Bid Corporation Limited (BID) Earnings Call Transcript & Summary

Welcome everybody to Bidcorp 2021 Results. It has clearly been quite a up and down year. I think that we're very proud as to how Bidcorp and its management team and all its employees navigated, again, what was a very volatile year with lockdowns opening -- countries opening and closing, and I think the diversification of the Group really held up exceptionally -- it held up exceptionally well. I think the liquidity was exceptionally well managed and that we can see that as soon as the country opens up, profitability comes back very, very quickly. A lot of people that I need to thank for their efforts in the past year, the executives, Bernard, Dave and the management teams all over the world, the Board members. Particular thanks go to Helen Wiseman, the Chairman of the Audit Committee; Nigel Payne, the Senior Independent Director; Founder, Brian Joffe, and all the other Directors for the kind of effort that they've put into ensuring that Bidcorp continues to deliver for all its stakeholders. So a really -- also have to acknowledge, and I did acknowledge her at the previous half year presentation, Dolly Mokgatle, unfortunately, passed away in January this year and she did pay a great contribution towards this Board. We also welcome Keneilwe Moloko, who has joined our Board recently and I'm sure that Keneilwe will have a long career as a Non-Executive Director with Bidcorp, and so we welcome her. So I'm going to now hand over to Bernard, and Bernard will take us through the results and he will then hand over to Dave, who will take us through the numbers. So thank you, Bernard. Please take over.

Thank you very much, Stephen, and without spending too much time, I'm going to thank you. First and foremost, I have to thank my fantastic management team around the world and our 24,000-odd employees around the world, who have managed to navigate us through exceptional choppy difficult waters. And there is no doubt, our customer base, and therefore, our business has been at the -- really at the pointy end of this pandemic. Our industry has been particularly hard hit and has had to adapt to taking severe challenges, and I couldn't be prouder of the way our team has rallied cause and have performed absolutely phenomenally, and most importantly, have ensured that the business remains exceptionally agile and strong and was and is in a great position to take advantage of the actual and the anticipated resumption in demand and the continued growth in our industry. So, yes, a huge thank you for them. And secondly, a huge thank you to, specifics to our finance teams, who have been through a pretty rough year-end, in some jurisdictions more than others, that's been a very long and tedious process. So thanks to them for getting us to where we are right now. I don't want to spend too much time dwelling on the past, because the year we went through end of June '21 is hopefully a year that we're never going to see again. It was a very dramatic year, had lots of different components in different geographies, at different times of the year, but generally it wasn't fantastic. Generally, COVID was raging through most geographies. Government restrictions were in place in most geographies for a significant portion of time and the challenges that we had to face were unprecedented and we were making up solutions on the fly, as was everybody. But I think when you look at the results that our people did manage to deliver, I think is a testament to the business and the people within the business, that we believe we have a great business model that's fit-for-purpose, highly diversified, exposed to multi-geographies, spread across lots of different currencies, lots of different experiences within the market, different phases of development, lots of collective learnings across the world, lots of synergy across world and it's -- I think it's a model that has served us well in the past and will continue to serve us pretty well in the future. You all know who we are, and you know what our strategy is. We haven't really changed a whole lot. And I think the most important feature of these results when you look through them and you sit back and we say what's the most notable outcome, it has to be with strong cash generation and the fantastically strong position that the business is in from a balance sheet point of view to face the future with absolute confidence and the ability to take advantage of the opportunities that can and will rise. We reduced it down to almost nothing, I think it's sitting at about ZAR 0.5 billion at June 30, which for a group of our size is almost nothing and that cash generation happened across the world, and I think puts us in a fantastic position. Next slide, Ashley. Hope you've lost the slides. Okay, there we go. Like I said, before we get into the detail of the numbers, I think it's important that we do understand that our most important asset are our people, I've said that before. Anybody can have warehouses, trucks and some product on shelves, but we are made up of 24,000, very, very, talented, dedicated people, and unfortunately in the year, we lost 7 of them to COVID, very valuable, loved, respected team members. 5 of them in South Africa, 2 of them in the U.K., and our deepest sympathies and thoughts go out to their families, friends, colleagues. It's been an exceptionally prime time, and our business is poorer for the loss of these people, and like I said, our thoughts are with their families at this very, very difficult time. So let's just put that into perspective. This is about people at the end of the day. This pandemic does affect people. And unfortunately, we didn't escape unscathed, and I think we do need to bear in mind. And I've said it before that our people didn't get the luxury of working from home, most of them. We were on the front line, delivering food to hospitals, nursing homes, vulnerable people, whoever else. That's a full credit to the team, and very sad tragedy that we did lose 17 members this year to COVID. Okay, we can move on. I think there is some technical problem here. I'll run through the numbers exceptionally quickly, because you got them also 3 months ago, and quite honestly, the year that we went through doesn't really bear any relevance to what a normal last year will look like. There were glimpses in some geographies of what it might look like, but generally, everybody was impacted. I guess, the star performer out of all of the geographies was the Australasian business, Australia and New Zealand. And that's probably to do with the fact that from a government point of view, they're zero COVID, their elimination strategy generally worked. And we didn't have the severe lockdowns generally that the rest of the world experienced. And I'm talking to June -- to the end of June. New Zealand only had limited -- a very limited number of lockdowns for the year under review. Australia had Victoria that was locked down for about -- I think it was about 6 months, 5 or 6 months in the first half of the year. And after that, they were rolling lockdowns in all states and territories for a week, 2 weeks at a time. That did impact the results, and made it a little stop/start. But notwithstanding that, the businesses performed exceptionally well. Under the circumstances, they bounced back very, very strongly once things started opening up and normality set in again. And they've put in a very, very good