Transcript Document

BIDVest Audited Results
for the twelve months ended
June 30 2004
Agenda
Introduction
Financial Results
Divisional Results
Strategy & Outlook
Introduction
Results Summary
Revenue
+8.9% to R51.3bn
Trading income
+13.9% to R2.6bn
Headline earnings +14.8% to R1.6bn
HEPS
+17.7% to 546.7c
DPS
+13.7% to 250.2c
Group Highlights
Attributable income impacted by:
R63m negative exchange rate impact on foreign operations
R13m negative impact of STC accounting changes
R120m (40cps) positive impact from McCarthy in H2 after
funding costs
HEPS growth excl. McCarthy:
6.6% on old accounting basis
Improved last quarter
Separation of Chairman / CE roles
Successful offers for Bidvest plc / Bidcorp plc minorities
Minority offers
Minorities: 19% of Bidvest plc and 41% of Bidcorp plc
Rationale
Buy-out in line with philosophy to “own the cashflows”
81% holding in Bidvest plc limited free float
Reorganisation of Bidcorp plc and alignment with SA
interests best achieved as a private company
Valuation
Minority offer for Bidvest plc equated to an EV/EBITDA
multiple of 6.5x and headline P/E ratio 13.7x
Minority offer for loss-making Bidcorp plc valued entire
business at £50m, a slight premium to book value
Historic Performance
Trading profit & margins
Annualised Returns
3000
2500
4.9%
2000
5.0%
4.9%
1500
1000
4.8%
500
4.4%
%
Rm
60
50
40
4.8%
4.9%
4.7%
4.6%
5.1%
2003
2004
30
20
10
0
57
44
42
30
34
2001
2002
1H
2000
2001
2H
25
28
2003
2004
ROE
DPS
600
300
500
298.7
400
220.3
180.2
153.6
181.6
243.2
215.9
136.8
200
152.8
200
250
221.3
cps
cps
2002
ROFE
HEPS
100
32
0
2000
300
54
49
248.0
150
100
50
0
112.0
78.3
88.2
100.0
72.0
81.0
90.0
2000
2001
2002
108.0
113.4
2003
2004
0
2000
2001
2002
1H
2003
2H
18% CAGR over 5 years
2004
1H
2H
15% CAGR over 5 years
Financial Results
Consolidated Income Statement
Year ended June 30
Actual:
Avg R/£ 11.94
R000’s
Revenue
Actual:
Avg R/£ 14.29
Constant currency:
Avg R/£ 14.29
2004
% ch
vs
2003
2003
2004
& ch
vs
2003
51 262 213
+8.9
47 073 375
55 481 013
+17.9
Foreign businesses
 Negative rand translation impact of R4.2bn
Local businesses
 Pressure on foreign currency-denominated revenues (eg. Safcor
Panalpina)
 Local volumes increased, but deflationary pressure on selling
prices (eg. SA Food Service deflation averaged +/-5%)
 McCarthy added R5.9bn in H2
Consolidated Income Statement
Actual:
Avg R/£ 11.94
Year ended June 30
R000’s
Revenue
Actual:
Avg R/£ 14.29
Constant currency:
Avg R/£ 14.29
2004
% ch
vs
2003
2003
2004
& ch
vs
2003
51 262 213
+8.9
47 073 375
55 481 013
+17.9
2 555 652
+13.9
2 244 121
2 665 490
+18.8
2 553 201
+13.0
2 259 197
2 663 039
+18.1
(15 076)
2 451
Trading Income
Trading income before translation gains
Translation gains (losses)
2 451
Amortisation of goodwill
(77 622)
+19.6
(64 887)
(77 622)
+19.6
Net capital items
(40 157)
-34.8
(61 548)
(40 157)
-34.8
2 437 873
+15.1
2 117 686
2 665 490
+18.8
Net Operating income
Trading Margins
Offshore
2004
2003
2.7%*
