes to the financial statements – continued for the year ended 30 June
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 36. Related-party balances and transactions (continued) Trade receivables Alimentar Carnes De Moçambique Limitada – (iv) – 7 448 – – Bidvest Car Rental (Namibia) (Proprietary) Limited – (ii) 155 15 – – Bidvest Paperplus (Proprietary) Limited – (ii) – 11 – – Carapau Fishing (Proprietary) Limited – (iv) 11 442 6 560 – – CaterPlus (Proprietary) Limited – (ii) 453 – – – Express Air Services (Namibia) (Proprietary) Limited – (ii) – 93 – – Manica Africa (Proprietary) Limited – (ii) 166 3 – – Minolco (Proprietary) Limited – (ii) 50 146 – – Namibia Bureau de Change (Proprietary) Limited – (iv) 13 139 – – Pureau Fresh Water Company (Proprietary) Limited – (ii) – 2 – – Royalserve Cleaning (Proprietary) Limited – (ii) – 154 – – Safcor Freight (Proprietary) Limited – (ii) 9 196 – – Solid State Power (Proprietary) Limited – (ii) 723 5 – – 13 011 14 772 – – Payable to related parties Trade payables Bid Corporate Services (Proprietary) Limited – (ii) 162 126 – – Bid Information Exchange (Proprietary) Limited – (ii) – 1 387 – – BidOffice Furniture Manufacturing (Proprietary) Limited – (ii) 262 85 – – Bidserv Industrial Products (Proprietary) Limited – (ii) – 18 – – Bidvest Bakery Solutions (Proprietary) Limited – (ii) – 170 – – Bidvest Car Rental (Namibia) (Proprietary) Limited – (ii) 77 99 – – Bidvest Paperplus (Proprietary) Limited – (ii) – 147 – – Blue Marine Frozen Foods (Proprietary) Limited – (ii) 1 425 2 070 – – Carapau Fishing (Proprietary) Limited – (iv) 1 429 – – – Cecil Nurse (Proprietary) Limited – (ii) 386 362 – – Express Freight (Namibia) (Proprietary) Limited – (ii) – 1 – – G Fox Swaziland (Proprietary) Limited – (ii) 39 – – – Hortors Stationery (Proprietary) Limited – (ii) 41 45 – – Kolok (Proprietary) Limited – (ii) 3 593 1 072 – – Lithotech Sales Cape (Proprietary) Limited – (ii) 47 33 – – Lithotech Listing and Logistics (Proprietary) Limited – (ii) 121 165 – – Minolco (Proprietary) Limited – (ii) 1 012 – – – Plumblink (South Africa) (Proprietary) Limited – (ii) 516 202 – – Pureau Fresh Water Company (Proprietary) Limited – (ii) – – Rennies Travel (Proprietary) Limited – (ii) 49 – Royalserve Cleaning (Proprietary) Limited – (ii) – 41 Silveray Statmark Company (Proprietary) Limited – (ii) 354 1 282 – – Sea World (Proprietary) Limited – (ii) – 575 – – Seating (Proprietary) Limited – (ii) 375 550 – – Steiner Hygiene (Proprietary) Limited – (ii) 261 344 – – Voltex (Proprietary) Limited – (ii) 756 3 421 – – Waltons (Proprietary) Limited – (ii) 431 462 – – 11 336 12 657 – –
104 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000 36. Related-party balances and transactions (continued) Sales to related parties Alimentar Carnes De Moçambique Limitada – (iv) 138 555 70 578 – – Bidvest Car Rental (Namibia) (Proprietary) Limited – (ii) 273 252 – – Bidvest Food Services (Proprietary) Limited – (ii) 1 786 426 – – Bidvest Paperplus (Proprietary) Limited – (ii) 10 10 – – Manica Africa (Proprietary) Limited – (ii) 346 241 – – Patleys (Proprietary) Limited – (ii) – 14 900 – – Royalserve Cleaning (Proprietary) Limited – (ii) 2 006 1 399 – – Safcor Freight (Proprietary) Limited – (ii) 688 1 142 – – Solid State Power (Proprietary) Limited – (ii) – 4 – – Minolco (Proprietary) Limited – (ii) 25 3 – – Carapau Fishing (Proprietary) Limited – (iv) 5 450 2 256 – – Foreal Investments (Proprietary) Limited – (iii) 1 905 2 792 – – 151 044 94 003 – – Finance income Carapau Fishing (Proprietary) Limited – (iv) 8 607 11 489 – – Purchases from related parties Bidvest Afcom (Proprietary) Limited – (ii) 207 1 460 – – Bid Information Exchange (Proprietary) Limited – (ii) – 11 – – Bidoffice Furniture Manufacturing (Proprietary) Limited – (ii) 4 090 3 213 – – Bidserv Industrial Products (Proprietary) Limited – (ii) – 183 – – Bidvest Bakery Solutions (Proprietary) Limited – (ii) 1 226 3 358 – – Bidvest Car Rental (Namibia) (Proprietary) Limited – (ii) 6 181 5 621 – – Bidvest Paperplus (Proprietary) Limited – (ii) – 190 – – Blue Marine Frozen Foods (Proprietary) Limited – (ii) 18 314 19 338 – – Carapau Fishing (Proprietary) Limited – (iv) 12 517 8 423 – – Cecil Nurse (Proprietary) Limited – (ii) 5 306 