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Edited Transcript of BIDJ.J earnings conference call or presentation 26-Aug-20 8:00am GMT

Full Year 2020 Bid Corporation Ltd Earnings Call

Sep 22, 2020 (Thomson StreetEvents) -- Edited Transcript of Bid Corporation Ltd earnings conference call or presentation Wednesday, August 26, 2020 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Ashley Kim Biggs

Bid Corporation Limited - Company Secretary

* Bernard Larry Berson

Bid Corporation Limited - Chief Executive & Executive Director

* David Edward Cleasby

Bid Corporation Limited - CFO & Executive Director

* Stephen Koseff

Bid Corporation Limited - Independent Non-Executive Chairman

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Presentation

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [1]

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Good evening, good morning, everybody. Welcome to the Bidcorp Annual Results Presentation. Apologies that we can't be with you, and we're not all together like we normally are, but this is a year that's a little bit different to any other year we've ever experienced. And hopefully, it will be different to any year we are going to experience in the future.

Thank you for your attendance. I don't really know how many are on the call, and I hope the technology is working. I hope you can hear me. I hope you can see me. Actually, maybe it's better for you if you can't see me. And hopefully, it's all working, in fact, and our virtual presentation goes without a hitch.

Before kicking off, I'd like to welcome our Chairman, Mr. Stephen Koseff, just to say a few words of introduction. And then I'll take it from there, and then David Cleasby, and then we'll have a question-and-answer session after it. Thank you, Stephen?

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Stephen Koseff, Bid Corporation Limited - Independent Non-Executive Chairman [2]

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Good evening, good morning, everybody. I think this is obviously a very different year, as Bernard says, no one can be together. And I think that's what's been experienced over the last while. I think that this -- obviously, I don't think any of us have been through a period like we have just been through around the world, and that obviously has quite big consequences on organizations and people.

And this -- we've seen many crises over the last 40, 50 years in the financial markets and generally in global economies, but this one is very different because it started out as a human crisis that, obviously, the knock-on effect is -- has economic consequences. And we witnessed devastating human consequences, even in our own group, and Bernard will talk about it, we've had people get this COVID, and we've had a number of people who passed -- unfortunately passed away from it.

So this hasn't been a season where you worry about numbers, you worry about cash flow, you worry about survival, you worry about doing the right thing for your clients and your people and making sure that we get to the other side. And I think that in this way, Bidcorp has done a sterling job, as you can see from the way it's presented its position, and Bernard will talk about that in a moment.

I think we've also been through a year of some form of transition, where we've renewed the Board and welcomed 2 new Board members, Tasneem Abdool-Samad and Cliff Rosenberg to the Board. We saw a long-standing Board member, Doug Band, retire, and we thank Doug for the contribution he made over many years. We're fortunate still to have Brian Joffe, our founder, on the Board. And I think that the strong balance sheet that we have, as Bidcorp has enabled us to navigate difficult times, is a credit to the culture and the style that he brought into the organization.

And then we also had -- I'd also like to thank our new senior Independent Director, Nigel Payne, who walked into Doug's shoes and for the kind of work that he's taken on. As well as our Head of Audit and Risk, Helen Wiseman, who does a sterling job. I'd also like to thank management, the executive management, Bernard, Dave, Ashley, all the geographical heads, this has been a very, very tough season and you've really done well to navigate through this particular storm. And I'm sure that we're very well positioned to take this business forward as life moves forward.

So to all our stakeholders, thank you again for attending. Thank you for the patience in this difficult time, and we really believe that this business is well set to take -- to go forward. As survival was important, cash flow is important and the balance sheet is important, I think that's what we have delivered in this period.

So I'm now going to hand over to Bernard, who is going to take you through the numbers and the strategy. Thank you. Welcome, Bernard.

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [3]

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Thanks, Stephen. Thanks a lot. Like we said, this is a year unlike any other. And at the outset, I do want to pay a testament to our 23,500 people around the world, our senior management team and every single one of our workers who have essentially been frontline workers throughout this pandemic and continue to be so.

We are providers to hospitals, to aged care homes, to nursing homes, to defense institutions, to civil defense, to vulnerable people, to all types of aspects of the community, and our business has never stopped. Not in any geography, not for one period of time, have we stopped operating. We've worked through this pandemic under some very difficult circumstances.

During the heart of lockdowns, our people continued to work. They continue to pick orders. They continue to deliver 5, 6, 7 days a week to make sure that people are basically fed, that health care workers are fed, that hospitals keep operating, that aged care facilities keep working. And our staff has done a tremendous job.

My senior management team have done an absolutely awesome job around the world, and I couldn't be more proud of what they have achieved under very, very difficult circumstances.

Just adding to Stephen's overall thanks. The Board showed us, as an executive team, an incredible amount of support during a very, very trying time. They gave us enough breathing space to get on and manage the business and to change things and do what we have to do in a very short period of time to ensure our survival, which I think we've more than adequately achieved. To Brian, our founder, who's a constant mentor and help to me, he has a huge amount of experience and often helped calm the waters and was a very strong sounding board.

To all the financial people who got these numbers out; to PwC, our auditors; to David, Charlie, Ashley, all of (inaudible) teams, all our local teams, everybody who's involved, and I'm going to get into trouble for not thanking somebody. But it's an awesome -- people have done an awesome job under very trying circumstances, and I'm exceptionally proud to be the CEO of such a wonderful organization with such a wonderful team of people.

These -- this results presentation will follow a little bit of a different format in that I don't really see any point going through our historical numbers in any great detail. We went through a period of time, which started in January, late January in Wuhan, China, where we do have an operation and we felt the impacts of COVID. It was something we didn't understand all that well in January. We spoke about it in February. And unfortunately, I was correct on some of the things I did say in February about this crisis and the impending impact it might have. I had no clue what was going to happen. And so I don't think I'm all that clever, I think I just got lucky and called a few of these things correct.

But it certainly was a challenging time. We then saw the pandemic spread from China to many other parts of the world in various different waves of severity, and we've been managing this crisis for 7 months now. And it's a crisis that all of you are managing as well. So we're all in this together. We're not looking for any particular praise or attention, we just like to talk about where we are and what we're going to do about that and how we see the future more importantly.

I think most importantly, this -- there's a human element to this. It's very nice here that you can -- we can sit and look at numbers and you can question me as why we didn't do things differently and why we didn't do more in a certain way, and why we didn't cut costs over there and why we didn't get rid of more people and why we didn't increase our revenue line, and we can macro have a look at this. But let's understand this is a human tragedy. It's a human tragedy on many, many different levels.

