Bidvest Group Limited · JSE:BVT
Bidvest — The Bidvest Group — H1 FY2019 Earnings Presentation
34 slides from Bidvest's earnings presentation, February 2019
Slide 1: Investor presentation for the half-year ended 31 December 2018
Investor presentation for the half-year ended 31 December 2018 2019
Slide 2: Agenda
agenda Introduction 01 Lindsay Ralphs 02 Financial review Mark Steyn Operational updates 03 Lindsay Ralphs Strategic overview and outlook04 Lindsay Ralphs Appendices 05 THE BIDVEST GROUP LIMITED Unaudited Results for the half-year ended 31 December 2018 2
Slide 3: Introduction
01 introduction Lindsay Ralphs CE THE BIDVEST GROUP LIMITED Unaudited Results for the half-year ended 31 December 2018 3
Slide 4: We are Bidvest
Introduction we are Bidvest A strong 30-year track record of consistent delivery, returns and growth A leading B-2-B services, wholesale ➢ Highly diversified portfolio spanning broad economic spheres: and distribution group operating › Services – 62% of trading profit in the areas of commercial and
Slide 5: Diversified portfolio
Introduction diversified portfolio No one segment dominant in profit contribution Contribution to revenue Contribution to trading profit 5% 8% 6% 3% 25% Services 9% 30% Freight Commercial Products Office & Print 7% 29% Financial Services 8% Automotive Electrical Namibia 12% 11% Properties 20% 3% 10%
Slide 6: Our strategy and progress
Introduction our strategy and progress Maximise Maintain strong Invest capital diverse portfolio Stewardship financial position for future growth Internationalisation: Trading profit +6.3% 80% of businesses achieved Tight asset management Evaluating opportunities despite frail economic backdrop betw
Slide 7: Highlights for the year
Introduction highlights for the year HEPS HEPS up by 9.6% to 629 cents (Cents per share) 629 Interim DPS of 282 cents (+10.6%) 574 Trading profit up 6.3% to R3 billion Stand-out results from Freight, Services, Office & Print and Properties 1HFY2018 1HFY2019 Commercial Products and Financial Se
Slide 8: Financial review
02 financial review Mark Steyn CFO THE BIDVEST GROUP LIMITED Unaudited Results for the half-year ended 31 December 2018 8
Slide 9: Financial highlights
Financial Review financial highlights Interim ended 31 December Interim ended 31 December R billion 2018 2017 Change Revenue 40.0 39.9 0.2% Gross profit margin* 29.3% 28.1% ↑ Expense margin* 21.5% 20.6% ↓ EBITDA 4.2 4.0 4.3% Trading profit 3.3 3.1 6.3% Trading profit margin 8.4% 7.9% ↑ Headline earn
Slide 10: Income statement analysis
Financial Review income statement analysis ➢ Revenue flat Revenue ➢ Accounting change in Tradeflow (June 2018), disposal of Bidfish, lower luxury vehicle sales and implementation of MBSA agency model, reduced trading across Electrical ➢ Gross margin improve 120bps to 29.3% Gross income ➢ Most divisi
Slide 11: Income statement analysis
Financial Review income statement analysis ➢ Flat net interest charge despite full period of Noonan debt and capital expenditure Net finance charges ➢ Indication of good cash management focus throughout the period ➢ Interest cover of 8.2x EBITDA Associate income ➢ Share of current period earnings de
Slide 12: Debt and funding
Financial Review debt and funding A conservative approach to gearing ➢ Net debt of R8.9 billion Interest cover & net debt (1HFY18 R9.0 billion) 10 7.6 8.2 8.0 ➢ EBITDA interest cover of 8.2 times 8 7.5 7.2 vs. 7.6 times in 2017 6 ➢ Net debt/EBITDA 1.1 times ➢ 44% of gross debt long-term 4 ➢ Ample he
Slide 13: Cash flow
Financial Review cash flow Cash generative businesses that are capital light Free cash flow Cash generated vs working capital (Rbn) (Rbn) 4.1 (3.1) 3.7 3.9 4.0106% 4.1 3.5 80% 2.6 (1.6) 0.2 (0.5) (0.6) 1.5 51% (1.0) 0.4 21% -0.6 from ops pre WC Working capital Capex Net Finance charges Taxation Dist
Slide 14: Operational updates
03 operational updates Lindsay Ralphs CE THE BIDVEST GROUP LIMITED Unaudited Results for the half-year ended 31 December 2018 14
Slide 15: Services
Operational Updates Services | CEO: Alan Fainman Interim ended 31 December Interim ended 31 December R million 2018 2017 Change Revenue 10 380 8 999 15.3% Trading profit 1 076 951 13.0% Trading margin 10.4% 10.6% EBITDA 1 340 1 198 11.8% Average Funds Employed 2 510 2 252 11.5% ROFE 85.7% 84.5% ➢ St
Slide 16: Freight
Operational Updates Freight | CEO: Anthony Dawe Interim ended 31 December Interim ended 31 December R million 2018 2017 Change Revenue 3 248 3 103 4.7% Trading profit 700 645 8.6% Trading margin 21.6% 20.8% EBITDA 843 798 5.7% Average Funds Employed 3 014 2 331 26.8% ROFE 44.7% 54.9% ➢ Strong result
Slide 17: Commercial Products
Operational Updates Commercial Products | CEO: Howard Greenstein Interim ended 31 December Interim ended 31 December R million 2018 2017 Change Revenue 4 584 4 429 3.5% Trading profit 355 354 0.4% Trading margin 7.8% 8.0% EBITDA 413 406 1.7% Average Funds Employed 2 564 2 425 5.7% ROFE 27.7% 29.2% ➢
Slide 18: Office & Print
Operational Updates Office & Print | CEO: Kevin Wakeford Interim ended 31 December Interim ended 31 December R million 2018 2017 Change Revenue 4 853 4 940 (1.8%) Trading profit 436 403 8.3% Trading margin 9.0% 8.2% EBITDA 506 466 8.4% Average Funds Employed 2 180 2 198 (0.8%) ROFE 40.0% 36.6% ➢ Ple
Slide 19: Financial Services
Operational Updates Financial Services | CEO: Japie van Niekerk Interim ended 31 December Interim ended 31 December R million 2018 2017 Change Revenue 1 351 1 787 (24.4%) Trading profit 243 319 (23.8%) Trading margin 18.0% 17.9% EBITDA 358 433 (17.3%) Average Funds Employed 3 497 3 378 3.5% ROFE 13.