performance. I guess, going forward, and I'll focus more on the future than the past. The Australia, New Zealand businesses is more of a challenge in this current year. Certainly. it's been in lockdown since the end of June and we're due to come out of that in a phased manner in the next 2 weeks or so. Victoria has been in lockdown. Victoria -- Melbourne, I think is actually the most locked-down city in the world through the pandemic. They've been in lockdown since July. Some of the other states have had a week and 2-week lockdowns, but the ACT has been locked down since August. So at the moment, we have 60% of the Australian population is subject to a lockdown order. And it's pretty severe. There's only takeaway and home delivery allowed. There's significant curbs on the movement of people. In New Zealand, they have been in a very severe lockdown since, I believe, it was about the middle of August. That got round back slightly, and so only Auckland now that's in the severe lockdown. But bear in mind, in the New Zealand context, Auckland accounts for about 40% of the population of New Zealand, so that's a pretty severe lockdown. Having said that, the Australasian business is still profitable. Obviously, we're not operating at these levels and deliberately stopped margins at the moment, but we are very confident that when things do resume, the Australia, New Zealand business will bounce back very, very strongly, very, very quickly and take the place on the leaderboard once again. So excellent performance in the previous year, albeit a little bit of a downward trend in this first 6 months, and then hopefully going forward, they'll start reopening and get back to some type of normality. And I suppose, it just highlights the challenge of government approach to how they handle the pandemic between elimination, eradication, worsening of the virus. And I'm no expert, so I won't really talk about it, other than it does have ramifications for what happens in the business. Okay, let's move on. The U.K. was probably the hardest hit out of all our businesses, because it is just the U.K. and we have no geographic diversification there, and the lockdown went on very long. I think that started in about October. So July, August, September, were reasonable trading months. From September onwards, it was downhill very quickly, and now only started coming out of this slumber, I think it was in about May, and Freedom Day was in July. So they went through 9 months of lockdown and it was very, very severe, the implication of that was very significant, and that's reflected in our results. But as I keep on saying, we're still profitable. The business was left in good shape and handled the upturn as it started coming at us, and it started coming at us at a rapid rate. Now we did take the time to streamline the fresh business, to take cost out of the business to integrate some of the back end into the Bidfood back in to get some cost synergy and cost savings, and we are definitely benefiting from that as we go forward. So we're seeing volumes in the U.K. rebound very, very dramatically in addition to business wins that we have. Sales are strong. They are strong across fresh. They're strong across the Bidfood broad range business and that business is already in a very strong position other than, and we'll talk about -- I'll talk about it generally. I think the issues that are faced in many companies at the moment, the supply type issues that we're facing in all our businesses, which are giving us a little bit of headwind, but notwithstanding that, the business is strong, demand is very strong, and the performance that we're getting out of both that businesses in the U.K. now are very, very strong. So that covers off the U.K. Europe also went through a very tough time, but the results are a little bit more stable than maybe than U.K., because we've got diversification. So we do have the Czech business, which has a component that manufactures and sells into retail, the Baltic operations also little bit into retail, and we also had the benefit of both our Spanish and German businesses, weirdly -- not weirdly, it's by design, but they did a whole lot better in the year under review than they did in previous year. So a whole lot of the hard work that we did is actually reflected in the results of them contributing way less losses than they did in the prior year. So we are very comfortable with that and absolutely bodes well for the future in those businesses. Once again, as we look forward in Europe, they had a very, very, very strong summer across all our geographies. They're profitable in every geography in Europe. Sales are very strong. And most sectors have bounced back. There are a few that haven't got full traction yet. Office -- return to office hasn't really happened fully yet. We estimate that to the round about 7% as a generalization. Travel is bouncing back, but it's certainly not at the same level that it was. We're talking about air travel, and probably international air travel. So there's a lot of localized travel and tourism, but there is certainly a very limited amount of international tourism. And maybe we are a beneficiary of that in terms of staycations and local tourism strength. So that's Europe. If we move on to emerging markets. And emerging markets is, once again, it's a very diverse portfolio of businesses, ranging from Asia to Middle East to Africa to South America. The performance overall was relatively good as well. The Asian businesses performed well, and once again that's because of the government eradication strategy, which has left them basically cut off from the rest of the world by performing very well domestically. And we're certainly seeing the benefit of that in both Chinese and the Hong Kong businesses. And our view is that both Hong Kong and China are going to stay cut-off from the rest of the world for a reasonably long period of time. Singapore, slightly more complicated. They were cut off. They have been in lockdown for a significant amount of time. They decided that living with the virus was the way to go, but now it seems like there's a little bit of a hybrid going on, and there's bit of a change in heart and some restrictions are being put back in again. Notwithstanding that, our business is doing relatively well. Bearing in mind, Singapore is a travel hub, as is Hong Kong, so you're missing all that international trip. The Middle East went through a rough time, but came back very, very strongly. I think their vaccination rates certainly were up there with leading rates in the world and they've reopened very soon and the business has been very, very strong. South America went through very, very difficult time of COVID. But it's fair to say, our businesses in South America are already in a much, much, much stronger position than we were going into this pandemic. And just as an example, our volumes in Chile are 3x what they were. They now are currently 3x what they were before the pandemic, pre-pandemic. Our Brazilian volumes are ahead of where they were before the pandemic. So there is no doubt we've picked up market share and we've also picked up share of basket, and our guys have done a fantastic job of moving into new markets and new product ranges, so we are very enthused about the future prospects that will come out of South America. In South Africa, you guys, most of you probably know the conditions today, but in my view, it has been a little bit