European Subsidiaries

Although the throughput of cattle decreased during 2008 the better prices achievable in the EU ensured that the European Subsidiaries once again provided excellent sales values for the parent company. Towards the end of the year the Dutch office and the Smithfield depot were closed as part of the ongoing European cost cutting exercise. The results of these reduced costs will not be seen until 2009 onwards. It was reported last year that contracts had been entered into with producers in Uruguay and Italy for the sale of their products in the UK, and certain other European countries, which was expected to assist in replacing the lost Meatco EU income. Due to the lack of product from Uruguay and the unfavourable Euro to Sterling exchange rate these contracts have not yielded the expected results in 2008.

It is still anticipated however that with these contracts we will continue to contribute income to the group during 2009 albeit not to the extent initially envisaged. The shortage in supply of product being sent to the EU from South America has had a positive effect on the prices achievable for BMC in the EU; however this shortage has severely reduced the GATT income of the EU subsidiaries. Due to the increased values, not only from BMC but also from Meatco, Allied Meat Insurance also achieved a better result for the year and was able to contribute US$700,000 (P5million) to the Commission’s consolidated trading results of which profit commissions amounted to US$639,000 (P4.6million). Allied Meat Insurance is continuing to insure all Meatco product destined for Europe as well as the importation of meat products from South America into Namibia. Similarly BMC Meat Importers (Guernsey) contributed £129,000 (P1.4million) to the consolidated trading results and £400,000 (P4.2 million) in profit commissions and dividends to the BMC Botswana results, despite there being no income from Meatco for 2008.

South African subsidiaries

The South African subsidiaries continued to provide support to BMC. In existence since 1941, TBCS has been part of the BMC Group since 1987 and has continued to be a self supporting unit, while adding value by paying management fees and insurance premiums to the Group. TBCS continued in its pivotal role of being an integral part of the BMC export chain through providing cold storage and logistical services from its premises in Paarden Eiland, Cape Town. While not detracting from the service rendered to BMC, TBCS has been successful in retaining and expanding the business obtained from outside customers. A good relationship exists with Meatco, who entered into new facilities rental arrangements on favourable terms in 2008. All indications are that they are delighted with the service provided by TBCS and their support is expected to continue into the future. A diversified range of other export products were handled, notably butternut and avocados. On the imports side, substantial throughput was provided by Airport Cold Store. The former container depot and dry cargo warehouse continued to be leased out to a tile merchant in 2008. This has had the benefit of ensuring a constant monthly income. The dry cargo business was in turn operated from within the cold store premises and this arrangement has proved to be satisfactory. The shipping division provided services to a range of customers, including BMC.

In spite of negative economic conditions, TBCS managed to achieve creditable results and remain in a favourable financial position. The company has continued to produce positive operating profits from trading activities, before the intergroup management fees paid are taken into account. Staff numbers have continued to reduce through natural attrition, with new appointments only being made where deemed to be absolutely necessary. The BMC Impex sales operation, based in the Johannesburg office and at the premises of TBCS in Cape Town, produced a positive result for the year, with market related prices being obtained in South Africa. This operation also serves an important role in providing information to BMC on trends in the SA market.

Local subsidiary

The only remaining local subsidiary Mainline Carriers continued to do well despite tough economic conditions and having sold off the majority of the property and plots it owned. The profit after tax for this company was P828,000