And most personally to us, we've lost 3 members of our family, of our team who succumbed -- 2 of them succumbed to the virus itself, and 1 of them was unfortunately a tragic victim of authoritarian enforcement of the rules. All 3 of these members of our family were in South Africa. It was Collins Khosa, Tembi Twala and Tshepo Tshepe. And each of them has a story. And it's when you have these real stories and you realize that they were somebody's husband, somebody's father, somebody's wife, somebody's mother, somebody's son or daughter, that you realize this thing is real. And it's not just about the numbers, and I think we need to be a little bit sensitive to that and understand that it's a real human tragedy underlying all of this.

So to our 3 colleagues, our deepest sympathies do go out to their families, and we hope we can draw the line at 3. As a business, we've been relatively fortunate, maybe we've been relatively lucky in the number of infections that we have had across our base, the majority of which, unfortunately, have been in South Africa with only 1 or 2 around the world. So fortunately, from our staff point of view, we have fared relatively well, but we do have our full respect to those 3 members of our staff. You will be missed.

So if we move on to the trading analysis. And I'm actually not going to talk to the slide and I'm going to move around a little bit, so I do apologize for that if you've got the slides, and you can follow them at your own leisure. I think it's more important for us to say where are we now, how do we go into this crisis, where are we positioned, how do we see the crisis through of what we've seen so far, where are we now and where do we see the future.

And generally, I have to say that I think we were on the right path before. We had a very strong business. We had a very strong strategic direction that we're delivering upon. Generally, most of our business was in good shape. We owned a few problems that we did have, which we made very clear in previous presentations that we did have a few challenges, which will 1 day be opportunities.

So we went into this crisis in a very, very, very strong position, in a strong trading position, in a strong employee position, in a strong financial position with a strong balance sheet, which many of you have called lazy over the years. I'll take that as a compliment. It certainly enabled us to panic a whole lot less than other people needed to panic. We certainly didn't have to do any cheap equity raisings. We didn't have to do any expense debt raisings. And we have a rock-solid balance sheet, which I'll talk a little bit about, and David will talk a lot about.

So we went into this thing in very strong shape. Our growth trajectory was good. Our numbers to the end of February were very, very reasonable and in line with expectations. Bearing in mind, we updated you in December, January and February aren't huge months in our calendar. They're the winter in Europe, they're the end of summer in Australasia, so they're not hugely impactful numbers on the total year. But nevertheless, they were tracking in the right direction.

And then late February and March, the crisis really hit and accelerated through April, and probably started getting better from May, if we look at the numbers. And in April, our group revenue dropped down to about 38% of prior year, but recovered to the 70s by the end of June. And currently, we're tracking anywhere between 85% and 90% on a weekly basis.

And you do get some weekly variations, and we do get some fluctuations depending on what's happening in various countries, like New Zealand going back into the state of lockdown a week ago, Hong Kong going into lockdown maybe 2 or 3 weeks ago. So we are going to get these variations. The roller coaster ride is going to continue for a while.

But overall, we've been incredibly satisfied with the recovery that we've seen, the speed of the recovery, the breadth of the recovery through many aspects of our customer base. And more importantly, I think we've been really pleasantly surprised, pleased with the fact that we believe we're actually increasing our market share, that we've maybe fared better than some of our competitors in various markets for various different reasons. And that might be because we didn't panic and cut the business to the bone to a point where we couldn't recover all that quickly.

Our infrastructure was good infrastructure, remains good infrastructure. We've retained the bulk of our workforce. The bulk of them are engaged, motivated. We saw them through the tough times. They'll repay that favor, no doubt, as times improve.

And so like I say, we're currently tracking at about 85% to 90% on a global basis compared to prior year, which under the circumstances, we feel is pretty good. Now that's an average. Certain geographies, we're tracking above 100%. We've seen an incredibly sharp bounce back, and we've seen increases in market share that enable us to get to that position.

Some economies are still pretty locked down, pretty beaten up and will take a little bit longer to recover. But our sense, and we're not specialist market research people, we only understand what we see every single day in our sales results. We can see what our customers are buying every single day, by customer, by product, by territory, by customer type, and we can see that the rebound happens very quickly and people's habits are generally bouncing back very, very quickly.

Notwithstanding the fact that certain parts of the economy remain closed in all parts of the world. International travel, to all intents and purposes, doesn't exist. Major sporting events, where you have the 10,000, 50,000, 100,000 spectators just aren't happening. You might have limited numbers of spectators, but they're not what they were. Music concerts aren't happening. Night clubs, discos, big pop type events aren't happening.

But notwithstanding that, we're still seeing phenomenal growth numbers through the rest of our business where we were heavily focused on the HoReCa channel. And we've seen, and I've mentioned it before, that the smaller to medium-sized customer is far more agile, is far more able to adapt to the conditions that they have to adapt to. They've changed their menus. They've been able to adapt their seating arrangements, their checking arrangements, their sanitary arrangements, whatever it might be. And it does differ markedly from geography to geography. They've been able to adapt very quickly. And our strength in that space has absolutely played into our favor.

So where we sit at the moment from a group point of view, we see sales of about 85% to 90%. As people get more used to the restrictions that are placed on them and social distancing and sanitizing and all of that, we see a continued improvement in people's desire to go out to enjoy, to have meals out, to do all of those things. People maybe like the novelty of staying at home for a while, but that's in our opinion and borne out of our sales numbers is worn out very quickly.

So that's from a group point of view. The other trend that we're seeing that is a great benefit to us is although international travel has shut down, domestic travel is absolutely surging and buoyant in many, many, many geographies. People just obviously have this great desire to travel, to do things, to experience new places, to escape the monotony of what they're doing. I don't know. I'm not a social scientist. I don't want to make too much comment on it.

But the local tourism market is exceptionally strong in many, many, many geographies. And it's more than made up for what we've lost in international tourism. And the spend has been far more in our type of business than maybe the international tourism also. So there are sectors of our industry that have been very hard hit. Contract catering has been very hard hit. Obviously, the airline catering -- caterers, the cruise line, the ship cruise lines are decimated. But notwithstanding that, we're picking up market share. We're picking up new customers. And our existing customers are growing in the space that we play in very strongly.

So where we sit at the moment, we're exceptionally enthusiastic and optimistic about what the future holds. But more importantly, we don't believe there's any radical urge for us to pivot our business to something different. We dabbled a little bit in home delivery. And it worked okay and filled a gap at the time when the retailers seem to fall over and couldn't satisfy the demands of the lockdown for home delivery. It kept some of our staff engaged. It kept the wheels turning. It kept the warehouses operating at a high level, but it's certainly not something we want to do.

We are food service professionals. We're all about the food service. We are a ship/shop. That's what we are. There's no need for us to pivot to be anything different because we are on a -- we're on the correct path. I've said it before, we're very focused on being food service professionals. That's what we do. We do it -- we believe we do it reasonably well. And there's a huge amount of opportunity, market share growth that will still come out of the market, and that the fundamentals of the eat out-of-home market remain very strong. Yes, this is a challenge. Yes, this is a bump in the road. Yes, this will dent demand for a period of time. But we are very much not of the view that there's going to be a permanent shift.