Slide 20: Automotive
Operational Updates Automotive | CEO: Steve Keys Interim ended 31 December Interim ended 31 December R million 2018 2017 Change Revenue 12 058 12 696 (5.0%) Trading profit 324 343 (5.5%) Trading margin 2.7% 2.7% EBITDA 459 498 (7.8%) Average Funds Employed 4 027 3 850 4.6% ROFE 16.1% 17.8% ➢ Luxury
Slide 21: Electrical
Operational Updates Electrical | CEO: Stan Green Interim ended 31 December Interim ended 31 December R million 2018 2017 Change Revenue 2 662 2 901 (8.2%) Trading profit 120 147 (18.6%) Trading margin 4.5% 5.1% EBITDA 146 173 (15.6%) Average Funds Employed 2 045 1 922 6.4% ROFE 11.7% 15.3% ➢ Underst
Slide 22: Corporate & Properties
Operational Updates Corporate & Properties Interim ended 31 December Interim ended 31 December R million 2018 2017 Change Revenue 604 611 (1.0%) Trading profit 58 (27) Trading margin 9.7% (4.4%) ➢ Property trading profit grew 16% as projects rentalised and vacancies declined ➢ 118 properties in the
Slide 23: Namibia
Operational Updates Namibia | CEO: Sebby Kankondi Interim ended 31 December Interim ended 31 December R million 2018 2017 Change Revenue 1 893 2 040 (7.2%) Trading profit 27 8 258.7% Trading margin 1.4% 0.4% EBITDA 47 46 0.5% Average Funds Employed 1 028 1 612 (36.2%) ROFE 6.2% 1.3% ➢ Mixed results
Slide 24: Strategic overview and outlook
04 strategic overview and outlook Lindsay Ralphs CE THE BIDVEST GROUP LIMITED Unaudited Results for the half-year ended 31 December 2018 24
Slide 25: Strategic overview and outlook
Strategic Overview and Outlook strategic overview and outlook ➢ Expect lacklustre economic growth, industrial activity and consumer spend until national elections Operational ➢ Need to initiate infrastructural and development programmes to kick-start the economy outlook ➢ Pockets of opportunities an
Slide 26: Succession – another homegrown story
Strategic Overview and Outlook succession – another homegrown story ➢ Succession planning, key part of good corporate governance › Unbundling of Bidvest ➢ Mpumi Madisa appointed CE-designate › Period to ensure smooth transition ➢ Mpumi CV › 12 years with Bidvest Group › Executive director since May
Slide 27: Appendices
05 appendices THE BIDVEST GROUP LIMITED Unaudited Results for the half-year ended 31 December 2018 27
Slide 28: Services
Appendices Services ➢ FM Services performed well, improving the trading margin slightly. Facilities Management and Steiner performed strongly on the back of contract wins. Prestige lost some contracts but recently secured a few sizeable contracts ➢ Security & Aviation Services delivered a good resul
Slide 29: Freight
Appendices Freight ➢ SABT experienced buoyant volumes for four out of six months ➢ All BTT’s new multi-purpose tanks operational. Slow industrial activity reflected in lower chemical volumes ➢ BPL experienced slowdown in warehousing and road freight; international logistics performed well on new bus
Slide 30: Commercial Products
Appendices Commercial Products ➢ Difficult trading conditions in Industrial environment ➢ Despite little consumer confidence, HOLB and Interbrand capitalised on strong brand equity and well-positioned price points ➢ Yamaha’s 1st retail outlet began trading. 2nd one to open in H2 ➢ Pricing pressure e
Slide 31: Office & Print
Appendices Office & Print ➢ Konica Minolta retained approved supplier status under Treasury’s new RT3 contract. New management recalibrating the business model ➢ Lithotech grew revenue and profit ➢ Data and packaging delivered acceptable results by securing several new contracts and growth from exis
Slide 32: Financial Services
Appendices Financial Services ➢ Bidvest Bank profit +8%. FML profit down; Personal & Business Banking growth strategy implemented; FX volumes under pressure; strong merchant volumes ➢ Bidvest Bank lease assets down 2%; advances growing more than deposits ➢ Bidvest Insurance grew underwriting but exp
Slide 33: Automotive
Appendices Automotive ➢ McCarthy grew new vehicle market share slightly to 8%. Volume brands performing well. Luxury volumes declined further ➢ 4% increase in used car unit sales but at lower average price points ➢ Service revenue broadly flat but parts revenue down ➢ Bidvest Car Rental rate per day
Slide 34: Electrical
Appendices Electrical ➢ Divisional profit declined 19% due to very challenging industry conditions ➢ Voltex maintained revenue and GP margin despite a challenging market. Branches performed admirably ➢ Cable and wire were acquired ahead of product shortages ➢ Versalec struggled due to the lack of pr