Slide 1: Interim financial results, six months ended December 31 2010
Interim financial results Six months ended December 31 2010 1
Slide 2: Agenda
Agenda 1 Group result Brian Joffe – Group CE 2 Strategy Brian Joffe – Group CE 3 Financial analysis David Cleasby – Group FD 4 Operating review and conclusion Brian Joffe – Group CE 5 Appendix 1 Financials 6 Appendix 2 Segmental results analysis, strategic imperatives and prospects 7 Appendix 3 Hist
Slide 3: Group result
Group result Brian Joffe – Group CE 3
Slide 4: Group result: key numbers
Bidvest Group Limited Result • Business cycle upturn is weak relative to Key numbers: past cycles and the H1 results reflect soft but gradually improving markets Revenue +4% to R58.5bn • Bidvest people are fighting hard for every Trading Profit +8% to R2.82bn cent earned Pre tax profit +17% to R2.57
Slide 5: Strategy
Strategy Brian Joffe – Group CE 5
Slide 6: Strategy
Strategy • Bidvest believes it has an effective formula for developing people and performing well • In the past decade we have achieved the following – Doubled the staff complement to 110 000 people – Quadrupled annual employee remuneration to R13 billion – Quadrupled annual revenue to R110 billion
Slide 7: Refreshed operating structure
Strategy • Refreshed operating structure effective immediately: – Bidvest Foodservice headed by Bernard Berson – Bidvest South Africa (excluding foodservice) headed by Lindsay Ralphs – Strategic investments, associates, and separately listed Namibian business headed by Myron Berzack – Owned property
Slide 8: Financial analysis
Financial analysis David Cleasby – Group FD 8
Slide 9: The H1 F2011 numbers in a nutshell
The H1 F2011 numbers in a nutshell Revenue © 4.2% to R58.5bn Trading profit © 8.0% to R2.8bn Headline earnings © 11.3% to R1.7bn HEPS © 9.1% to R539.8cps Adjusted HEPS* © 13.4% to R560.8cps DPS © 8.7% to 225.0cps Cash generated from operations (before WC) © 4.6% to R3.6bn Net debt R4.6bn & 20% geari
Slide 10: H1 F2011 financial highlights
H1 F2011 – Financial highlights • Revenue up 4,2% (on constant currency up 8,6%) – benefits of increase in Safcor Panalpina & automotive retailing offset currency impact • Tight control of expenses (actual 1,3% increase – constant currency 4.6% increase) assists trading margin, at 4,8% (2009: 4,7%)
Slide 11: Notable influences on the trading period
Notable influences on the trading period Rand strength • Exchange rate continued to strengthen during H1, 2,3% negative translation impact on HEPS • ZAR on average up 11% vs. GBP, 15% vs. EUR, flatish vs. AUD Working capital increase • A function of a reduced base vs. 2008/9 and focus on asset manag
Slide 12: Financial pointers for the balance of F2011
Financial pointers for the balance of F2011 • Cash absorption in working capital is highly likely again as growth resumes, but H2 should follow seasonal trends • Cash generation anticipated to be positive, gearing should reduce further unless there is corporate activity • Financial position (balance
Slide 13: Operating review and conclusion
Operating review and conclusion Brian Joffe – Group CE 13
Slide 14: Business conditions
Bidvest Group Limited - Business conditions Macro economic • South Africa – steady but patchy recovery from recession, strong recovery in exports • Western Europe – fiscal constraints dominate, modest resumption of growth, incomes squeezed • Central Europe – growth assisted by recovery in neighbouri
Slide 15: Freight
Bidvest Freight * Refer appendix for further detail • Higher re-negotiated port authority lease charges + effect of IAS Revenue +19.8% to R9.6bn 17 straight lining of leases (R13m swing) Profit +6.1% to R399.4m • Improving South African trade volumes, particularly exports • Excellent Bulk Terminals