People don't want to stay at home. And I'm sure I'll have some clever people arguing with me and they'll have lots of empirical data and they'll have lots of surveys, and they'll be able to dispute what the baked bean salesman says, but we know how many baked beans -- cans of baked beans we've sold to them.

If we just run through the various geographies exceptionally quickly. Australasia probably remains the gold standard, performs relatively the best out of the 4 regions. And that's probably because the Australian and the New Zealand government went hard, they went quick and they offered great support to the economy and to the workforce, social welfare type of programs, keep people in work programs that kept the economy going. And they were very fortunate in how they controlled the numbers so they could start relaxing restrictions relatively quickly.

So we saw the bounce back happen quickly. Unfortunately, in Australia, we've got the second wave, which may be the first wave in Victoria. So they're in quite a severe lockdown. New Zealand had a resurgence of cases after being 0 for 102 days about 2 weeks ago. So they're in a little bit of a lockdown situation. But notwithstanding that, we're still running in Australasia in the high 80s, low 90s on a week-by-week comparative basis. And those businesses are in fantastic shape. They were going into it. They continue to be in great shape. And they've done a fantastic job and will continue to do so.

The U.K. had a very severe lockdown, and they had a very severe caseload, virus caseload, death load. And I think the economy got knocked around pretty severely, and they were shut down for a lot longer than some of the other markets. And we felt that pain quite hugely. It was particularly felt in the fresh business, where 100% of our business was to the HoReCa type of customers, the cafes, restaurants, hotels, the larger events like Wimbledon, the Epsom Derby, the Chelsea Flower Show, which has all disappeared for this year. Will be back next year, hopefully. And they really only had started opening up the hospitality channel in mid-July.

So they got pretty hard hit. Fresh was hard hit. It was a problem child going into this. So we have taken the opportunity to restructure it, take quite a bit of cost out to simplify the branch network. Not to change the offering, we've actually enhanced the offering, but can do it more effectively, more efficiently. And the initial prospects are very, very encouraging. Our performance in July was exceptionally encouraging. We made a small loss, which is absolutely anticipated because we are only running at about 45% of volumes. But it was a small loss, which was incredibly pleasing.

The Bidfood business, on the other hand, has fared a lot better. They have an institutional base. They do have hospitals, nursing homes, prisons and other institutional type customers which held up okay. And they also were the joint provider of what we call the shield program, which delivered home-delivered care packs on a -- I think it was on twice a week basis to the vulnerable members of the community. And that was a very, very large welfare type project that was undertaken by the U.K. government. And that went until the end of July and it's been tapering off since then. But as that's tapered off, the hospitality market has opened up again.

The one comment I do want to make just going back on health care, aged care, et cetera, is although that's relatively defensive, that too suffered a decline. Because hospitals basically shut down and were only handling corona-related issues and weren't having the regular elective surgeries and other things that were happening. Aged care facilities, also a short reduction in demand because they weren't hosting families, they weren't hosting birthday parties, they weren't doing any big functions, et cetera. So even on the defensive side, we saw a little bit of a downward taper. And that's a comment across the world where we play in those geographies.

We also exited the logistics businesses in the U.K. in the first week of March. That was the Bestfoods logistics business, the contract distribution business, as well as the PCL business. So we got those away beginning of March, a week or 2 before the crisis and the lockdown hit.

Europe is a combination of fantastic stories, average stories and not-so-good stories. The not-so-good stories are Spain and Germany. Both of those we identified before as problem children. And we've taken our medicine in Spain, we've amortized about EUR 45 million worth of -- well, we impaired EUR 45 million worth of goodwill on that. We fundamentally believe there's still a very good business there.

We have parted ways with our CEO and CFO a few weeks ago and have it under the supervision of Grant Cox, who helped us with the logistics business disposal in the U.K. and he's moved to Spain to oversee that process. And the early signs are exceptionally promising as well. We are very, very confident we will turn the corner as soon as the economy starts recovering a bit, and we're confident about that. Parts of that Spanish business remain very good. The Portuguese business is very good. The Igartza business in Basque Country continues to perform very well. So it's not the whole of Spain that's a problem, that was the core Guzmán business which we've addressed.

Germany needed less work, which we undertook during the period. We moved into our new warehouse. I think it was late last year. That -- by having lower volumes enabled us to actually set in a whole lot quicker, get the efficiencies we required, get things working well. And we believe that business is now in a solid position. We believe it should be profitable relatively soon and forms the base of building a business in a very, very rich, large foodservice market, and we believe there's a space we can play.

Belgium held up reasonably well because of the mix of its business. Holland fared less well because of the mix of its business, where they've done a fantastic job in transitioning to HoReCa, that fell the quickest and the furthest and they didn't have a huge institutional base to pull back up. Having said that, the rebound in the HoReCa market has been phenomenally quick, and they're tracking over 100% in the HoReCa segment as we speak at current times.

Italy struggled. Italy really was the epicenter and went through 2 awful, awful months. I think the population was scarred by it. There's a lot of fear, there was a lot of reality to that situation. We've got a death rate that high and our business is actually based very close to Bergamo, where in Brescia, which was the epicenter of what went on. So we had direct exposure, market had direct exposure, where you've got 40,000 deaths in a relatively small area, the population do get shell-shocked by that and the impact was large.

Having said that, they've come out of it relatively okay. The business is absolutely profitable. That's doing well. It's clawing back its way. Sales are recovering very, very nicely. They won't have a tourist season this year and Italy does depend on tourism to a large degree. So it will be a relatively flat year this year for them, but they're in very, very good shape. We're very pleased with our business there. We're pleased with the way it got managed through the crisis, and it's in fantastic shape.

Czech and Slovakia, maybe missed a beat for 1.5, maybe 2 months. And that business is doing phenomenally, they're ahead of last year. They do have a retail component where we sell into the retail -- into the retailers who manufacture product. That held up very well. But on the foodservice side, that's rebound relatively quickly. Their view is that population is going to live with the virus, they've learned to live with the risk and life carries on, and we're certainly seeing that in our numbers.

Poland, another phenomenal story of rebound. Very tough few months. And then we're absolutely astounded by strength and the sharpness of the rebound. We had a fantastic July, and August is looking good. I mentioned Baltics is a success story again. They actually made more money this year than in the year we just finished than the previous year, hardly missed a beat. So I think that covers off on Europe. Was hard hit, but it is recovering nicely.

There is one caution, and I don't want to hop on it, I'll just raise it. That a lot of the dining is outdoor dining in Europe, and that's proven to be very popular. They're a little bit concerned about what happens when they got to go back indoors because it gets colder. And will that have an impact? Yes. Hopefully, that's got a few months to run, and hopefully by then the path forward is a little bit clearer.