4 903 – – Crown National (Proprietary) Limited – (ii) 25 – – – Dauphin Office Seating S.A. (Proprietary) Limited – (ii) 46 552 – – G Fox Swaziland (Proprietary) Limited – (ii) 196 – – – Hortors Stationery (Proprietary) Limited – (ii) 1 492 791 – – Kolok (Proprietary) Limited – (ii) 54 683 94 303 – – Lithotech Listing and Logistics (Proprietary) Limited – (ii) 804 1 054 – – Lithotech Sales Cape (Proprietary) Limited – (ii) 231 211 – – Minolco (Proprietary) Limited – (ii) 21 236 27 063 – – Namibia Bureau de Change (Proprietary) Limited – (iv) – 661 – – Plumblink (South Africa) (Proprietary) Limited – (ii) 4 519 2 087 – – Royalserve Cleaning (Proprietary) Limited – (ii) 70 35 – – Sea World (Proprietary) Limited – (ii) 10 600 7 502 – – Seating (Proprietary) Limited – (ii) 4 012 3 679 – – Silveray Statmark Company (Proprietary) Limited – (ii) 10 385 7 288 – – South African Diaries (Proprietary) Limited – (ii) – 55 – – Steiner Hygiene (Proprietary) Limited – (ii) 1 952 2 199 – – Voltex (Proprietary) Limited – (ii) 12 047 12 581 – – Waltons (Proprietary) Limited – (ii) 8 483 12 508 – – 178 622 219 269 – –
Bidvest Namibia Annual Integrated Report 2017 105 Notes to the financial statements – continued for the year ended 30 June
Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000
36. Related-party balances and transactions (continued) Administration and royalty fees paid to related parties Bid Corporate Services (Proprietary) Limited (royalties) – (ii) 290 267 – – Bid Corporate Services (Proprietary) Limited (fees) – (ii) 960 880 – – McCarthy Limited – (ii) 338 – – – Waltons (Proprietary) Limited – (ii) 486 489 – – Cecil Nurse (Proprietary) Limited – (ii) 1 386 1 307 – – Minolco (Proprietary) Limited – (ii) 819 765 – – 4 279 3 708 – – Administration fees received from related parties Carapau Fishing (Proprietary) Limited – (iv) 11 260 11 984 – – Quota rental fees paid to related parties Spoto Fishing (Proprietary) Limited 14 210 13 887 – – The Group paid quota rental fees to the above mentioned company. M Shipanga is a director of Spoto Fishing (Proprietary) Limited. S Kankondi, M Mokgatle- Aukhumes and M Shipanga hold indirect shareholdings in Spoto Fishing (Proprietary) Limited. These transactions occurred under terms that are market related. (i) Direct subsidiary (ii) Fellow subsidiary of the Group (iii) M Shipanga is a director and shareholder in Foreal Investments (Proprietary) Limited and Oshivelelwa (Proprietary) Limited. (iv) An associate of the Group. Related-party transactions were carried out on terms and conditions as agreed between the parties. 37. Financial risk management 37.1 Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The financial risk management function is carried out by local management at a subsidiary level. (a) Market risk (i) Foreign exchange risk Currency risk is created due to the influence of exchange rate fluctuations. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar, euro, Angolan kwanza and Mozambique metical. Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Group’s functional currency. The Group has a policy to consider the need to take out cover on outstanding foreign currency transactions on an ad hoc basis, as and when such transactions occur. Upon the final decision and discretion of management, cover is then taken out from time to time. At 30 June 2017, if the currency had weakened/strengthened by 10% against the US dollar, euro and Angolan kwanza with all other variables held constant, post-tax profit for the year would not have been materially impacted. This can be seen in the analysis of foreign currency financial instruments at year-end: Euro US dollar Angola kwanza denominated denominated denominated Totals in ’000 ’000 ’000 N$’000
Group As at 30 June 2017 Other borrowings – – (174 444) (12 927) Trade and other receivables 700 856 – 19 822 Cash and cash equivalents 5 4 250 1 327 355 180 111 Trade and other payables (27) (4 246) – (18 544) 678 860 1 152 911 168 462 Equivalent in N$ 9 792 46 574 112 096 168 462 Group As at 30 June 2016 Other borrowings – – (248 889) (20 740) Trade and other receivables 270 3 147 – 39 547 Cash and cash equivalents 323 2 617 835 894 138 548 Trade and other payables – (2 518) – (14 772) 593 3 246 587 005 142 583 Equivalent in N$ 9 223 58 919 74 441 142 583