challenging, but 2 out of our 3 businesses reported record results, being the Crown business and the Chipkins business, back to form beyond the expectations, and did phenomenally well. The Bidfood business, which sells to restaurants and hotels et cetera, obviously, had a tougher time with restrictions and alcohol bans, et cetera, but we're still profitable. We're still profitable at a very healthy level and we've certainly seen a very rapid pickup in customer demand, now that things seem to be easing up a little bit. So there is a lot of information in the pack. There's a lot of detail. A lot of it's historical. I'll just roll for a few minutes as to where we are at the moment. I have touched on most of it. But generally around the world, we are seeing very, very strong growth. So we have released our sales data to you guys at the end of August. The trend absolutely has continued in September. Our sales are tracking basically at or above 2019 levels, other than Australia, New Zealand, in particular, which are quite big contributors, but their trading, that's absolutely attributable to COVID and lockdown issues. So we are seeing demand come back exceptionally strongly across almost all segments. We are very happy with where our customer proposition is positioned at. Across the world, we have done a lot of work over many, many years in terms of getting the right customer mix. We've spoken about many, many years and we are very happy with where we're at with that. And I think that's the reason we're able to perform relatively well through the pandemic. And while we've been able to adapt and react to the market opening up again, as well as our guys have. There are some clouds on the horizon, and I don't want to be too negative about it. But we do need to be pragmatic. I'm sure you read about it and see it on the TV at all times. There is a shortage of labor across almost all our geographies with probably the exception of South Africa and South America. We just can't get sufficient numbers of workers, particularly in warehouse and distribution type roles, which is being -- which creates a lot of challenge when we have a lot of demand. Not only are we having staffing problems, but our customers are having the same problem. So they can't get people to start the hotels, their restaurants, their pubs, whatever else, so they can't operate at full capacity that the demand is almost dictating that they should be operating at. So that's a major problem that the world has to overcome, and I'm sure that that equilibrium will be restored at some stage once people can start moving around again, and people will go where the opportunities are and that equilibrium will be restored. But that certainly will take some time, and absolutely is causing us some pressure. There are cost pressures in the Northern Hemisphere. Fuel, electricity, gas prices are skyrocketing, and that obviously has a significant implication. There is food price inflation on the way, some of it's here. Some of it's on the way. We believe that that will be able to be passed on. We're still confident about that. That will still be manageable and still we'll be able to pass it on, particularly because of the demand side of the equation from our customers is very, very strong. And I guess there is also dislocation in terms of availability of things that you need to operate your business. So it's very difficult getting motor vehicles, trucks, forklifts, and all those other simple things that you need to operate your business. Fortunately, we're well invested and we never uninvested in the last year or 2. So we are in a strong position. But we do understand that there's a year to 2-year delay in getting much additional capacity onstream. So those are the challenges that we face. I think we'd rather face those challenges than the challenges we faced in the previous year. I see them as positive challenges. I see them that they will create opportunity for us, and our businesses are very agile and able to take advantage of those circumstances as they arise. The other thing I should have mentioned is our commitment to ESG. Now going back to 2018, we committed to reduce our emissions by 25% by 2025, and we're well on track to achieve that. Obviously, we'll be looking at future targets, 2030's and 2050's. We don't just want to commit to something without having a plan as to how we're going to actually achieve. I won't be here in 2050. I can't give you the guarantee on that. So it will be very easy for me to say, well, we commit to being net-zero by 2050. But we need to understand how that will work, bearing in mind that we have 2 components that contribute the majority of our emissions. It's the electricity consumed in running our warehouses, and that we've done a very, very good job of continuing to in terms of going to renewables in terms of solar, wind and whatever other new technologies will happen. And that has been very, very successful, and has driven down our consumption quite dramatically. The other major component, which we are struggling with, as is the world generally, is with our distribution business. And we run thousands of vehicles around the world every day. And I told, there is a credible alternative. We just don't see the path forward as to how we can reduce that. Now obviously, we will buy the most efficient vehicles we can find. We are trialing some electric vehicles, but they have great shortcomings in terms of range and payload. But who knows, where the next leap is going to come, but we will -- we are eyes wide open and we will invest where necessary to help us along that journey. So, yes, we'll watch that space with great detail and do understand we'll have to invest in it. But it will be a -- there will be a return on payback, so we're very committed to that. The outlook, as I've said, we are very positive. We are already 3 months in the -- into the year, so we're 1 quarter down. We are very happy with where we are at the moment. And yes, we are positive. We don't know what the future is going to hold in terms of COVID, so there is always this caution of, is COVID going to come back? Are restrictions going to come back? We don't know. We hope not. And we're planning that they aren't. So we are going down the positive path of business is going to continue and life is going to get back to normal, and the world is going to transition from a pandemic to an endemic, and life will get back to normal. So we are in a very happy position in our business. There are some acquisition opportunities. We made a few last year. There are more opportunities that are arising. We have said that they're primarily in the emerging market segment. A few things have changed over the past few weeks. There are a couple of opportunities in some emerging markets as well that we're looking at. We've certainly got the balance sheet to make these acquisitions. So we remain very committed to not only giving -- delivering organic growth, but also some acquisitive growth as we go forward. So thank you very much. Thanks for your patience. Thanks for listening to me. And I'm going to hand over to David to talk you through the financial segments, and then we'll have a Q&A session. So if you could please send your questions to Ashley. I noticed that one of them did pop up on the messaging thing in Zoom, but if you could rather just use the Q&A capability in the -- I'm not sure exactly where it sits, but there is a Q&A capability. So over to you, David.

