Bidvest Group Limited · JSE:BVT
Bidvest — H1 2018 Earnings Presentation
39 slides from Bidvest's earnings presentation, February 2018
Slide 1: Unaudited financial results
Unaudited financial results For the six months ended 31 December 2017 www.bidvest.com
Slide 2: Agenda
Agenda 01 Introduction Lindsay Ralphs 02 Financial review Peter Meijer 03 Operational updates Lindsay Ralphs 04 Strategic overview and outlook Lindsay Ralphs 05 Appendices 2
Slide 3: We are Bidvest – strong track record of consistent delivery, returns and growth
We are Bidvest – strong track record of consistent delivery, returns and growth A leading South African B2B services, trading and distribution group operating in the areas of commercial and industrial products, electrical products, financial services, freight management, office and print solutions,
Slide 4: Our strategy and progress
Our strategy and progress Maximise diverse Maintain strong Going beyond Stewardship portfolio via innovation financial position +12.3% SA trading profit Internationalisation: good given Tight asset management Acquired Noonan for EUR175mn Employ 130 000 people limited economic activity (effective Sep
Slide 5: Diversified portfolio
Diversified portfolio Contribution to revenue Contribution to trading profit 5% 5% 7% 10% 22% 5% 30% 13% 12% 7% 11% 11% 20% 31% 11% Services Freight Commercial Products Services Freight Commercial Products Automotive Office & Print Financial Services Automotive Office & Print Financial Services Elec
Slide 6: Highlights for the six months
Highlights for the six months HEPS increased by 12.5% to 574 cents HEPS 580 574 DPS declared of 255 cents, up 12.3% 560 Cents per share Flat GP margin 540 520 510 Trading profit up 12.0% to R3 143 million 500 Excellent results from Freight, Services and Office & Print; 480 Good results fro
Slide 7: Financial review
Financial review Peter Meijer www.bidvest.com
Slide 8: Financial highlights
Financial highlights R billion Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 39.9 36.0 10.7% Gross profit %* 28.1% 28.0% ↑ Expenses %* 20.6% 20.1% ↑ EBITDA 4.0 3.6 10.3% Trading profit 3.1 2.8 12.0% Trading margin %* 7.9% 7.8% ↑ Headline earnings 1.9 1.7 13.4% HEPS cents 574.0 5
Slide 9: Income statement
Income statement R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 39 909 36 036 10.7% Gross income 11 218 10 080 11.3% Operating expenses (8 208) (7 252) 13.2% Trading profit 3 143 2 807 12.0% Other costs (61) (15) 319.6% Net capital items (2) 229 (100.8%) Net finance cha
Slide 10: Income statement analysis
Income statement analysis Revenue increased by 10.7% or R4 billion; 3.3% organic growth Services and Commercial Products revenue boosted by acquisitions; Bidvest Properties up 9.1%; Financial Services Revenue and Namibia revenue declined Freight revenue increased significantly (up 19.3%) on hi
Slide 11: Income statement analysis (continued)
Income statement analysis (continued) Flat net finance charges testament to strong cash generation Net finance Increased debt to finance Noonan and USS acquisitions (EUR200 million) at favourable rate charges Cash inflow from non-core asset disposal Share of current period earnings increased
Slide 12: Debt and funding – a conservative approach to gearing
Debt and funding – a conservative approach to gearing Net debt of R9.0 billion (R8.4 billion H1 2017) Interest cover 10 Rolling EBITDA interest cover of 7.6x (7.5x H1 2017) 8 8.0 7.6 7.5 7.5 7.2 18% of long-term debt at fixed rates (47.7% H1 2017) 6 4 Bulk of new debt is offshore at attracti
Slide 13: Cash flow
Cash flow H1 2018 (R bn) Cash generated vs working capital (R bn) 3.9 Cash generated from ops pre wc Net wc Cash conversion 51% cash 5 100% -0.6 conversion 4 80% 80% 75% -1.5 3 3.9 2.3 60% 3.7 51% 2 3.5 3.4 1.5 40% 3.3 1 21% 20% 0 -3.4 0% -1 -0.6 -0.5 0.7 -0.6 -2 -20% -20% -2.0 -1.9 -1.0 -3 -40% Cas