Emerging markets is the most challenging at this point in time. But once again, it's made up of a few components. So we've got greater China, which is doing fine. China, we're running ahead of last year. Hong Kong, we're doing great until they had the lockdown again. But they tell me that's starting to be eased in the next few days. So hopefully, we'll continue to see that. Singapore, we did well, notwithstanding the fact that there were lockdowns. Government support was reasonably good as well. But demand has bounced back very quickly there. Malaysia, we're ahead of prior year. Vietnam's climbing, so the -- we can't really call that.

Turkey, we've seen phenomenal numbers come out of Turkey, don't ask me why, because they are highly dependent on international tourism. But obviously, the local markets needed a holiday as well, are spending money, and our sales are looking very buoyant in Turkey. Middle East, we're not quite back to 100%, but we're certainly tracking towards it. It's a highly tourism-dependent market, either religious tourism in Saudi Arabia or transit type tourism in the UAE, which got hit very, very hard. But once again, the recovery seems to happen relatively quickly.

South America continues to be challenging. Chile is challenging. They just don't seem to have the virus under control, but the people are becoming more immune to the challenges and are getting out and we're experiencing reasonable volume growth, although we're only running at about 50% where we were last year. Result is a little bit ahead of that, and I think they've also got their challenges as a country.

Argentina also has challenges in the country, but we learn a lot from Argentina. So there's a very good acquisition of that. Because if you want to know how to manage a crisis, talk to the Argentinians because they've managed a crisis for every single year of their existence, so then this is just another one. And they actually managed to turn the profit. So even through the pandemic, they managed to somehow turn a profit. It's not a material amount to the group, but there's a great deal of learning and, I guess, comfort that you can get as to how people can adapt to adversity and how you can turn what appears to be a challenge into an opportunity.

South Africa, I don't need to tell you most of you know about South Africa. It's been a challenge for us. We've remained profitable in South Africa throughout the entire period because we've had the diversity of our businesses. We've got the Bidfood business, which caters to the foodservice market, but we also have the crown business which caters to butchers and production, manufacturing, retail type market, and that's performed very, very well. They're also cycled through the listeriosis crisis in the previous year, so they were helped with those tailwinds.

We are seeing an improvement in South Africa, there's no doubt about that. The introduction of alcohol, I think it was about a week ago, has helped not huge increases yet, but we remain optimistic that they'll get through the crisis. The business is in good shape. And yes, all will be okay. We just need to be a little bit patient.

I've spoken a lot of -- we're excited about the prospects. We're excited about the rebound. Our staff were enthused. We didn't fire huge amounts of people. We supported our staff as best we could through the crisis because we knew this would be a passing issue, and we're seeing that paying dividends now. We are picking up market share. We believe we're picking up market share. We can't prove it, but we certainly believe it. We certainly believe we're outperforming markets that we operate in. We have supported our customers through the crisis as well, understanding that they're under some severe financial pressure, and we've worked with them on the payments they face. And I think that will stand us in good stead.

We have had some COVID-related adjustments, and David will talk more about them. But I think they need to be looked at in the context of the overall size of our balance sheet position. So inventory, I think we provided ZAR 250 million of obsolescence against an inventory value, which I think is about ZAR 10.5 billion. So it's not a huge proportion. On our receivables, there's about ZAR 780 million of receivable provision against the book of about ZAR 12 billion. And there are some customers who aren't going to make it in certain segments. In the cruise ship industry, we are going to see some casualties. In airline caterers, we are going to see some casualties. So there are going to be a few of those. But by and large, we've been very enthused and impressed by the ability of our customers to weather the storm and pay their debts.

And I think that's borne out in the cash. And for us as a management team, the most important issue we had day 1 going into this crisis was the only way you're going to survive the crisis is if you've got enough cash to see you through. And we focused on that. Our cash generation has been phenomenal. The teams did an awesome job around the world. They managed their working capital. They got their inventories down. They brought their debt levels down. They paid all their creditors. Yes, we extended some terms, but we're totally up to date. We paid everybody. We're a good credit risk out there for our suppliers, and we generated a phenomenal amount of cash.

And the one number I'm exceptionally proud of is, as we stand today, yesterday, we're GBP 140 million better off than we were a year ago at the same point in time. So we've generated a heap of cash. We still have some debt, it is less than previous year. It's not a huge amount of debt. But we're GBP 140 million better off, and we'll see that strong cash generation carrying on. And as long as we generate strong cash, we've got a very strong position to take advantage of opportunity, be it organic, be it market share, be it new geographies when borders open up again, and we can start doing things, be it adjacencies, be it some type of vertical integration opportunities. All of these opportunities will present themselves. It's a little bit early in the piece to tell you where exactly they'll be or what form they'll take, but they will happen and we'll be in a very strong position to take care of them.

So just in summary, once again, a huge thank you to the team. They've done an absolutely awesome job. They continue to do an awesome job, and I'm humbled and proud to be the CEO of such a fantastic bunch of people. I think our strategy remains sound. The principles by which we run the business remain sound. There's no need for us to have any knee-jerk panic reaction and radically modify what we do. We do what we do well. We're well-respected in the industry by our suppliers, by our customers and by our staff.

And we'll just continue to do what we're doing. We'll continue to rebuild. We'll continue to build on what we have, and I have every confidence that we'll see a restoration to our historical levels of profitability in due course. Now don't ask me what that means because I've got no clue. If you can tell me when they'll find a vaccine or when they find a cure, I'll give you that answer. But it will happen, and it might be 3 months, it might be 6 months, it might be a year. I don't know, but it will happen. We've got the people, we've got the financial capability and we will make it happen.

And I'll hand over to David, and then we'll open it up for questions. So David, can I hand over to you?

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David Edward Cleasby, Bid Corporation Limited - CFO & Executive Director [4]

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Yes. Thanks very much, Bernard. Hopefully, I can give you some color on the numbers and a little bit in more detail. I think the phrase, and you'll see it on the next slide, where it says great financial performance but poor financial result really sums it up for me. It's been, as you've heard and everyone knows, a tumultuous 6 months. But I think, certainly, from my perspective, the Bidcorp spirit has prevailed. And as Bernard said, we want to thank every one of our people all around the world.

But from my perspective, I think the financial people need special praise. They've had to, I guess, initially manage the cash flows through those dark days. And they've had to organize their year-end, and a lot of that's been done remotely. So it's been tough. They've had to get their accounts audited, and that's been even tougher. So I mean, we took the view that we weren't going to succumb to the view that we were going to take extra time to get everything done. We wanted to get everything done normally in this new normal. And therefore, the time pressures and the whole getting the audit done has been an exceptional feat across the world. So thanks to them out in the businesses. Our corporate team, absolutely, it's been a challenge, but we're there. So certainly, from my perspective, absolute thanks and praise.