106 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
37. Financial risk management (continued) 37.1 Financial risk factors (continued) (a) Market risk (continued) (ii) Price risk The Group is not exposed to any significant commodity price risk or equity securities price risk. (iii) Interest rate risk The Group’s significant interest-bearing assets are cash and cash equivalents and loans granted. The Group also has significant interest-bearing borrowings. The Group’s interest rate risk arises mainly from cash invested in current and call accounts, loans granted, from its bank overdraft and borrowings. The Group’s trade and other receivables and trade and other payables do not expose the Group to any significant interest rate risks due to their short- term non-interest nature. The table below provides the interest rates for monetary financial instruments at year-end: Group Company
2017 2016 2017 2016 % % % %
Cash and cash equivalents 3,76 5,39 6,78 4,17 Bank overdraft 8,75 8,75 – – Other financial assets 5,50 5,50 – – Floor plan liabilities 10,25 – 11,50 10,25 – 11,50 – – Secure bank loan 11,00 11,00 – – Cash flow sensitivity analysis for floating interest rate bearing instruments. A change of 100 basis points in interest rates at the reporting date would have increased or (decreased) accumulated losses and surplus by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis was performed on the same basis for 2016. Group Company Effect on profit and equity Effect on profit and equity
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000
Cash and cash equivalents 7 430 7 442 369 72 Floor plan liabilities 1 482 1 528 – – Other financial assets 127 127 127 127 Secure bank loan 129 207 – –
Bidvest Namibia Annual Integrated Report 2017 107 Notes to the financial statements – continued for the year ended 30 June
37. Financial risk management (continued) 37.1 Financial risk factors (continued) (b) Credit risk Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers and committed transactions. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. The Group has policies that limit the amount of credit risk exposure to any one financial institution, and cash transactions are limited to high credit quality financial institutions. The Group’s credit risk relating to its loan to related party is mitigated as the loan to the associate company is secured by a marine bond over a fishing vessel owned by the associate company. Bidvest Namibia Limited issued suretyships of N$289,5 million to commercial banks to secure overdraft facilities of its subsidiaries. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
Group Company Carrying amount Carrying amount
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000
Trade receivables 382 482 370 099 – – Related-party loans 66 418 83 708 477 398 514 173 Other financial assets 12 714 12 714 12 714 12 714 Other receivables 63 047 61 306 3 25 Trade and other receivables 524 661 527 827 490 115 526 912 Cash and cash equivalents 742 986 744 167 36 917 7 153 1 267 647 1 271 994 527 032 534 065 The ageing of the components of trade receivables at year-end was: Gross Impairment Gross Impairment 2017 2017 2016 2016 N$’000 N$’000 N$’000 N$’000
Group Trade debtors Not past due 279 715 (174) 303 698 (40) Past due 1 – 30 days 57 916 (86) 48 301 (772) Past due 31 – 90 days 29 855 (201) 14 012 (365) Past due 91 – 180 days 10 930 (1 715) 5 088 (3 210) Past due more than 180 days 19 255 (13 013) 18 233 (14 846) 397 671 (15 189) 389 332 (19 233) Company Trade debtors Not past due – – – – Other debtors Not past due 3 – 25 –
108 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
37. Financial risk management (continued) 37.1 Financial risk factors (continued) (b) Credit risk (continued) Credit quality of financial assets The Group has not renegotiated the terms of receivables and has collaterals or guarantees as security for all significant debtors. The Group limits its exposure to credit risk by investing in high-quality creditworthy counterparties. Given these high credit ratings, the directors do not expect any counterparty to fail to meet its obligations. The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. The Group only banks with high credit quality financial institutions. The Group has bank accounts with First National Bank of Namibia Limited, Standard Bank Namibia Limited, Nedbank Namibia Limited and Bank Windhoek Limited. Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000