Thanks, Bernard, and good morning to everyone. Just as we normally say, the numbers we are showing are obviously in terms of IFRS and accounting policies are consistent with the -- what we've used previously and applied accordingly and Greta Thunberg's words as I heard on the TV the other day, blah, blah, blah. And as Bernard has noted there, I'd like to acknowledge all our finance people, not only the people worldwide, but specifically from my perspective, the finance people, particularly the corporate people, and particular mention of the Hong Kong finance team, which has had pretty tough time over the last 3 months. We obviously have a disappointment that is coming in 3 forms, I guess. Firstly, the discovery of the fraud late in June and the work that's going around that. It's a disappointment because, I guess, it's been primarily driven by confusion, confusion of our own management team. And when you get that, typically it doesn't matter what internal controls you've got in place, they get overwritten. And these things are typically very difficult to detect. So obviously, a big number from our perspective, but it has been perpetrated over 5 to 6 years, and I think if you take each number in context per year, it is not that material, but certainly from our perspective, we've taken absolutely a prudent view and written off the full amount, but we are obviously very positive and confident that we're going to get some recoveries from the perpetrators, from insurance and from the other parties that have been involved in this. And we are obviously pursuing the criminal side of it, and if necessary, service side as aggressively as we can. We are -- obviously, we're disappointed by the delay in the results, but the reality was because of the timing we needed to make sure that the forensic investigators and the auditors have enough time to look at 3 critical issues; one, just making sure it wasn't contained to this particular segment of Angliss Greater China business; the second was really quantifying the losses; and thirdly, was really trying to allocate those over the correct hands. And accordingly, we needed to restate our accounts, as I said, most were not particularly material, but if you take that to more than 1 year, they were material. It resulted in a modified opinion from our auditors, and the auditors could be comfortable in containment, but were not able, as a result of the forensic RFP investigation still not being complete, able to get sufficient evidence around the loss, quantification of the loss and the allocation. So we were up against a reporting deadline in terms of our JSE obligations, and therefore, we ended up where we have ended up. I'd like to just thank the auditors for all the efforts that have gone in over the past few months in terms of getting us to where we are today. And other than that, it's been a rather an eventful year-end. So by going to the numbers, just through some highlights. I think overall it's an excellent financial performance considering the conditions which you heard from Bernard. We had 12 months of COVID in 2021 as opposed to 3 and about in 2020. So one needs to confirm these in that context and certainly, from our perspective, we're really happy with the results. Revenue was only down 5% in rand terms and about 9% in constant forex. The gross margins were largely maintained, so that's obviously a pleasing achievement. EBITDA margin 5.1%, and we've put there just to compare it back to 2019, which obviously was the last pre-COVID period that we had, full period that we had of 6.1%. So we're not far off or the result wasn't far off where we were in F 2019. Trading margin of 4.2%. Obviously, well, through all the months of 2021 we were profitable despite the severity and the different lockdowns that we got in all the different jurisdictions. Headline earnings was up 21% -- or 22%. And HEPS likewise up 21.8%, 868,4 cents. As Bernard mentioned, working capital better by 7 days and we generated ZAR 0.6 billion. That's on top of the 2020 generation of ZAR 1.3 billion, so generated cash flow from operations was very strong and a real highlight in the period, what you call a pandemic era of free cash flow. And that's basically from the end of February to the end of June, nearly GBP300 million of free cash flow, and that excludes the benefits that we got one-off, I guess, of the sale/leaseback transactions and the dividends, we have excluded those. We declared a final dividend of ZAR 4.00 per share, which is 2.17x covered, largely in line with our improved policy. In terms of the P&L, revenue in constant currency was only down 9.2%. I think one needs to take this in context of the harsh Q2 and Q3, and a bit of Q1 and I guess a bit of Q4, particularly in the U.K. and Northern Hemisphere in terms of what they went through, but has been -- really to -- the sales recovered to basically where they were in 2019 through July, August and September. And that's notwithstanding where we -- what we had in terms of the restrictions that Australia remained and obviously in New Zealand as well. As I said, the gross profit has held up well, and I think that's particularly strong considering the trading environment. There was some price discounting to gain market share in a number of jurisdictions. And the businesses have been subject to, often as we've seen in major restrictions, sudden and severe lockdowns that come quickly and one needs to be able to deal with short, dated inventory and that does have some impact. So I think in the context of those 2 issues, the GP has held up particularly well. Operating expenses have been very well managed. I think just to put it in context, our constant currency revenues was down 9% and our operating expenses were down 13%. There was some -- obviously, and as we've alluded to over a number of periods, government retention assistance or government employment assistance, which has helped cash flow, but doesn't impact the P&L. So those numbers have benefited the cash flow temporarily because this is really just a timing issue. Interest is down, if you look through it, and you take out imputed interest, and FX down 23% and that's really being driven by the better asset management, and generally cash -- stronger cash flows. We had some capital profits, net of ZAR 243 million. The positive is really the profit on the sale and leaseback of transactions we did. There have been some impairments to PPE, the fire we had in November of '20 was a contributor and we have written off some obsolete IP or intangible assets, which related to IT, where we have seen changing technologies. The tax rate