On the accounts, they are audited. They prepared under IFRS as we are. And the only real accounting issue, I guess, is the adoption of IFRS 16. My choice, we wouldn't have adopted it, but we were forced to, so we have. And I'll give you a bit of color on the impact. In terms of the performance, as Bernard said, the trajectory through February was absolutely in line with expectations and largely in line with as we reported in December. In terms of the onset of COVID, our group weekly results or sales went down to about 37% in the 5th of April, improved to 65% at the end of May and then 71% at the end of June.

Revenue was down 6.3% in rands, 11.6% in constant currency. And the Q4 revenue number was down about 28% at ZAR 23.7 billion. I think one of the encouraging things is the gross margin is basically held up 24.1% for the year, slightly ahead of where they were a year ago. But certainly, in terms of Q4, 25.5% versus 25.1% in the comparative period. And that's bearing in mind that we did take a significant -- well, a relatively significant amount of inventory obsolescence provisioning of about ZAR 248 million.

We coined the term EBITDAC, which was EBITDA and then after COVID-related adjustments. And I think if you look at that from the group perspective, that gives us a margin of about 5.7% versus 6.2% last year. So on the basis, you exclude the one-offs and the group has performed particularly well. Those adjustments are -- total about ZAR 1.5 billion, and I'll give you the makeup in a short space of time. IFRS, as I said, very small impact on the P&L, but a sizable impact on the balance sheet. About ZAR 4.5 billion -- ZAR 4.6 billion of right-of-use assets and ZAR 5.8 billion of right-of-use liabilities. Those numbers are slightly elevated compared to what we initially guided to and that's largely because of the FX movement.

HEPS of ZAR 7.413 per share, down 48.6%. There has been some translational benefit of about 2.3%, but I think in the context of the numbers, relatively irrelevant. Total dividend for the year of ZAR 3.30 per share is in line with basically our decline in HEPS. So just to make the point that we haven't changed the dividend policy, we kept it absolutely as we had it before. But unfortunately, the first half dividend is all that shareholders are going to get. Excellent free cash flow for the period of about ZAR 3 billion and a large portion of that coming in the second half, which amounted to about ZAR 2.2 billion. It's something that we're very proud of. As Bernard said, the discontinued operations were exited from March onwards.

In terms of the P&L, not to go through -- through these -- the revenue again, I've spoken about that, the GPs we've spoken about. In terms of the operating expenses, yes, they did increase as a percentage of revenue, but you would expect that of a decline in revenue of 6%. The additional COVID-related expenses were really receivables provisioning of about ZAR 785 million, largely spread across each of the regions. I think Australasia was less, but between Europe, South Africa, emerging markets and the U.K. largely evenly spread. Government employee assistance has helped. But ultimately, we've kept people in employment and we would have -- we incurred those costs anyway. So it's really offset the keeping people employed.

Discretionary expenditure has reduced where possible, and Bernard alluded to that. And ultimately, I mean, we have been through an investment program, so the base has grown over the years. So I mean costs -- operating costs have been well managed. I think if you look at the Q4 and you take out the one-off adjustments, revenue was down about 28%, but costs were also down nearly 20%. So the businesses have done a good job in managing that.

Net interest IFRS expenses up 19%. The 2 main things there are really not big issues. One is the FX impact of about 8% and the other is the imputed finance cost on the put option liabilities of about 7%. So ultimately, the businesses have done a good job in managing the interest bill, and that's obviously off the back of good asset management. In terms of capital items, as Bernard alluded to, we took ZAR 794 million in respect of -- which is about EUR 46 million in respect of Spain. Other than that, there were some asset impairments, but nothing material other than the Spanish impairment.

In terms of the cash flows, really a highlight. I think cash generated from operations before working capital was down a little bit, as you would expect. Noncash movements, there are some big movements in there, provisioning, goodwill impairments, which I've spoken about, some impairments to intangibles and PPE and share-based payments.

Working capital -- and just to remind you that the typical cycle is absorption in the first half and generation in the second, and we saw that, I guess, exacerbated by the COVID crisis. We generated ZAR 1.2 billion for the year. We absorbed ZAR 200 million in the first half, so it generated ZAR 1.4 billion in the second half. The working capital cycle to a large extent, on average, over the year hasn't changed at 13.6 days versus 13.4. But certainly, at year-end, we were down to an absolute 7 days working capital cycle versus about 10 in the previous year.

Impact in 2020, I mean, some of these are structural, and that's really value-added procurement that we've been through for some time and was something that will continue to grow and this is absolutely part of the strategy. I think the decline we saw in activity levels in Q4 was responded to very quickly and aggressively by the businesses in terms of receivables, in terms of inventory management and obviously managing payables. And as I've said, we have -- because of the investment that we made over a number of years now into property and growing the base, we've seen an absolute increase in stocking levels across the group.

In terms of investing activities, a net ZAR 2.5 billion in CapEx versus ZAR 1.5 billion in D&A. And I think most of that CapEx was committed by the time the crisis -- at the onset, and it was fairly evenly spread, I think ZAR 1.6 billion, largely in both halves. Cash and cash equivalents at the year-end of ZAR 7 billion. So there's a fair amount of liquid funds in the group. Net debt of ZAR 5.6 billion, which is only 1x net debt to EBITDA, and that's on an adjusted basis versus 0.6x in the previous year. So the businesses have done a good job in that space. And net debt to our EBITDAC is 0.8x. So not materially different to where we've been if one adjusts for those one-off items, and certainly well within our covenants and our responsibilities to our lenders.

If we look at the cash flow comparison, I think this is just really reiterates how well the businesses have done in managing the crisis. I think if you look at somewhere around the end of March, we paid ZAR 1.1 billion in dividends to shareholders, which was around about GBP 60 million of outflow. Between March and, I guess, the beginning of May or end of May, we managed the cash and we (inaudible) out to the businesses on cash in, cash out basis. And you can see that the businesses did a particularly good job there. And as Bernard alluded to from May onwards, we've started to see some activity levels improve and we've seen the cash flows improve across the group.

The one spike there in the prior year is really our year-end asset management, I guess, which we didn't have in this year. So it alludes to, as Bernard said, our payables are up-to-date and certainly is really a strength of the group and how we've managed through the crisis. And once again, between where we are today and a year ago, GBP 140 million of improvement of the net debt, and we're currently sitting at around GBP 180 million, GBP 190 million of net debt, which is not significant in the context of the group.

I think just in terms of the financial position, nothing really to highlight here other than we're sitting on headroom across the group of about ZAR 20 billion, ZAR 7 billion in cash and about ZAR 13 billion of facilities. So we do believe that we do have adequate resources to manage through what is ahead of us. And certainly giving us -- gives us the financial wherewithal to be able to take advantage of opportunities as they arise.