Counterparties without external credit ratings net of provision for impairment: Other financial assets 12 714 12 714 – – Other receivables 63 047 61 306 3 20 Loan to related party 66 418 83 708 – – Angolan banks 125 023 95 181 – – Trade receivables 382 482 370 099 – – 649 684 623 008 3 20 Counterparties with strong external credit ratings: Cash and cash equivalents and money market funds Cash on hand 1 018 1 162 – – Old Mutual Corporate Fund 18 130 – 18 130 – Bank Windhoek Corporate Fund 19 497 14 862 18 167 – IJG Securities EMH Prescient Unit Trust Fund 69 11 950 – – First National Bank of Namibia Limited 28 236 41 605 – – Nedbank Namibia Limited 7 783 26 620 – – Standard Bank Namibia Limited 512 240 519 369 620 7 113 Bank Windhoek Limited 30 990 33 418 – 40 617 963 648 986 36 917 7 153 The Group’s standard credit terms are cash on or before delivery, 0 and 30 days from statement date. The average credit period on sales of goods of the Group is 30 days (2016: 38 days). In some instances interest is charged on overdue accounts at prime plus 2% on the outstanding balance. Some sales are insured by a credit guarantee cover. Included in the past due trade and other receivables are balances totalling N$79,2 million (2016: N$66,2 million) with no collateral, none of which in its own right is material to the Group. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts. (c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and availability of funding through an adequate amount ofcommitted credit facilities. Due to the dynamic nature of the business, the Group aims at maintaining flexibility in funding by keeping committed credit lines available.
Bidvest Namibia Annual Integrated Report 2017 109 Notes to the financial statements – continued for the year ended 30 June
37. Financial risk management (continued) 37.1 Financial risk factors (continued) (c) Liquidity risk (continued) The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. Less than Between 1 Between 2 Over Interest 1 year and 2 years and 5 years 5 years adjustment Total N$’000 N$’000 N$’000 N$’000 N$’000 N$’000
Group As at 30 June 2017 Bank overdraft 73 717––––73 717 Borrowings 159 903 5 695 1 784 198 (1 844) 165 736 Trade and other payables 408 428––––408 428 642 048 5 695 1 784 198 (1 844) 647 881 Group As at 30 June 2016 Bank overdraft 71 097––––71 097 Borrowings 162 648 8 226 18 981 792 (12 160) 178 487 Trade and other payables 346 430––––346 430 580 175 8 226 18 981 792 (12 160) 596 014 Company As at 30 June 2017 Trade and other payables 45––––45 As at 30 June 2016 Trade and other payables 36––––36 The average credit period on the purchase of certain goods from major creditors is current to 90 days. No interest is charged on the trade payables for the first 30 to 90 days from the date of the invoice. Thereafter, interest is charged at varying rates ranging from nil to 30% per nnuma on the outstanding balance. The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through committed credit facilities with the Group’s bankers. The credit facilities of the Group are reviewed annually and consist of the following unsecured and secured bank overdraft facilities: Group Company
2017 2016 2017 2016 N$’000 N$’000 N$’000 N$’000
Unsecured bank overdraft facilities, reviewed annually and payable on demand Standard Bank Namibia Limited 225 200 198 500 – – First National Bank of Namibia Limited 55 000 55 000 – – Bank Windhoek Limited 500 500 – – 280 700 254 000 – – Secured bank overdraft facilities, reviewed annually and payable on demand Nedbank Namibia Limited – 8 500 – – – 8 500 – – 37.2 Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including “current and non-current borrowings” as shown in the consolidated statement of financial position) less cash and cash equivalents. Total capital is calculated as equity as shown in the consolidated statement of financial position plus net debt. The Group’s capital exceeds its net debt and thus the capital risk is assessed as low.