Slide 16: Services
Bidvest Services * Refer appendix for further detail • Pleasing results across the businesses assisted by an improving Revenue +9.9% to R4.5bn economy and strong competitive position Profit +25.7% to R648.3m • Expenses growth very well controlled • Traditional cleaning businesses performed particula
Slide 17: Foodservice
Bidvest Foodservice * Refer appendix for further detail Foodservice businesses in Southern Africa, Europe, Asia Pacific Revenue -3.8% to R29.2bn Approximately $8.5bn and $400m in annual revenue and EBITDA Profit -7.4% to R956.2m Multiple currencies, jurisdictions, cultures and tastes • UK: slightly
Slide 18: Industrial & Commercial Products
Bidvest Industrial & Commercial Products * Refer appendix for further detail • Trading conditions remained challenging Revenue +0.8% to R4.4bn Profit -11.9% to R151.0m • Electrical and office furniture markets depressed • A better result from stationery, mix continues to shift • Poor Furniture resul
Slide 19: Paperplus
Bidvest Paperplus * Refer appendix for further detail • Trading conditions mixed Revenue +11.0% to R1.26bn Profit +12.9% to R154.2m • General print & packaging market highly competitive • Balance of mature and newer technology offerings ongoing plus • Vigorous focus on efficiencies and expense contr
Slide 20: Automotive
Bidvest Automotive * Refer appendix for further detail • Improved profitability at most dealerships Revenue +17.7% to R9.57bn Profit +59.6% to R243.6m • Substantially better new vehicle contribution • Replacement demand and improved affordability of new cars • Used, auction and parts & service contr
Slide 21: Namibia
Bidvest Namibia • Strong result driven by fishing assets Revenue -2.8% to R923.0m Profit +47.0% to R220.6m • Continued favourable catch rates + pricing and mix • Underperformance within BidCom being addressed 250 230 Outlook 210 R220.6m • Fishing likely to end the year on a strong note 190 • BidCom
Slide 22: Concluding remarks
Concluding remarks • Strategy remains intact and will continue to be refreshed as circumstances warrant • Substantial balance sheet and capital raising capacity for growth • Bidvest is a proven incubator for entrepreneurship and people development • We are bolstering our capacity to step up exploita
Slide 23: Thank you
Thank you
Slide 24: Appendix: Financials for the six months ended December 31 2010
Appendix 1 Financials for the six months ended December 31 2010 1
Slide 25: Managing for financial sustainability
Managing for financial sustainability Financial • A decentralised operating model that encourages entrepreneurship but with strict financial disciplines and controls Currency risk • Our businesses are managed for local conditions and local currency • Currency is but one variable among numerous exter
Slide 26: Consolidated Income Statement: Revenue
Consolidated Income Statement H1 2011 in constant Avg Avg Half year ended December 31 2010 currency R/£11.18 R/£12.57 R/£ 12.57 Revenue 58 492,5 +4.2% 56 113,1 60 959,0 +8.6% • R2,5bn adverse exchange rate impact on revenue just in translation • 49/51 split between Foreign and South African revenue
Slide 27: Consolidated Income Statement: Trading profit
Consolidated Income Statement H1 2011 in constant Avg Avg Half year ended December 31 2010 currency R/£11.18 R/£12.57 R/£ 12.57 Revenue 58 492,5 +4.2% 56 113,1 60 959,0 +8.6% Trading profit 2 824,6 +8.0% 2 616,4 2 875,2 +9.9% Trading margins H1 2011 H1 2010 Comment Increase in lower margin business