Slide 14: Operational update
Operational update Lindsay Ralphs www.bidvest.com
Slide 15: South Africa | Overview
Bidvest South Africa | Overview R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 38 670 34 845 11.0% Trading profit 3 159 2 812 12.3% Trading margin 8.2% 8.1% ↑ EBITDA 3 962 3 565 11.1% Average funds employed 18 286 17 318 8.5% Average ROFE 34.7% 33.1% ↑ Revenue Trading i
Slide 16: Bidvest Services
Bidvest Services| CEO: Alan Fainman R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 8 999 6 475 39.0% Trading profit 951 766 24.3% Trading margin 10.6% 11.8% ↓ EBITDA 1 198 975 22.9% Average funds employed 2 252 1 978 18.5% Average ROFE 84.5% 77.8% ↑ SA annuity-type bu
Slide 17: Bidvest Freight
Bidvest Freight| CEO: Anthony Dawe R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 2 919 2 447 19.3% Trading profit 642 544 18.0% Trading margin 22.0% 22.2% ↓ EBITDA 789 678 16.4% Average funds employed 2 262 1 803 25.4% Average ROFE 57.8% 61.7% ↓ A record-high result
Slide 18: Bidvest Commercial Products
Bidvest Commercial Products| CEO: Howard Greenstein R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 4 429 3 735 18.6% Trading profit 354 332 6.5% Trading margin 8.0% 8.9% ↓ EBITDA 406 369 9.8% Average funds employed 2 425 2 203 10.1% Average ROFE 29.2% 33.5% ↓ Double d
Slide 19: Bidvest Automotive
Bidvest Automotive| CEO: Steve Keys R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 12 696 12 372 2.6% Trading profit 343 364 (6.0%) Trading margin 2.7% 2.9% ↓ EBITDA 498 529 (5.8%) Average funds employed 3 849 3 866 (0.4%) Average ROFE 17.8% 18.9% ↓ A below-par result
Slide 20: Bidvest Office and Print
Bidvest Office and Print| CEO: Kevin Wakeford R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 4 940 5 080 (2.8%) Trading profit 403 357 12.7% Trading margin 8.2% 7.0% ↑ EBITDA 466 426 9.4% Average funds employed 2 198 2 461 (10.7%) Average ROFE 36.6% 29.1% ↑ Excellent
Slide 21: Bidvest Financial Services
Bidvest Financial Services| CEO: Japie van Niekerk R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 1 787 2 003 (10.8%) Trading profit 319 302 5.6% Trading margin 17.8% 15.1% ↑ EBITDA 433 420 3.1% Average funds employed 3 378 3 082 9.6% Average ROFE 18.9% 19.6% ↓ Financ
Slide 22: Bidvest Electrical
Bidvest Electrical| CEO: Stanley Green R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 2 901 2 734 6.1% Trading profit 147 146 1.0% Trading margin 5.1% 5.3% ↓ EBITDA 173 169 2.3% Average funds employed 1 922 1 734 10.8% Average ROFE 15.3% 16.9% ↓ Good result considerin
Slide 23: Bidvest Corporate
Bidvest Corporate R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 794 803 (1.2%) Trading profit (24) (28) (16.7%) Trading margin (3.0%) (3.5%) Corporate comprises Bidvest Properties, material associates and other investments Bidvest Properties performed well and cont
Slide 24: Bidvest Namibia
Bidvest Namibia R million Interim ended Dec 31 2017 Interim ended Dec 31 2016 Change Revenue 2 040 2 173 (6.1%) Trading profit 8 23 (67.9%) Trading margin 0.4% 1.1% ↓ EBITDA 46 67 (30.5%) Average funds employed 1 612 1 784 (9.7%) Average ROFE 1.3% 2.4% ↓ Disappointing performance overall Revenue
Slide 25: Strategic update
Strategic update Lindsay Ralphs www.bidvest.com
Slide 26: Strategy and prospects
Strategy and prospects Operational Optimistic that trading conditions will improve given political changes outlook Stronger Rand will drive deflationary pressures in trading businesses in the short term; longer term positive for SA and Bidvest Seven core, well managed businesses Maximise Cas
Slide 27: Group Financial Officer