110 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
37. Financial risk management (continued) Loans and Financial receivables at liabilities at amortised amortised cost cost Total N$’000 N$’000 N$’000
37.3 Financial instruments per category Group As at 30 June 2017 Financial assets Trade and other receivables 445 529 – 445 529 Related-party loans 66 418 – 66 418 Other financial assets 12 714 – 12 714 Cash and cash equivalents 742 986 – 742 986 Financial liabilities Bank overdraft – (73 717) (73 717) Borrowings – (165 736) (165 736) Trade and other payables – (408 428) (408 428) Total financial instruments 1 267 647 (647 881) 619 766 Group As at 30 June 2016 Financial assets Trade and other receivables 431 405 – 431 405 Related-party loans 83 708 – 83 708 Other financial assets 12 714 – 12 714 Cash and cash equivalents 744 167 – 744 167 Financial liabilities Bank overdraft – (71 097) (71 097) Borrowings – (178 487) (178 487) Trade and other payables – (346 430) (346 430) Total financial instruments 1 271 994 (596 014) 675 980 Company As at 30 June 2017 Financial assets Trade and other receivables 477 401 – 477 401 Other financial assets 12 714 – 12 714 Cash and cash equivalents 36 917 – 36 917 Financial liabilities Trade and other payables – (45) (45) Total financial instruments 527 032 (45) 526 987 Company As at 30 June 2016 Financial assets Trade and other receivables 514 198 – 514 198 Other financial assets 12 714 – 12 714 Cash and cash equivalents 7 153 – 7 153 Financial liabilities Trade and other payables – (36) (36) Total financial instruments 534 065 (36) 534 029
Bidvest Namibia Annual Integrated Report 2017 111 Notes to the financial statements – continued for the year ended 30 June
37. Financial risk management (continued) 37.4 Fair value measurements (a) Valuation In terms of IFRS, the Group is required to measure certain assets and liabilities at fair value. The Group has established control frameworks and processes to independently validate its valuation techniques and inputs used to determine its fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, ie an exit price. Fair value is therefore a market-based measurement and when measuring fair value the Group uses the assumptions that market participants would use when pricing an asset or liability under current market conditions, including assumptions about risk. When determining fair value it is presumed that the entity is a going concern and the fair value is therefore not an amount that represents a forced transaction, involuntary liquidation or a distressed sale. Fair value measurements are determined by the Group on both a recurring and non-recurring basis. Recurring fair value measurements Recurring fair value measurements are those for assets and liabilities that IFRS requires or permits to be recognised at fair value and are recognised in the statement of financial position at reporting date. This includes financial assets, financial liabilities and non-financial assets that the Group measures at fair value at the end of each reporting period. Financial instruments When determining the fair value of a financial instrument, where the financial instrument has a bid or ask price (for example ina dealer market), the Group uses the price within the bid-ask spread that is most representative of fair value in the circumstances. Although not a requirement, the Group uses the bid price for financial assets or the ask/offer price for financial liabilities where this best represents fair value. When determining the fair value of a financial liability or the Group’s own equity instruments the quoted price for the transfer of an identical or similar liability or own equity instrument is used. Where this is not available, and an identical item is held by another party as an asset, the fair value of the liability or own equity instrument is measured using the quoted price in an active market of the identical item, if that price is available, or using observable inputs (such as the quoted price in an inactive market for the identical item) or using another valuation technique. Where the Group has any financial liability with a demand feature the fair value is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid where the time value of money is significant. Non-financial assets When determining the fair value of a non-financial asset, a market participant’s ability to generate economic benefits by using the assets in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use, is taken into account. This includes the use of the asset that is physically possible, legally permissible and financially feasible. Non-recurring fair value measurements Non-recurring fair value measurements are those triggered by particular circumstances and include the classification of assets nda liabilities as non-current assets or disposal groups held for sale under IFRS 5 where fair value less costs to sell is the recoverable amount, IFRS 3 business combinations where assets and liabilities are measured at fair value at acquisition date, and IAS 36 impairments of assets where fair value less costs to sell is the recoverable amount. These fair value measurements are determined on a case by case basis as they occur within each reporting period. Other fair value measurements Other fair value measurements include assets and liabilities not measured at fair value but for which fair value disclosures are required under another IFRS eg financial instruments at amortised cost. The fair value for these items is determined by using observable quoted market prices where these are available or in accordance with generally acceptable pricing models such as a discounted cash flow analysis. For all other financial instruments at amortised cost the carrying value is equal to or a reasonable approximation of the fair value. (b) Fair value hierarchy and measurements The Group classifies assets and liabilities measured at fair value using a fair value hierarchy that reflects whether observable or unobservable inputs are used in determining the fair value of the item. If this information is not available, fair value is measured using another valuation technique that maximises the use of relevant observable inputs and minimises the use of unobservable inputs. The valuation techniques employed by the Group include, inter alia, quoted prices for similar assets or liabilities in an active market, quoted prices for the same asset or liability in an inactive market, adjusted prices from recent arm’s length transactions, option-pricing models, and discounted cash flow techniques. Level 1 Fair value is determined using unadjusted quoted prices in active markets for identical assets or liabilities where this is readily available and the price represents actual and regularly occurring market transactions. An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis. Level 2 Fair value is determined using inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly such as quoted prices for similar items in an active market or for an identical item in an inactive market, or valuation models using observable inputs or inputs derived from observable market data. Level 3 Fair value is determined using a valuation technique and significant inputs that are not based on observable market data (ie unobservable inputs) such as an entity’s own assumptions about what market participants would assume in pricing assets and liabilities.