Slide 28: Consolidated Income Statement: Net finance expense
Consolidated Income Statement H1 2011 in constant Avg Avg Half year ended December 31 2010 currency R/£11.18 R/£12.57 R/£ 12.57 Revenue 58 492,5 +4.2% 56 113,1 60 959,0 +8.6% Trading profit 2 824,6 +8.0% 2 616,4 2 875,2 +9.9% Net finance expense (308,5) -20.0% (385,6) (311,3) -19.3% • Benefit of exp
Slide 29: Consolidated Income Statement: Associate income
Consolidated Income Statement H1 2011 in constant Avg Avg Half year ended December 31 2010 currency R/£11.18 R/£12.57 R/£ 12.57 Revenue 58 492,5 +4.2% 56 113,1 60 959,0 +8.6% Trading profit 2 824,6 +8.0% 2 616,4 2 875,2 +9.9% Net finance expense (308,5) -20.0% (385,6) (311,3) -19.3% Associate Income
Slide 30: Consolidated Income Statement: Taxation
Consolidated Income Statement H1 2011 in constant Avg Avg Half year ended December 31 2010 currency R/£11.18 R/£12.57 R/£ 12.57 Revenue 58 492,5 +4.2% 56 113,1 60 959,0 +8.6% Trading profit 2 824,6 +8.0% 2 616,4 2 875,2 +9.9% Net finance expense (308,5) -20.0% (385,6) (311,3) -19.3% Associate Income
Slide 31: Consolidated Income Statement: Minority interests
Consolidated Income Statement H1 2011 in constant Avg Avg Half year ended December 31 2010 currency R/£11.18 R/£12.57 R/£ 12.57 Revenue 58 492,5 +4.2% 56 113,1 60 959,0 +8.6% Trading profit 2 824,6 +8.0% 2 616,4 2 875,2 +9.9% Net finance expense (308,5) -20.0% (385,6) (311,3) -19.3% Associate Income
Slide 32: Consolidated Income Statement: Headline earnings
Consolidated Income Statement H1 2011 in constant Avg Avg Half year ended December 31 2010 currency R/£11.18 R/£12.57 R/£ 12.57 Revenue 58 492,5 +4.2% 56 113,1 60 959,0 +8.6% Trading profit 2 824,6 +8.0% 2 616,4 2 875,2 +9.9% Net finance expense (308,5) -20.0% (385,6) (311,3) -19.3% Associate Income
Slide 33: Consolidated Income Statement: HEPS
Consolidated Income Statement H1 2011 in constant Avg Avg Half year ended December 31 2010 currency R/£11.18 R/£12.57 R/£ 12.57 Revenue 58 492,5 +4.2% 56 113,1 60 959,0 +8.6% Trading profit 2 824,6 +8.0% 2 616,4 2 875,2 +9.9% Net finance expense (308,5) -20.0% (385,6) (311,3) -19.3% Associate Income
Slide 34: Consolidated Income Statement: Diluted HEPS
Consolidated Income Statement H1 2011 in constant Avg Avg Half year ended December 31 2010 currency R/£11.18 R/£12.57 R/£ 12.57 Revenue 58 492,5 +4.2% 56 113,1 60 959,0 +8.6% Trading profit 2 824,6 +8.0% 2 616,4 2 875,2 +9.9% Net finance expense (308,5) -20.0% (385,6) (311,3) -19.3% Associate Income
Slide 35: Consolidated Income Statement: Distribution
Consolidated Income Statement H1 2011 in constant Avg Avg Half year ended December 31 2010 currency R/£11.18 R/£12.57 R/£ 12.57 Revenue 58 492,5 +4.2% 56 113,1 60 959,0 +8.6% Trading profit 2 824,6 +8.0% 2 616,4 2 875,2 +9.9% Net finance expense (308,5) -20.0% (385,6) (311,3) -19.3% Associate Income
Slide 36: Consolidated cash flow statement
Consolidated cash flow statement – Rm’s Half year ended December 31 2010 Half year ended December 31 2009 3621 Cash generated from ops pre wc 3455 -1006 Working capital utilised -432 -307 Net Finance charges -380 -751 Taxation -406 -783 Distributions -610 -1661 Cash effects of investment act’s -3345
Slide 37: Net working capital days
Net working capital days 17 9 16 8 11 9 15 Net days 33 33 30 30 30 Debtors days 36 31 33 34 33 30 32 34 33 Stock days Creditors days -49 -61 -50 -53 -51 -55 -48 H1 2008 F 2008 H1 2009 F 2009 H1 2010 F 2010 H1 2011 Working capital position typically spikes in H1 but sharp improvement on weaker tradin
Slide 38: Net working capital flows vs cash generated