is up a little bit from the effective rate from where we've been. That's just really about a contribution issue, Australasia being a big contributor to the result, and they're having higher tax rates. And what we really see, we do anticipate, as normality returns, whatever the normality is, our tax rate should track down a little bit further. As we say, cash -- the cash flow is very, very positive. And I think one needs to just bear in mind the objective over the last 18 months is obviously survival and making sure that we have liquidity. Our businesses have liquidity, and they've been in a position to be able to deal with the varying operating conditions that have played out in the different parts of the world. So I think just to acknowledge, the group has done a fantastic job in that space. The working capital, as I said, we generated ZAR 0.6 billion. Our working capital on average days is 7 days as opposed to 14, previously. Another metric, which we look at is the net working capital percentage versus the annualized revenue. We have given guidance that we expect that, under normal circumstances, to be between 4% and 5%. In the past year, it was 2.5%, so we've done a great job there. But we do, as indicated, because of supply chain disruptions, and in some places, product availability, we do anticipate the businesses where they can't get product will be stocking up to make sure that they have sufficient product to supply their customers. On receivables, provisioning has been largely maintained. And from our perspective, I don't think we -- the world is out of the woods yet. What you are seeing is obviously a reduction in support programs, the government support programs in terms of -- for businesses in terms of rates, vegetables, those kinds of things, those things are going to come back. And obviously, in terms of people, in terms of government support schemes, those are winding down as the world emerges from the pandemic. So I think some of the economic consequences are still going to play out in some parts and therefore, we've maintained our conservative provisioning. In terms of investing activities, we did through a number of sale/leaseback transactions, which really are principally a desire to maximize our, what we call end of use for life properties. We did realize about ZAR 1.6 billion. We were assisted by particularly favorable yields in many markets because of industrial property. They're quite opportunistic. There is obviously a strategy behind them, and that was a good achievement from our group property manager. He did a fantastic job. And net debt is ZAR 0.5 billion, a consequence of basically all the cash flow benefits and the good job that we've done. Largely, again, from our perspective, it gives us fantastic opportunity and headroom to be able to take on organic and acquisitive opportunities as we go forward. Next slide, Ashley. I think really just to iterate what we've seen in terms of the cash flow, the pandemic era, and something that we as a group are particularly proud about. Next slide. Just in terms of our balance sheet, financial position, very strong. Nothing really to add. There is no change to our risk management policies in the way we've approached the world. Look, in terms of our liquidity, we've got ample headroom. And subsequent to year-end or end of June, we have raised an additional 300 million in terms of an RCF. That will be used to take advantages of options and also just trying to make sure that we more efficiency manage the cash flows around the Group. So that we've done at obviously good rate, so we are happy with that. And solvency, debt to equity is very, very low and our net debt to annualized EBITDA in terms of excluding IFRS 16 regiment, basically at 0.1x and well within our covenants of 2.1x. So we're very comfortable with that. In terms of financial guidance, obviously, as you heard, the Group sales have bounced back quickly, and we've had a particularly good Q1. The impact of the Northern Hemisphere winter, I guess, is uncertain. But I think when compared to where we were previously amongst -- the world out there is vaccinated, and I think you will see a far less restricted environment as we go forward. We are cash generative, and we do anticipate that to continue. As Bernard has indicated, there will be -- we anticipate there will be some inflation coming back, but through product pricing as well as the cost-push of staff and staff shortages and the energy prices. The absorption of working capital is, we'll expect that as the normal trading cycle returns. I mean, as you are well aware, we generally absorb working capital in the first half and adsorb it in the second half. We haven't seen necessarily that for the last 18 months. But as the world normalizes, we do anticipate that to happen. And as I indicated, there is some deliberate stocking up due to supply chain issues that are being experienced in many parts of the world. We do have some maturities, debt maturities in the second half of the next financial year and no need to deal with those and nothing in particular. We are seeing a step-up in CapEx from those jurisdictions where activity has returned and the investment is for, obviously, anticipated growth and needs to be embarked upon well ahead of time because of lead times and developing principally what our long-term invest properties. Our financial position remains strong and we do believe that's going to be a competitive advantage. You've heard about opportunities starting arrive from an acquisitions perspective, what we say in a less volatile year, that's still unpredictable COVID world. There will be introspection over what we experienced in terms of our lessons over the Miumi fraud. But once again, we need to find the correct balance between making sure that the businesses remain entrepreneurial and operated within the decentralized model versus what we try and restrict from a center. So that obviously is a balance that we will continue to make sure is balanced properly. There is no change to our philosophies of hedging assets and liabilities, and that will remain. Provisioning will remain conservative, as I said, because of anticipated difficult economic conditions that are likely to return on us. But then within that, forecasting remains difficult. Therefore, we are not really giving any guidance going forward. And clearly, the first quarter, as we said, has started up particularly well. So we are optimistic and we are anticipating growth, but difficult to not only take down and predict anything as we sit here today. So on that, I'll hand back to Bernard to take questions.