In terms of our solvency and trading profit interest cover at 11.3x, yes, it's a big decline from where it was a year ago. But just to note, that's after taking the ZAR 1.5 billion of COVID costs adjustments. And I think if you back those out to get a more normalized view, it's somewhere around 15x or 16x.

In terms of going forward, Bernard alluded to the sales. They've showed consistent improvement through July and August and up until the beginning of August was around about 89% of the prior week. Trading performance in July was encouraging. And certainly indicating that our developed market recovery, businesses in those markets are well on track. Although a number of the emerging markets activity levels and performance is still lagging.

Our financial base is very supportive of what we see ahead of us and what we can't see ahead of us. As I said, cash generative, we've continued that into July and August. And we do expect that the cash generation into the rest of F '21 will be strong. Our debt-to-equity ratio is low 20% and gives us ample opportunity to take advantage of organic and acquisitive opportunities. We do see some absorption, and we do anticipate and it's certainly really forecasting, I guess, but we are going to have to extend some credit into the -- our customer base. But the good thing is, to a large extent, we're sitting on a lot of paid-up inventory, and that will give us some runway and advantage as we go into the next 6 months or a year.

Our liquidity, we do have some short-term debt, which we will -- as market conditions improve and they are improving, we'll try and term out. But we do have ZAR 7 billion of cash on hand and some of that was taken out as a precaution of optionality on what was happening through April to June in the crisis in the various parts of the world. I think the strength of our financial position has put us in great stead through the last 6 months, I guess, and we certainly believe that will be a strength going into the rest of this financial year or the next financial year.

Our CapEx, we don't see as being anything like what we've incurred in the last few years. Our anticipation, it will be around about where our D&A costs are for F '20, about ZAR 1.5 billion, maybe less. But that really will depend on activity levels, and we certainly won't hold the businesses back that are running at levels greater than where they were a year ago in terms of investment. There are several end-of-life properties that we are going to realize in a number of jurisdictions around the world, one of which we've already concluded. And that certainly will add to the cash reserves of the group into F '21. Our philosophy of naturally hedging assets and liabilities remains, and it certainly allowed us to sleep easy at night, particularly where we've seen volatility in the last few months.

Forecasting risk from our perspective remains high, and that's really just the uncertainty and you have to take what comes, but we certainly don't believe that it will be as volatile as what we've seen. Our provisioning, we think, is conservative, but it is our best estimate of the world as we see it at the moment. Yes, I think we reiterate our -- the businesses are managed in local currencies. And really, our consolidation of our market positions is really the core focus at the moment. Currency volatility, we manage the businesses in local currencies, you're going to get what you're going to get in rands, and we try at least give you some perspective on what the performance is, excluding that rand impact.

Our shareholder base has remained largely half spread between South Africa and international. It does vary up and down depending on where the emerging markets are in vogue or not. And I guess they currently aren't. We're not providing any projections for F '21 at this particular point in time, but certainly we've got more visibility on the levels and sustainability of the recovery in each jurisdiction.

So I mean we've got great financial strength. The group is in great shape. So certainly, from my perspective, we're in a good position and certainly have the wherewithal to take advantage of whatever opportunities sit in front of us.

So on that, thank you, and I'd like to hand back to Bernard for questions.

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [5]

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Thanks, David. I think the questions are going to come through Ashley, who is going to ask the questions, and then we can respond to them.

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Questions and Answers

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [1]

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Good evening. Good morning. We have about 230 people that have joined us on the webcast and about 20 people that have joined us on Chorus Call. So in total, about 250 people participating today. We do have a few questions. The first question, Bernard, I think this one is for you from Shane Watkins at All Weather Capital. He asks, "In terms of the recovery you have articulated, please can you separate out your annuity type businesses, such as prisons, from your independent restaurant businesses? What are the numbers for restaurants, excluding annuity catering businesses themselves?"

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [2]

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That's a very difficult generalization question. Let me also just clarify the annuity-type business. None of our businesses is really annuity and tied to long-term contracts. Most of our businesses are actually short-term based. Even in the institutional space, it's not going to run more than a year or 2 or 3.

The mix depends on the business. So if we look at the Polish business, for example, that's about 95% restaurant based and that's where we've seen a huge recovery. The Czech business is about 70% restaurants and HoReCa, 30% retail, with very little institutional base. In a market like the U.K., the Bidfood business probably has about -- of institutional type of business about 30%, which includes educational, prisons, health care, nursing home, et cetera, and the rest is the more traditional HoReCa type space.

So I can't give you an accurate number on that. I think the question might be alluding to the growth. And is the bounce back coming out of the institutional, not for profit of the catering sector or out of the restaurant trade. And the answer to that is there's a very small recovery in the institutional side. Because they tracked at a relatively flat level and the strong recovery is coming out of the side that was impacted the most, which is the restaurant, hospitality, HoReCa type of market, which has recovered very quickly.

And offset slightly by those industries that haven't recovered at all, like airlines, airline catering, anything to do with airports, cruise ship operators, et cetera. And to a degree, contract caterers who were doing workplace catering has seen massive reductions, which just haven't come back. But fortunately, that's not a large part of our portfolio. And our portfolio has been skewed over the last years, our strategy has been to play more in that, and we've spoken about as the right customer in the small and medium-sized better mix. So we have a relatively good mix across the world in that, and I think that's why we're seeing a relatively good bounce back.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [3]

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Thank you. Michael Jacks from Bank of America has a question for David. In order to better understand the base for FY '21, can we please have a breakdown of the receivables provisioning of ZAR 785 million and stock write-offs of ZAR 250 million between the 4 reporting segments?

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David Edward Cleasby, Bid Corporation Limited - CFO & Executive Director [4]

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The short answer is no. I can't give it to you off the top of my head. But as I said, I think the -- on the receivables provisioning, it was evenly spread between Europe, emerging markets and the U.K. with Australasia provisioning a little less. But I mean, maybe we can put that up on the website. So everyone's got to access to it.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [5]

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A follow-up question from Michael. What was the quantum of government wage subsidies and other direct support, which provided an offset for OpEx in H2? And do you anticipate further debtors impairments in FY '21? Or was the F '20 provision sufficient?

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David Edward Cleasby, Bid Corporation Limited - CFO & Executive Director [6]

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These loan impairments, time will tell. It doesn't play out in a month or 2. There's obviously where their problems -- there's legal processes that need to be followed, and those do play themselves out over a period of time. So as I said, our best estimate of provisioning at this particular point is conservative, but it is our best estimate at this particular point in time.