112 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
37. Financial risk management (continued) 37.4 Fair value measurements (continued) (b) Fair value hierarchy and measurements (continued) The table below sets out the valuation techniques applied by the Group for recurring fair value measurements of assets and liabilities categorised as Level 1 and Level 3 in the fair value hierarchy: Fair Significant value unobservable hierarchy Valuation Description of valuation technique and Observable inputs of Instrument level technique main assumptions inputs Level 3 items
Financial assets and Level 3 Discounted The future cash flows are discounted using a Market interest Credit inputs liabilities not measured cash flows market related interest rate rates at fair value but for which fair value is disclosed Biological assets Level 1 Market prices Fair value less estimated point of sale costs Market prices Not applicable Assets held for sale Level 1 Market prices Fair value based on willing buyer and willing Market prices Not applicable seller basis During the year there were no changes in the valuation techniques used by the Group. 38. Critical accounting estimates and judgements The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldomequal the related actual results. The preparation of the Group’s financial statements necessitates the use of estimates, assumptions and judgements. These estimates and assumptions affect the reported amounts of assets and liabilities at the reporting date as well as affecting the reported income and expenses for the year. Although estimates are based on management’s best knowledge and judgement of current facts as at the reporting date, the actual outcome may differ from these estimates. Estimated recoverable amount of certain cash-generating units The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates. Assumptions used are referred to under note 2.3. Fishing vessels The residual values of fishing vessels are based on valuations performed by independent external valuators. Revaluations are made with sufficient regularity to ensure that the carrying amounts do not differ materially from the revalued amounts. The residual values are calculated using management’s best estimates and using the exchange rates at the reporting date. Deferred taxation assets Deferred taxation assets are recognised to the extent that it is probable that taxable income will be available against which they can be utilised. Management estimates that there will be sufficient taxable profit in the future against which to utilise the deferred tax asset. Contingent liabilities Contingent liabilities are raised based on management’s assessment of whether a possible obligation exists whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain events. Contingent liabilities which could not previously be recognised as liabilities due to the uncertainty surrounding the amount or the outcome of the event, are recognised as liabilities as soon as there is certainty that the outcome of an event will not be in favour of the Group or as soon as the amount can be measured reliably. Proceeds received from the Group’s insurers as compensation for an unfavourable outcome of a contingent event are accounted for separately from the liability arising from the contingent event. Asset lives and residual values Property, plant and equipment is depreciated over its useful life taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. Investment in associate Industria Alimentar Carnes Moçambique Limitada has been adversely impacted by the depreciation of the local Mozambique currency and as result, at year-end the Group share of the net asset value of the Company was less than the carrying value of the investment at year-end by N$19 million. The fair value determined using the cash flow projections of the operating activities and the fair value of the land and buildings of the associate was compared to the carrying value, based on this, management is confident that the net asset value will improve therefore no impairment of the investment was deemed necessary.