Net working capital flows vs cash generated Net working capital Cash generated by operations 5 4 3.6 3.8 3.6 3.3 3.5 3.5 3.2 3 2.3 2 1.8 1.1 1 Rbn 0 -1 -0.4 -1.0 -2 -3 -2.5 -2.4 H1 2008 F 2008 H1 2009 F 2009 H1 2010 F 2010 H1 2011 • Seasonal absorption of working capital but lower than previous half
Slide 39: Gearing
Gearing Net interest-bearing debt (Rbn) Interest cover (x) 9 10 8 9.2 9 7.9 8 7 7.3 7.2 7 6 6.6 Target interest cover range 6 5 5.5 5.7 5.9 5.5 4.8 5 4 4.7 4.6 4.1 3.9 4 3 3 2 2 1 1 0 0 H1 2008 F 2008 H1 2009 F2009 H1 2010 F 2010 H1 2011 • Net interest cover of 9,2x exceeds Group benchmark of 5 – 6x
Slide 40: Appendix: Segmental results analysis, strategic imperatives and prospects
Appendix 2 Segmental results analysis, strategic 17 imperatives and prospects
Slide 41: Revenue and Profit by geography and contribution
Revenue and Profit by geography and contribution H1 F2011 H1 F2010 51% 55% 29% 33% Revenue 16% Southern Africa 16% Asia Pacific 13% 17% Europe Trading Profit 14% 73% 69% 14% Revenue Trading Profit Contribution H1 F2011 H1 F2010 H1 F2011 H1 F2010 Foodservice 49% 53% 34% 39% Services 51% 47% 66% 61% A
Slide 42: Segmental contributions to results
Segmental contributions to results % Contribution % Contribution Segment to to Revenue Trading Profit Bidvest Freight 16.1 14.1 Bidvest Services 7.6 22.8 Bidvest Foodservice 49.0 33.7 Bidvest Industrial and Commercial 7.3 5.3 Products Bidvest Paperplus 2.1 5.4 Bidvest Automotive 16.0 8.6 Bidvest Nam
Slide 43: Freight – billings bounce back
Bidvest Freight – billings bounce back • Bulk Connections Current contribution to Group Trading Profit • Island View Storage • Bidfreight Port Operations 14.1% • Rennies Distribution Services • SACD Freight • South African Bulk Terminals • Naval • Safcor Panalpina • Manica Appendix 2 20
Slide 44: Freight – billings bounce back
Bidvest Freight – billings bounce back • A pick up in billings on a rise in imports following the recession • Bulk activity remained buoyant particularly in exports • Automotive volumes increased as the industry recovered from recession • Port authority lease charges increased substantially followin
Slide 45: Freight – billings bounce back
Bidvest Freight – billings bounce back • South African Container Depots: new Cape Town facility is attracting additional clients and resulting in higher utilisation; profits up despite higher property costs; poor service levels at Transnet freight rail are proving problematic for business in Johanne
Slide 46: Services – a clean sweep
Bidvest Services – a clean sweep Full range of outsourced services including: Current contribution to Group Trading Profit • Cleaning • Laundry • Hygiene 22.8% • Security • Interior and exterior landscaping • Aviation services • Industrial workwear • Corporate and OnlineTravel • Banking and foreign
Slide 47: Services – a clean sweep
Bidvest Services – a clean sweep • Recovery gathered momentum with a 25.7% rise in profits off a 10% rise in revenue translating into trading margin rising from 12.6% to 14.4% • Businesses have emerged stronger from the recession • Budget car and van rental is included in the results with comparativ
Slide 48: Services – a clean sweep
Bidvest Services – a clean sweep • Office – Konica Minolta SA and Océ: margin at Konica Minolta SA was under some pressure in part due to currency effects; Océ produced a good result, benefitting from a stronger rand against the euro; the distribution arrangement with Océ has been maintained followi
Slide 49: Foodservice Europe – opportunities in adversity
Bidvest Foodservice Europe – opportunities in adversity • 3663 Wholesale (UK) Current contribution to Group Trading Profit • Bidvest Logistics (UK) • Deli XL (Netherlands) 13.0% • Deli XL (Belgium) • Horeca (Middle East) • Nowaco (Czech and Slovakia) • Farutex (Poland) Appendix 2 26