In terms of wage subsidy support, yes, we do continue -- we will continue to see some. A lot of them are tapering off. I think the number in this period or in the 6-month period was about ZAR 800 million. But just to caution, I guess, without countries having or governments providing that wage support, we would've taken those costs effectively out of the base far more aggressively. So I think what the wage support did was really allowed people to panic slowly or businesses to panic slowly and really to keep people in jobs as long as possible. Bernard, anything you want to add to that?

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [7]

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I don't know if I'm on. Yes, on that wage subsidies, I think you can jump to the wrong conclusion very quickly. Because they were -- primarily the large ones were job retention schemes where the government paid you to keep people employed, to keep people connected to the workforce and to ensure that the jobs are there when the pandemic was over. So it's not money that went in over and, above, basically have covered a portion of people's wages. We still bear the cost to top that up. It didn't cover a 100%, was far from 100%. Generally, it was about 70% to 80% of basic wage.

And as David said, if there wasn't a government subsidy, we would have taken the cost out and we would have been in a net-net no different position. And in fact, we might have been in a better position without the government subsidy because we wouldn't have had to make it up. But our view was always that we've tried to preserve as many jobs as possible because it will recover and you need to be in a strong position when it recovers. And the best employees are those who've worked for you for a long time and will continue to. And I think that's why we're seeing good growth now in that we do have a very solid and engaged workforce who are there and are ready for the challenge.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [8]

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Okay. We have a question from Nick Webster, HSBC. Nick asks, "Are you able to allocate the ZAR 1.5 billion of exceptional COVID costs to the 4 reporting geographies, for a more accurate basis of comparison?"

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David Edward Cleasby, Bid Corporation Limited - CFO & Executive Director [9]

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Yes. I think we answered that earlier.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [10]

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Okay. Vik Sharma from RMB Morgan Stanley, asks, "Management has indicated trading profit is not reflective of cost savings done in Q4. Could you please elaborate on the extent of the amount of cost savings that have been done, which will benefit FY '21?" And there's a second question, Australia fresh has been sold. Is that an indication of fresh is tougher and potentially that the company could look to exit all other fresh businesses?

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [11]

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We'll answer those. Second one first. The sale of the fresh business in Australia was opportunistic. Somebody offered us a reasonable price for a business that we weren't overly in love with in Australia. It doesn't mean we're not in love with the business elsewhere in the world. You take circumstances as they happen. And we believe it was a better home where it went to. And so they sold it and I think we covered off on that in February. I think the same question was asked. And no, don't read anything into that, that we won't be getting out of that business anywhere else. And maybe we'll make further investments into the fresh business in other jurisdictions in time to come. That forms part of the food portfolio. That was an opportunistic disposal.

The next question was on the cost savings. And I really don't want to focus on what the cost savings were because I think it's a very negative aspect of the business. You're not going to cut your way to greatness. We have great confidence that the business is going to recover. We try to maintain as much of the -- of our employee workforce as possible. Yes, we did get some short-term rental assistance from landlords. Bearing in mind, we own 70% to 80% of our business -- of our properties. Obviously, we had a reduction in operating costs.

But the bulk of our business is our people. 70% of our cost base is people. We're a people business. We have 23,500 people. We've only seen our headcount reduce relatively marginally if you eliminate the discontinued operations, people who were in the numbers last year, who aren't in the numbers this year. And our people are our most important asset, and those are the ones are going to grow the business going forward. And you're far better off keeping the people you got, keeping them engaged, keeping them employed. They're our greatest asset, and we're very fortunate to have the team that we do have.

And we don't want to focus on cost-cutting and say we can cut our way to success. We don't believe there's a necessity there. And obviously, we trim costs where we could. We got government assistance against wages where we could. And we -- I think the business has done a fantastic job, by the way. And there were cost cuts from the top down, from the Board of Directors through the executives through our senior levels of management in the organization to contribute to that. But we are far more focused on the future and growing the business back to where it needs to be growing.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [12]

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Thank you. We have questions from Dino Constantinou, JPMorgan, and Warren Riley at Bateleur Capital, but they both relate to the cost-cutting discussion that I think you've just had, and we'll address those more. I think they'll be dealt with. Nick Webster from HSBC follows on with, "Can you give us a broad sense of the size of Victoria in terms of the Australia revenues?"

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [13]

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Yes. Victoria is about -- from a population point of view, Victoria is of about 7 million out of 25 million. Only Melbourne is in strict, strict lockdown, the rest of regional Victoria isn't. Our Victorian operations contributed about -- it's about 23%, I think it was, of pre-COVID revenues to the total. And our Victorian business is down about 35%. So notwithstanding the fact that they're in severe lockdown, we are still operating at 65% of historical levels, and we're doing relatively okay.

We're actually -- yes, we're holding our head in the Victorian market, and we're relatively confident that they'll ease restrictions within the next 4 or 5 weeks. Numbers are dropping pretty rapidly. It was a very harsh lockdown for a short period of time, and that will bounce back. We believe that will bounce back relatively quickly.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [14]

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Thank you. Refilwe Moroka from Melville Douglas, asks, "It was mentioned that the German business should turn profitable soon. What are your estimated time lines for this turnaround?"

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [15]

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I'm not allowed to tell you, but they made a profit in July. Whether that's sustainable or not for the full year, we don't know. But we believe that business is breakeven profitable this year even under these circumstances. So yes, I'm going out on a limb in saying that, and I'll put the management team under pressure, but we believe it's that close.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [16]

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Okay. Anthony Geard from Investec, asks, "It sounds like average debt will be well down this year on lost in hard currency. Can we also expect the average cost of funding to be lower? Please remind us the split between fixed and variable interest rates."

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [17]

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I will hand over to David to answer.

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David Edward Cleasby, Bid Corporation Limited - CFO & Executive Director [18]

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I think our financials are available on our website. If you want to go and look, I think if I recall off the top of my head, our weighted average cost of debt, last year to this year, has gone from about 2.6% to 2.1%, and our South African debt has gone from about 8% down to 5%. So yes, we do expect that there will absolutely be some savings on the interest line, not the non-IFRS interest line, but certainly the proper interest line.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [19]

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Okay. Rowan Goeller, asks, "Gross profit margins and operating cost reductions indicate you could get that close to normalized operating margins in FY '21, would this be a correct assumption?"

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [20]

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I think the answer to that is not for the full year. But I certainly think the run rate, as the year progresses, will approach historical run rates. So July, for example, we only ran the full July average, I think, was 82% of revenue. At 82% revenue, you're not going to make the same money you made at a 100% purely from a leverage point of view. But as sales trend higher -- and they don't have to get to 100% to get to the same levels of profitability because there have been efficiencies, there have been permanent cost reductions. Not huge, but there absolutely have been.