Group Financial Officer Outgoing – Peter Meijer Incoming – Mark Steyn – CA (SA) – Joined Bidvest 19 May 1997 – Various financial positions held in Bidvest Freight, the latest being divisional Financial Director since 2012 – 47 years old 27
Slide 28: Appendix 1
Going Beyond www.bidvest.com
Slide 29: Bidvest Services | CEO: Alan Fainman
Bidvest Services | CEO: Alan Fainman Facilities Management performed strongly on the back of efficiency gains and new contract wins Soft service businesses traded well in a tough environment Security businesses benefitted from higher mining activity and other niches areas Lounges and cargo a
Slide 30: Bidvest Freight | CEO: Anthony Dawe
Bidvest Freight | CEO: Anthony Dawe BTT benefitted from increased volumes and the annualisation of the fuel tank investment in FY17 SABT handled higher volumes of wheat, maize and rice. Volatile ZAR-maize prices makes operational planning difficult Despite only one operational berth and the on
Slide 31: Bidvest Commercial Products | CEO: Howard Greenstein
Bidvest Commercial Products | CEO: Howard Greenstein Difficult trading environment and little consumer confidence Organic performance dampened by low consumer spend and margin pressures (HoLB and Yamaha) Delayed industrial projects and margin pressure contributed to a disappointing Brandcorp p
Slide 32: Bidvest Automotive | CEO: Steve Keys
Bidvest Automotive | CEO: Steve Keys New volumes grew 7.7%, used volumes declined 10.1% Margins were under pressure, particularly luxury brands and with fleet customers Aftermarket activity slower as the car parc under warrantee & service plans shrink. The older part of the car parc being targ
Slide 33: Bidvest Office and Print | CEO: Kevin Wakeford
Bidvest Office and Print | CEO: Kevin Wakeford Competitive pressures were felt particularly in the office products segment Further contraction in the print cartridge market, the non recurrence of voter registration business and competition weighed on revenue Konica Minolta installed a signific
Slide 34: Bidvest Financial Services | CEO: Japie van Niekerk
Bidvest Financial Services | CEO: Japie van Niekerk Revenue decline mainly due to major contract non recurrence Bidvest Bank assets grew by 22.6% to R8.5 billion; deposits grew by 32.0% to R5.2 billion. Net interest income grew by 32.6% Bidvest Insurance Group grew gross written premium strong
Slide 35: Bidvest Electrical | CEO: Stanley Green
Bidvest Electrical | CEO: Stanley Green Activity in the construction and infrastructure sectors continued to decline. Several customers either under business rescue, liquidation or in a cash squeeze Overall gross margin held up despite pressure in the cable market as business mix continue to shi
Slide 36: Bidvest Namibia | CEO: Sebby Kankondi
Bidvest Namibia | CEO: Sebby Kankondi Sale prices and fish sizes remained under pressure. New and increased legislative levies added to the cost base. Another vessel was sold to lower the fixed cost base The sharp appreciation of the Namibian Dollar to the USD at the period end adversely impacte
Slide 37: Appendix 2
Going Beyond www.bidvest.com
Slide 38: Group structure
Group structure L Ralphs Chief Executive P Meijer Chief Financial Officer Executive team comprising M Madisa Executive Director G McMahon Executive Director Bidvest Industrial Bidvest Namibia Bidvest Properties Material Associates Other Investments Ontime Automotive UK Services Fishing Properties =
Slide 39: Shareholders
Shareholders Investment management shareholding Geographic spread of investment managers Investment manager Shareholding % 13% PIC 48 630 675 14,5 5% Lazard Asset Management LLC 9% 41% 28 115 715 8,4 J.P. Morgan Asset Management 19 964 438 5,9 GIC Asset Management 17 759 999 5,3 32% BlackRock Inc 14