Slide 50: Foodservice Europe – opportunities in adversity
Bidvest Foodservice Europe – opportunities in adversity • Economic recovery is fragile in western Europe and fiscal cut-backs reinforce customer prudence • Extreme wintry weather was an added negative • Value for money and pricing considerations are taking precedence over service levels • Difficult
Slide 51: Foodservice Europe – opportunities in adversity
Bidvest Foodservice Europe – opportunities in adversity • 3663 Wholesale: sales up 5.7% to £497.6m; profit up marginally to £16.9m pre exceptionals; margin 3.4% • Encouraging recovery in volumes across all channels but winter weather hampered the result; cost per item delivered continues to be drive
Slide 52: Foodservice Asia Pacific – getting on with the job
Bidvest Foodservice Asia Pacific – getting on with the job • Bidvest Australia Current contribution to Group Trading Profit • Bidvest New Zealand • Angliss Singapore 14.1% • Angliss Greater China Appendix 2 29
Slide 53: Foodservice Asia Pacific – getting on with the job
Bidvest Foodservice Asia Pacific – getting on with the job • All territories contributed positively to an increased result; constant currency consolidated profits up 8% in rand, with Australia up 5%, New Zealand up 13%, Greater China up 21% and Singapore up 16% with respective contributions 66%, 17%
Slide 54: Foodservice Asia Pacific – getting on with the job
Bidvest Foodservice Asia Pacific – getting on with the job • New Zealand: sales up 11.7% to NZ$266.2m, profits up 13% to NZ$12.9m margin 4.85%; economy remained soft; sales tax increase; scaling back of spending by customers an enduring feature • Fresh sales up 29%, profits up 28%; leveraging off sy
Slide 55: Food southern Africa – hard going
Bidvest Food southern Africa – hard going • Bidvest Foodservice South Africa Current contribution to Group Trading Profit • Bidfood Ingredients • Speciality 6.5% Appendix 2 32
Slide 56: Food southern Africa – hard going
Bidvest Food southern Africa – hard going • Deflationary and price sensitive conditions • Expenses were well contained but with sales flat and gross margins under pressure operating profit margin came off from 8.3% to 7.1% • The run up to the usually buoyant Christmas season was poor • Bidvest Foods
Slide 57: Food southern Africa – hard going
Bidvest Food southern Africa – hard going • Ingredients: revenue up by 4% but profits were down 9% with deflationary pressures evident; despite these deflationary pressures the Crown Trading result was good driven by a focus on the sale of own-manufactured products and Crown Food Ingredients produce
Slide 58: Industrial and Commercial Products – a low point in the cycle
Bidvest Industrial and Commercial Products – a low point in the cycle • Electrical Wholesaling Current contribution to Group Trading Profit • Stationery • Office Furniture 5.3% • Packaging Closures • Industrial Catering Equipment • Materials Handling (Nissan forklift trucks) Appendix 2 35
Slide 59: Industrial and Commercial Products – a low point in the cycle
Bidvest Industrial and Commercial Products – a low point in the cycle • Markets remained depressed and in particular the important building and construction sector • Electrical Wholesaling: revenue was flat for the period with the rate of decrease in profits slowing to 5% but down significantly sinc
Slide 60: Industrial and Commercial Products – a low point in the cycle