Bidvest Namibia Annual Integrated Report 2017 113 Notes to the financial statements – continued for the year ended 30 June
39. Acquisition of subsidiary The Group acquired 100% of the shares of Bidvest Prestige Cleaning (Proprietary) Limited (Prestige) therefore obtaining control of the company with effect 1 June 2017. Prestige was acquired from The Bidvest Group. Prestige is a company operating in Namibia. Taking control of Prestige will enable the management of Bidvest Namibia to take over the decision-making of the company. Identifiable assets acquired and liabilities assumed The following table summarises the acquisition date fair value of assets and liabilities acquired. N$’000
Property, plant and equipment 862 Inventories 31 Trade and other receivables 971 Cash and cash equivalents 1 604 Total assets 3 468 Deferred tax liabilities 182 Taxation 117 Trade and other payables 3 029 Total liabilities 3 328 Total identifiable net assets acquired 140 Bargain purchase Negative goodwill arising from the acquisition has been recognised as follows. Consideration transferred – Fair value of identifiable net assets (140) Bargain purchase (140) The bargain purchase gain has been included in administration expenses. 40. Events after the end of the reporting period The Group through its subsidiary, Taeuber & Corssen SWA (Proprietary) Limited, lost a distribution agreement with Parmalat with effect from 31 August 2017. 41. Standards and amendments issued At the date of authorisation of these annual financial statements, the following standards were in issue but not yet effective,and were not early adopted. The Group intends to adopt these standards when they become effective. Management has not yet assessed the impact of these new and revised standards and interpretations on the Group. Effective for annual periods beginning New/Revised International Financial Reporting Standards on or after
IFRS 9 Financial Instruments – Finalised version, incorporating requirements for classification and measurement, impairment, 1 January 2018 general hedge accounting and derecognition. IFRS 15 Clarifications to IFRS 15 1 January 2018 IFRS 16 Amendments as the result of the first comprehensive review 1 January 2019 IAS 12 Amendments regarding the recognition of deferred tax assets for unrealised losses 1 January 2017 IFRS 10 Sale or contribution of assets between an investor and its associate or joint venture To be determined and IAS 28
114 Bidvest Namibia Annual Integrated Report 2017 GROUP PERFORMANCE CONSOLIDATED AND OVERVIEW OVERVIEW SEPARATE FINANCIAL STATEMENTS
Shareholders’ diary
Financial year-end 30 June Annual general meeting November Reports and accounts Interim report for the half year ending 31 December February/March Announcement and annual results August/September Annual report September/October Distributions Interim distribution March Final distribution September
Bidvest Namibia Annual Integrated Report 2017 115 Administration
Bidvest Namibia Limited Legal practitioners Incorporated in the Republic of Namibia H.D. Bossau & Co Registration number: 89/271 15th Floor, Frans Indongo Gardens Share code: BVN 19 Dr Frans Indongo Street ISIN code: NA000A0Q5TN0 Windhoek, Namibia (PO Box 1975, Windhoek, Namibia) Company secretary Telephone: +264 (61) 370 850 Ms Veryan Hocutt Facsimile: +264 (61) 370 855
Registered address Koep & Partners 1 Ballot Street, Windhoek 33 Schanzen Road (PO Box 6964, Ausspannplatz, Windhoek, Namibia) Windhoek, Namibia Telephone: +264 (61) 417 450 (PO Box 3516, Windhoek, Namibia) Facsimile: +264 (61) 229 920 Telephone: +264 (61) 382 800 Facsimile: +264 (61) 382 888 Sponsor and corporate adviser PSG Konsult (Namibia) Auditors Member of the Namibian Stock Exchange Deloitte & Touche Registration Number 98/528 Registered Accountants and Auditors 5 Conradie Street ICAN practice number 9407 Windhoek, Namibia Deloitte Building, Maerua Mall Complex (PO Box 196, Windhoek, Namibia) Jan Jonker Road Telephone: +264 (61) 378 900 Windhoek, Namibia Facsimile: +264 (61) 378 901 (PO Box 47, Windhoek, Namibia) Telephone: +264 (61) 285 5000 Commercial bankers Facsimile: +264 (61) 285 5050 Standard Bank Namibia Limited Registration Number 78/01799 Website Standard Bank Centre, Post Street Mall www.bidvestnamibia.com.na Windhoek, Namibia Email: [email protected] (PO Box 3327, Windhoek, Namibia) [email protected] Telephone: +264 (61) 294 9111 Facsimile: +264 (61) 294 2555
Transfer secretaries Transfer Secretaries (Proprietary) Limited Registration number 93/713 4 Robert Mugabe Avenue, Windhoek Ethics line Windhoek, Namibia Free call: 0800 28 68 82 (PO Box 2401, Windhoek, Namibia) Cellular free call: 081 91 847 Telephone: +264 (61) 227 647 Email: [email protected] Facsimile: +264 (61) 248 531
116 Bidvest Namibia Annual Integrated Report 2017
Namibia
www.bidvestnamibia.com.na