So we're pretty confident that if the trend continues the way it is and we don't go through a major second, third, fourth, fifth wave, and this thing doesn't mutate and become much uglier than it is, we'll see our run rate approaching normality within months, 6 months, who knows. But we're not talking 2 years 5 years out. We've got a much shorter focus, a much shorter vision than that.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [21]

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Thank you. [Nick Kriffer] from [Signal AM], asks, "Can you speak to the competitive environment? Have competitors gone out of business? And are there opportunities to consolidate that will move the needle? Also some comments on pricing power."

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [22]

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From a competitive point of view, I mean, we -- you need to be a little bit -- it's probably not the right time now to be talking about the misfortunes of your competitors. And that will play out in a period of time. Everybody is going through a tough time, our competitors included. Some of them are going to survive, some of them aren't going to survive. And when that -- when they, unfortunately, for some of them fall over, bear in mind these are very nice people with their own businesses and work very hard, there might be some opportunity for us.

In the short term, we are looking at a few. We've got to be careful not to be seen as vultures in this environment. You do need to be sensitive. But when the opportunity arises, we will certainly have a look at it. And we don't really know in each geography how our competitors are doing. It's not published information. It's not really out there. And quite honestly, we do spend a whole lot more time worrying about ourselves and worrying about our business and our road to recovery than worrying too much about our competitors.

But as I have said before, we do believe we're picking up market share because of some of the difficulties our competitors have faced. They might not have the same financial backing as us. They might have cut too deep too quick. If they did make radical changes to their business model in a knee-jerk type of manner, and so we are bearing the benefit of that. But acquisitions will absolutely be part of our strategy going forward as they have been in the past, when the opportunity is correct.

I think you asked a question about pricing power. I'm not sure what that really means because we don't really have pricing power. We are -- we do operate in highly competitive markets. Our markets are still highly competitive. We have numbers of competitors. We think it's -- we've been able to maintain our gross margins through the pandemic, and that's through a number of factors, including a shift in the type of customer that you're selling to, that a lot of the institutional business, the contract catering business disappeared, which was at lower margins. So that has a natural positive balance for your gross margins.

But there's certainly no change in pricing parity in the market. I don't want to call it power because we have no power. We don't hold dominant market positions anywhere. We might be the largest player, but we're the largest player in a highly fragmented market, which remains price-competitive. And we remain price-competitive, offering value to our customers, and we'll continue to do so.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [23]

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Siphesihle Siswana from ALUWANI Capital, asks, "With the exception of sales through e-commerce platforms, are there any other levers to pull? And if so, please expand on them."

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [24]

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We continue to pull the levers all the time. And we've spoken about them. We don't want to talk too much about them because our competitors also like to listen to them. As I've said, we're not radically pivoting our business, pivoting has been the new buzzword, I believe. We're on the right path. We're doing what we continue to do. We're going down the path of value-add, of vertical integration where we see the possibility of doing that, of global procurement, of e-commerce, of data analytics, of automation in warehouses where we see an applicability for that, of focus on the correct customer, of range expansion into different categories, in value-add and other things that we do.

So there's a multiplicity of things that we're working on the whole time in different geographies with different speeds. None of them have the ability to shift the needle immediately in the short-term by a radical amount, but they all add a little bit here and there. And quite honestly, the margins we operate at are world class. They're probably the highest amongst our peer group. So we have to be a little bit careful not to push that needle too far and to remain competitive with what we do all the time.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [25]

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Okay. We have 2 more questions. The second last is from Jiten Bechoo from Avior. He asks, "What portion of your inputs are locally sourced on average? Do you foresee global procurement disruption from supply chain blockages?"

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [26]

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That's a very interesting question. And primarily in most of our markets, a fairly substantial portion of the product is locally or regionally sourced. But there's a lot of product that travels around the world. And in February and March, we saw that -- we thought we were going to see major disruption to freight movement, that hasn't really happened and it's normalized itself relatively quickly. Product is moving across the world. There's no real supply chain issues in terms of getting stock.

What is starting to rear its head, and I would note to where it gets to and what the implications are, is China now seems to be of the view that the virus could potentially be present on frozen food cartons that get shipped around the world. And so we have to go through quite a rigorous process of disinfecting imported product -- not us, everybody who imports food product into China, has to go through a rigorous process. And that's just what you have to do. It's just the cost of doing business and it's another barrier to entry, quite honestly. So you can't fight that.

So will that have a global repercussion rollout? I've got no clue. So not only are people getting swabbed in China, but products getting swabbed as well when it enters the country, which is very interesting. But overall, in terms of supply chain, we haven't seen any major disruptions. We haven't seen -- there were some short-term disruptions out of Brazil in poultry and beef. There were some disruptions out of America when some of the meat plants closed down, but they're all relatively short-lived. The Italian export business closed down for a short period of time, but they've all got back to normal very, very, very quickly.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [27]

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Okay. And our last question from [Ander Teke], PSG Wealth, asks, "Please, could you give us a split of volume and price inflation for the group and divisions?"

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [28]

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Probably not. David?

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David Edward Cleasby, Bid Corporation Limited - CFO & Executive Director [29]

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Probably not.

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [30]

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There's been no inflation. There's been no price inflation at all on average in the past few months, and there's probably been deflation. But it's absolutely not something we've been focused on. So I actually can't answer that question.

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Ashley Kim Biggs, Bid Corporation Limited - Company Secretary [31]

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Okay. I think that addresses all the questions that we have through the webcast. We can hand over to the call. Callers are reminded how they can ask questions through the call facilities.

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Operator [32]

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(Operator Instructions) At this stage, we have no questions from the lines.

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Bernard Larry Berson, Bid Corporation Limited - Chief Executive & Executive Director [33]

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Well, everybody, just to wrap it up, I need to go home and have some dinner. It's very late here, I'm very hungry and it's all about food. As you can tell, I'm a walking billboard.

Thank you very much for your attendance. I know this was unconventional. I hope it worked. I hope we answered your questions. These are really interesting times, a difficult time for everybody. But we still see the opportunity. We remain enthused. We've got a great team of people around the world. Let's not forget that we are diversified. We have this global reach, this global diversification. Many of our markets are over the worst, many are out of it in totality, and we remain confident. And hopefully, in February next year, we'll be able to update you more, in the interim we will as well, and let you know how it's going.

But please, there's no short-term fix. This is a journey. It's a journey of months hopefully, not years. But we're very well positioned to go on that journey. Exceptionally strong balance sheet. Fantastic people. Fantastic strategy. Excellent foundation. And yes, the management team are absolutely up to the challenge of taking what gets thrown at them.

So thank you very, very much for your attendance. Thank you for your support. Thank you for your questions. If there's anything further, please just get hold of David directly. Hopefully, he can answer them. And everybody, please stay safe, keep your distance and keep the faith. And this too shall pass, and the good times will come back again. So thank you, everybody. Good evening.