Bidvest Industrial and Commercial Products – a low point in the cycle • Packaging Closures and Catering Equipment: • Afcom results remained weak in a tough market for packaging and fastening products • Buffalo Executape results reflected a pleasing improvement assisted by sales mix • Vulcan Catering
Slide 61: Paperplus – adapting to change
Bidvest Paperplus – adapting to change • Printing and conversion Current contribution to Group Trading Profit • Sales and Distribution • Wholesale Stationery 5.4% • Labeling and Packaging products • Personalisation and Mail • Alternative Products Appendix 2 38
Slide 62: Paperplus – adapting to change
Bidvest Paperplus – adapting to change • Successful adaption to shifts in technology and applications continues • High speed full colour digital printing yields a positive market response and return on investment • Market retention strategy in wholesale distribution secures volumes • Buying down tre
Slide 63: Automotive – new car sales upturn
Bidvest Automotive – new car sales upturn • Motor retail – 116 outlets Current contribution to Group Trading Profit • BMW/Mini, General Motors, Land Rover/Volvo, Mercedes- Benz, Chrysler/Jeep/Dodge/Mitsubishi, Nissan/Fiat/Alfa/ 8.6% Renault, Peugeot/ Citroën, Toyota/Lexus/Hino, Volkswagen/Audi, Suzu
Slide 64: Automotive – new car sales upturn
Bidvest Automotive – new car sales upturn • Motor Retail • New vehicle unit sales up 28% to 17 465 driving a substantial improvement in contribution • Used vehicle unit sales reduced by 13% to 19 983 and negatively affected contribution; residual values in used have also been impacted by excess de-f
Slide 65: Automotive – new car sales upturn
Bidvest Automotive – new car sales upturn • Yamaha Distributors: a strong product line-up in motor leisure (e.g. ATVs, motorcycle, marine), music, and parts; market remained weak and well off previous highs • The brand new Johannesburg based “World of Yamaha” facility is world class and expected to
Slide 66: Namibia – profitable fishing
Bidvest Namibia – profitable fishing • BidFish Current contribution to Group Trading Profit • Fishing and canning • BidCom 7.8% • Stationery and office furniture • Electrical supplies • Foodservice • Automotive services • Office solutions • Printer consumables • Freight management services and trave
Slide 67: Namibia – profitable fishing
Bidvest Namibia – profitable fishing • Gross revenue was down 3% to N$923.0m and net revenue after disbursements increased by 13% to N$831.7m; trading profit increased 47% to N$220.6m driven by an excellent Fishing result • Strengthening of the Namibian dollar adversely affected trading profit by ap
Slide 68: Namibia – profitable fishing
Bidvest Namibia – profitable fishing • BidFish • Revenue increased 25% to N$517.7m and trading profit by 72% to N$181.7m. A net profit of N$16.7m was realised on the sale of a fishing vessel • Good fish catches, a favourable mix and firm selling prices offset the effects of a stronger currency • The
Slide 69: Corporate – a real estate
Bidvest Corporate – a real estate • Corporate office Current contribution to Group Trading Profit • Bidvest Properties • Ontime Automotive 2.4% • Bidvest’s strategic property holdings contributed R98.2m in income, up 9% • Two properties in Gauteng were sold at a profit, land in Durban was purchased
Slide 70: Appendix: Historic performance
Appendix 3 Historic performance 47
Slide 71: Historic Performance – year to June
Historic Performance – year to June Trading Profit and Margins Returns (annual) 60 6000 50 54 5000 50 49 5.4% 40 4000 5.1% Rm 39 % 5.1% 30 36 3000 5.2% 5.2% 32 31 5.2% 30 2000 4.9% 20 24 4.4% 4.3% 4.4% 4.7% 4.8% 21 1000 4.4% 10 4.7% 4.5% 0 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 H1