2.7%
Bidvest plc margins 3.1% in 2004 vs
2.9% in 2003
Local
6.6%
Improved operating efficiencies,
6.7% comparative base affected by
McCarthy
Group
5.0%
4.8%
* Offshore margins include a R21.8m loss from Bidcorp plc and a R17.0m loss from
Lithotech France
Consolidated Income Statement
Year ended June 30
R000’s
Revenue
Trading Income
Trading income before translation gains
Translation gains (losses)
Actual:
Avg R/£ 11.94
Actual:
Avg R/£ 14.29
Constant currency:
Avg R/£ 14.29
2004
% ch
vs
2003
2003
2004
& ch
vs
2003
51 262 213
+8.9
47 073 375
55 481 013
+17.9
2 555 652
+13.9
2 244 121
2 665 490
+18.8
2 553 201
+13.0
2 259 197
2 663 039
+18.1
(15 076)
2 451
2 451
Amortisation of goodwill
(77 622)
+19.6
(64 887)
(77 622)
+19.6
Net capital items
(40 157)
-34.8
(61 548)
(40 157)
-34.8
2 437 873
+15.1
2 117 686
2 547 711
+20.3
Net Operating income
Translation gains: R100m swing from R102.6m in 2002 to R2.5m in
2004
Consolidated Income Statement
Year ended June 30
R000’s
Revenue
Trading Income
Trading income before translation gains
Translation gains (losses)
Actual:
Avg R/£ 11.94
Actual:
Avg R/£ 14.29
Constant currency:
Avg R/£ 14.29
2004
% ch
vs
2003
2003
2004
& ch
vs
2003
51 262 213
+8.9
47 073 375
55 481 013
+17.9
2 555 652
+13.9
2 244 121
2 665 490
+18.8
2 553 201
+13.0
2 259 197
2 663 039
+18.1
(15 076)
2 451
2 451
Amortisation of goodwill
(77 622)
+19.6
(64 887)
(77 622)
+19.6
Net capital items
(40 157)
-34.8
(61 548)
(40 157)
-34.8
2 437 873
+15.1
2 117 686
2 547 711
+20.3
Net Operating income
Capital items: includes R38.6m loss on discontinuance of businesses +
R1.6m loss on disposal of assets
Consolidated Income Statement
Year ended June 30
R000’s
Actual:
Avg R/£ 11.94
Actual:
Avg R/£ 14.29
Constant currency:
Avg R/£ 14.29
2004
% ch
vs
2003
2003
2004
& ch
vs
2003
51 262 213
+8.9
47 073 375
55 481 013
+17.9
Net Operating income
2 437 873
+15.1
2 117 686
2 547 711
+20.3
Net finance expense
(168 902)
+52.2
(110 982)
(175 126)
+57.8
Revenue
Net interest:
 R475m net debt offshore
 R198m net debt in SA
 Low interest earned on cash balances and high interest paid on debt
in F2004; higher net debt position intra-month; unable to offset cash in
foreign minorities until now
 R1bn debt for McCarthy acquisition added R41m to the interest bill
 Interest cover = 15x
Consolidated Income Statement
Actual:
Avg R/£ 11.94
Year ended June 30
R000’s
Actual:
Avg R/£ 14.29
Constant currency:
Avg R/£ 14.29
2004
% ch
vs
2003
2003
2004
& ch
vs
2003
51 262 213
+8.9
47 073 375
55 481 013
+17.9
Net Operating income
2 437 873
+15.1
2 117 686
2 547 711
+20.3
Net finance expense
(168 902)
+52.2
(110 982)
(175 126)
+57.8
Income before taxation
2 268 971
+13.1
2 006 704
2 372 585
+18.2
Taxation
(678 079)
+12.7
(601 658)
(723 226)
+15.7
Revenue
Tax rates
2004
Offshore
31.5%
27.8%
Local
28.1%
29.5%
Group
28.9%
29.0%
2003
Offshore rate to decline slightly due
to tax relief as a consequence of
minority acquisitions of Bidvest and