Okay. Thanks, David. The one thing we didn't mentioned was a dividend of ZAR 4.00 being declared, which is the largest dividend we've ever declared, bearing in mind though that we didn't declare a dividend in February. So it's in respect to the full year. Our intention is absolutely to go back to paying an interim and the final dividend in the year ahead. And we certainly see that as being the reality, unless something very, very, very unfortunately untoward happens in terms of COVID, which we don't anticipate. So that's a feature that we should have mentioned. So I think it's about ZAR 1.4 billion of cash will be paid out in dividend.

What I want to do is go through the questions. So a whole lot of questions have been sent to Ashley. I'm going to read the question out and then I'll try to answer as best I can or David. So from Morgan Riley. Australia reported a strong second half. I calculate trading margins of 8.4% in the second half. Could you disclose the absolute contribution from government support in the half? Where do you see normalized Australian trading margins going forward? And monthly net working capital days halved to 7 days versus 14 days. Should we expect this to return to 14 days in the year ahead as markets reopen? What is absolute expected working capital outflow? So let me try and answer that as best as I can. The segments in Australasian segments, that's a blend of Australia and New Zealand, and there's differences between the 2. In terms of government support, there's AUD9 million -- effectively about AUD9 million, call it ZAR 90 million of government support in the second half. But once again, and we keep on saying it to have an academic argument is that's offset by the fact that you've got payroll cost. So you cannot take people on during lockdowns, which did happen, but you're recognizing it will be coming from the government as well, but it's AUD9 million. And do we anticipate the margins to continue at that rate, I think was part of the question. They are very high and a very high for a number of reasons and conditions were very, very good. We'd be disappointed if in a normal year we don't see margins pretty similar to that. In the current year we're in, we won't see margins at that level because there isn't government support and there is obviously a downturn in trading because of COVID restrictions. In terms of net working capital, look, I don't know what these days mean, because that's a statistic and you've got a denominator and a numerator and your sales number is a collection of a few periods of months. You've got sales increasing relatively rapidly, and it does all types of things with ratios. So yes, I wouldn't get too hung up as to whether it's 7 days or 9 days. I think you need to look at the absolute numbers and what has happened subsequent to year-end and the absorption of working capital subsequent to year-end. And we haven't seen any great absorption of working capital subsequent to year-end, notwithstanding that we've seen strong turnover growth. So our working capital has continued to be very strongly managed. Obviously, you'd need more working capital as your base grows, but it certainly hasn't been a major issue that's gone to levels that was maybe 2 or 3 years ago. I think at this stage we're seeing some permanent change in the nature of our working capital makeup. Next question is: what loss U.K. Fresh make this financial year? What percentage of U.K. turnover is Fresh? And where do you see normalized margins for Fresh? What loss did Germany and Spain contribute this financial year within the European division? Under normal circumstances, I actually wouldn't give you those numbers, because we don't want to split it out by country. We've got these divisions for a reason. There is competitive reasons as to why we don't disclose certain issues in certain markets. But I'm happy to tell you the numbers because I think that paints a very positive picture for what lies ahead. In the U.K., Bidfresh was about 8% of total sales in the year that we just finished, but they were more hard hit from a revenue point of view than the Bidfood business because that didn't have the hospitals, et cetera. We reckon it's somewhere between 14% to 20% -- 15% to 20% contributed to revenue of the U.K. segment. We also lost within the profit that we made in the U.K., there is a loss of 23 million for Fresh and we are very proud to say that first 2 months and we anticipate third month of the current year, Fresh has traded profitably. Germany lost 5 million last year and Spain lost 11 million last year. Once again, we're very happy to say that those businesses have operated at -- Spain and Germany have operated at breakeven with profit-making levels in the first quarter. So there is quite a big swing there. If we can continue that momentum, that trajectory on those 3 problem businesses, which we always identified as a problem children, which we think are absolutely out of intensive care now and are absolutely on the road to recovery, and we're very confident about the future prospects. They're not going to kick full goals necessary in the first year, but they are absolutely on the path to recovery in our opinion. What is your outlook for CapEx and working capital trends in FY22. Do you think net debt will reduce further? We did benefit from a cash flow in mid-term, so we didn't pay dividends for the year, and we also had the proceeds of the sale and leaseback transactions. The counter to that is we are generating a lot of money out of regular trade, so we believe that with our dividend policy of between 2.2x to 2.5x covered with our normal CapEx spend of about 2% of revenue and with working capital being managed, we will be cash generative, which means we should see an improvement in the debt levels, other than we do not need to now account for the fact that there are dividends going out. So I think I hopefully have answered that one. Please, could you give more detail on your Own Brand growth and prospects and what percentage of the business is Own Brand now. We estimate the blended average across the business, Own Brand is about 20% and it's growing strongly and there is no doubt that supply chain disruption gives us good opportunity to grow that even more. When you just don't have the availability of inventory and you do have a house brand, it makes it a lot easier to convert your customers. And generally, once you've got the customer into house brand product, there's a high degree of stickiness. So we see that was a positive for our house brand. Could you perhaps give some comment as to whether you believe the Australian business would be able to trade the second half margins as [ first half ] volumes return. I think I have answered that question. Please also bear in mind that -- go back in history, you always see that the Australasian business performs much stronger in the second half than first half and that's to do with the recognition of some rebates and growth rebates from suppliers and the trading up provisioning, et cetera. So the second half margin doesn't reflect the full year's margin and it's normal for the second half to be higher than the first half. Does the qualified audit opinion should have any practical impact on your business, covenants listing rules et cetera? I actually can't answer that question, maybe get David to. The only thing I will say on that is we have spoken to our bankers. We spoke to them a while ago. None of them were overly termed about it. They all see it as pretty Miumi isolated, contained issue and they've expressed my concern whatsoever. And are very comfortable to lend us money based on our financial position and our performance and our strong cash generation. So I don't know if David's got anything else to add in terms of practical impact.

Not really. I mean, I think obviously when you just understand as you said, it's an isolated, small -- relatively small impact. And I think that's the basis of the qualification. There are some practical issues from what's needed to remove that qualification like a review audit, like will have to be done on the half-year numbers. But other than a cost issue, I don't believe this is the practical issue.

Thank you. Certain sectors are not trading at normal levels here, hotels, catering office, et cetera. Historically, what percentage of sales delivered into these sectors. I can't give you an answer on that based on the business and the geography. In the U.K., for example, the most recent feedback we've had is that basically all sectors are trading above 2019 levels, except for the office, the work environment, which is operating at about 70%. International travel, which is operating at lower levels, further lot lower levels, and the cruise industry. Besides that, everything else is operating at normal levels. When you move to Australasia, obviously, it's a very different issue. And then, I think the Europe levels would be very similar to what we've seen in the U.K. On Australia and New Zealand, how has revenue statistics or percentages of 2019 and 2020 levels panned out in September? Have these continued to track down significantly? No, they've actually improved. So September in both Australia and New Zealand was better than August. The differential between -- they basically -- I think they're about 10% down on 2020 levels, the year ago, which was operating almost full capacity across both of them, and it's about 50% down on 2019 level. So I think the businesses are holding up remarkably well, bearing in mind that 60% of Australia, 40% of New Zealand is under severe lockdown. Really the sale and leaseback transaction, would you say these are largely complete or more expected in coming years? Look, I think we took advantage of market conditions where yields are very, very compressed and we sold a property in Hong Kong and 3 in Australia, which one was pretty large. They will continue as part of what we do in our property portfolio is that's the way you maximize your end-of-life use out of the assets. The complicated issue there is the replacement now of assets of real estate is becoming quite difficult, both from a cost point of view and a timing point of view. So we might just have to stick with what we've got for a little bit longer. But absolutely, it's part of our real estate portfolio proposition is to do these transactions in order to maximize the event of end-of-life properties. Could you please comment on trading levels in Australasia? Commented on that one. Gross margin management has been enviably stable for the Group. What would it take to get back to 2019 cost/income, thus operating margins? I think with it, so our cost -- our gross margins are very similar to where they were in 2019. Our costs are probably a little bit better than where they were in 2019 with severe pressure. I'm not sure we're going to be able to maintain that cost benefit that we picked up through the pandemic. We've got very strong wage pressure, but very strong inflation cost pressures. So yes, I'm just not so sure that we will be able to hold on to the full cost reduction for too long. You have cut costs during the pandemic -- yes, we got -- but are facing inflationary pressures. How does your FY22 cost base compare to FY19? Like I said, at this stage, it's probably little bit lower, but I'm not sure how long that goes on for. Please, can you comment on e-commerce platform sales as a percentage of revenue and what you're seeing in terms of competition from food delivery businesses? I'll answer the second part first. Food delivery businesses are not competition to us. They're delivering the end product from a restaurant or a top kitchen. And those restaurants are kitchens of our customers. So whether they service the end user a way of takeaway, dine-in or by home delivery, it's still a potential customer for us. So we don't compete against the Uber Eats, et cetera. That's not our competitor. Possibly our competitor is retail home delivery, but that's just the split between retail and out of home. In terms of e-commerce, and I guess, it'll be remiss if I don't say, the business has made remarkable strides forward from a very, very, very strong position in terms of technological advancement. Now one thing we don't do, is we don't talk like a tech company, like a startup, and maybe we should and throwing fancy slides and fancy words and fancy percentages. But a large proportion of our business is done electronically. The smarts that we have in business are phenomenal. The back end is incredible, the data analytics that go into it are very good and that helps you maximize that margin and maintain that margin and grow the customer and grow the basket and ensure customer retention and loyalty and all those other good things. So we do a fantastic job of it, but don't really talk too much about it. But technology is a very, very important part of our DNA. We think it's a very, very strong competitive advantage and it's something that gets -- is getting increased investment and management attention. Now the investment planning isn't huge, huge, huge numbers, but it's a mass millions of dollars or pounds to make sure that we're actually ahead of the pack and that it works. We are very fortunate that our technology is servicing our base that already exists. We're not trying to create something new. We're not trying to invent a market and talk about a market that we're going to create. We already have the market, have the customers, we have the product and it's for us to maximize that relationship. And our team does a fantastic job of that. We've got an incredible team of developers and the output from that is absolutely amazing, and the technology is amazing. And if any of you know anybody who owns a restaurant or is a customer of us, yes, I think you need to talk to them and see if they are using that technology and what they think of it. But our view is, it's world leading. On a country-by-country basis, we're getting huge uptick and it's a very, very exciting part of the business. But please bear in mind, we are B2B. We're not B2C and we don't intend to go to B2C path. We played around with a little bit during the pandemic, and we did a little bit of it. And as I said before, that was to keep our people busy and motivated as opposed to trying to be profitable. We don't want to go to the B2C market. We are very, very happy with what we do in B2B and I think we do it relatively well. With sales at 2019 levels or thereabout, cost-cutting from last year, confidence of passing on costs, does Bidcorp see earnings returning to 2019 levels? Is that the benchmark for the year? That's a very good question. And yes, it probably is, bearing in mind this year isn't a normal year, because we still have COVID, we still have lockdowns, we still have uncertainty. And if all things were equal and things carried on the way they are and we could see the incremental improvement in Australia-New Zealand over the next few months, which are absolutely at 2019, is the first quarter call, and it's very much within reach. But we're not fortune tellers, we, unfortunately, don't know -- we don't know what's going to happen. Are you experiencing any supply chain issues in the U.K. in terms of lack of truck drivers? Is the lack of fuel at present in the U.K. an issue for your fleet? Please elaborate on supply chain challenges in general that you talked in your outlook. Okay. So in terms of truck drivers, I'll ask Andrew this question specifically. In April, we were 200 truck drivers short for the reopening, when we saw the reopening happening. We are talking about HGV grant, heavy goods vehicles. We recruited 300 drivers. We lost 150, and so we are little bit short for month. We are about 50 driver shorter. Out of 1,200 that's not all that significant and our service levels were not where we want them to be or acceptable in the U.K. complex context compared to what others are going through. Is the lack of -- sorry, the driving issue is designation fresh business, because generally, they're small vehicles that can be driven on a regular car license. Is the lack of fuel an issue? No, that is something we plan for. We do have contingencies. We do have on-site storage at most of the depots. And I guess we do get priority because we are dealing with institutions like prisons, hospitals, defense forces, et cetera. So no, it hasn't caused us any major issues. It's been a very limited amount of disruption. And the supply chain challenge. Look, it's very difficult to -- there is a dislocation of shipping components. They are all in the wrong place, particularly reefers, refrigerated containers. They're in the wrong place, shipping is very expensive, it's unpredictable, shipping times have blown out. Your order containers, you get none of them, then they all appear at the same time and there's no one at the ports to move them because they don't have truck drivers. So those supply chain challenges have a knock-on effect. And it's not only important product for us, it applies to our suppliers. So our suppliers are having the same issues in their supply chain. And they might be missing the screw cap on the bottle or one ingredient that goes into a sauce. And it's just right through the whole chain. And I think it's going to get worsen a bit. What scope do you have to further automate your operations robotic pickers, et cetera to mitigate labor cost inflation? In the short-term, very little, because you have to invest a huge amount of money in real estate. So if you want to go down the robotic part, you actually have to purpose-build facilities to handle it. So unfortunately, in the short term, we don't see that as being a quick win for us, being able to do. But in the longer term, it is something we're looking at. We've seen some of the automation that is happening in retail, and it looks very, very, very impressive, but it's not actually cost effective yet. It might become at some point in time, but at this point in time, it's not cost effective. But I suppose that's going to go, at some point in time, it's going to -- it's not going to be a cost effectivity issue, that's going to be a necessity in terms of labor availability. I think I've got them all. Let's just have a look. Sorry, no, there are a few more. We have seen restaurants simplifying and condensing their menus since the pandemic. Is this something that has continued until now and what has been the impact on the business? Do you expect menus to return to normal as things normalize further? I think there's no doubt that in a year or 2 or 3, things will go back to normal. But right now, operators have simplified their lives. They have moved to more standard-type ingredients. They have moved to simpler menus and it's going to stay like that for a while, particularly when you've got supply shortages, when you've got these disruptions we talked about. They're not going to want to go for too much of a novel experience. That will change. But we're not seeing a change just yet, and we're quite happy with the way it is. But because like I say, we've got more opportunities to sell house brand and we've also got more opportunity to simplify the range. With your balance sheet basically ungeared, do you see enough acquisition opportunities to utilize this capacity? Could we expect increased dividends? David, I'm going to let you answer that.

I think the first is being that we've maintained a conservative position. I don't see that changing as we go forward. So it will be a balance between CapEx and acquisition opportunities and developments. And so, I don't see -- we've got a policy, we structured and short-term aberrations can change. The acquisition can materialize and that could change the position of the group. So I guess we'll stick with where we are from a dividend perspective and acquisitions, we will take advantage as they come along.

Okay. We have no more questions. Thank you everybody for your attendance. I really do appreciate your continued interest. We will give the market an update in probably about 6, 7 weeks' time, towards the middle end of November, I believe, we are scheduled for. Once again, just a great shout out to the team around the world. They really are an amazing bunch of people. I haven't seen most of them for 18 months at least, and I do miss them. But they have done us proud. They've done shareholders proud and I think business is in a very, very strong position, thanks to them. And we remain very optimistic about the future and look forward to sharing some more good news with you in a few weeks' time. So thank you everybody and good bye or good day. Thank you.