Bidcorp plc
Note: Rates exclude goodwill amortisation
STC included as a charge in the Income Statement
Consolidated Income Statement
Year ended June 30
R000’s
Actual:
Avg R/£ 11.94
Actual:
Avg R/£ 14.29
Constant currency:
Avg R/£ 14.29
2004
% ch
vs
2003
2003
2004
& ch
vs
2003
51 262 213
+8.9
47 073 375
55 481 013
+17.9
Net Operating income
2 437 873
+15.1
2 117 686
2 547 711
+20.3
Net finance expense
(168 902)
+52.2
(110 982)
(175 126)
+57.8
Income before taxation
2 268 971
+13.1
2 006 704
2 372 585
+18.2
Taxation
(678 079)
+12.7
(601 658)
(723 226)
+15.7
Income after taxation
1 590 892
+13.2
1 405 046
1 649 359
+19.3
24 691
-18.6
30 328
25 092
-20.5
(74 759)
-23.5
(97 701)
(86 131)
-20.5
1 540 824
+15.2
1 337 673
1 588 320
+21.7
Revenue
Income from associates
Outside shareholders’ interest
Income attributable to shareholders
 Minority interests declined due to the buy-out of Bidvest plc minorities
effective April 2004
 This will impact the full F2005 year
Consolidated Income Statement
Actual:
Avg R/£ 11.94
Year ended June 30
R000’s
2004
Actual:
Avg R/£ 14.29
2004
& ch
vs
2003
51plc,
262 213
47 073 375France
55 481
foreign earnings from Bidvest
Bidcorp+8.9
plc, Lithotech
& 013
Namsov
= 20% of Group (R329m) 2 437 873
Net Operating
income
+15.1
2 117 686
2 547 711
+17.9
Earnings
% ch
vs
2003
2003
Constant currency:
Avg R/£ 14.29
Revenue
 Total
+20.3
21.8%
increase
Net
finance
expense
in HEPS to 565.9c (168
if McCarthy,
Bidvest (110
plc 982)
& Bidcorp
were+57.8
902)
+52.2
(175plc
126)
owned for F2004
Incomewholly
before taxation
2 268 971
+13.1
2 006 704
2 372 585
+18.2
 21.8%
Taxation
increase in HEPS on constant
basis
(678currency
079)
+12.7
(601 658)
(723 226)
+15.7
1 405 046
1649 359
+19.3
30 328
25 092
-20.5
-23.5
(97 701)
(86 131)
-20.5
1 540 824
+15.2
1 337 673
1 588 320
+21.7
300 643
-2.4
308 116
300 643
-2.4
1 643 526
+14.8
1 431 221
1 706 098
+19.2
HEPS without restatement (cents)
551.2
+15.1
479.0
572.0
+19.4
HEPS (cents)
546.7
+17.7
464.5
567.5
+22.2
DPS (cents)
250.2
+13.7
220.0
Dividend
Income
after taxation
1 590 892
+13.2
Income
from associates
 17%
enhancement
24 691transaction
-18.6
in DPS due to Dinatla
Outside
shareholders’
interest
 Dividend
cover
will
(74 759)
remain around 2x
Income attributable to shareholders
Number of shares in issue (weighted 000)
Headline earnings (Rm)
Consolidated Balance Sheet
Year ended June 30
R000’s
2004
2003
6 406 635
4 904 544
Current assets
11 542 389
9 666 838
Total assets
17 949 024
14 571 382
Capital & reserves
6 426 618
6 103 451
Non-current liabilities
1 299 340
1 007 749
Current liabilities
10 223 066
7 460 182
Total equity & Liabilities
17 949 024
14 571 382
Assets
Non-current assets
Equity & Liabilities
Consolidated Balance Sheet
Year ended June 30
R000’s
2004
2003
6 406 635
4 904 544
11 542 389
9 666 838
5 17 949 024
14 571 382
Assets
Non-current assets
Current assets
Total assets
No. of Days
Equity & Liabilities
Capital & reserves
8
27
21
34
38
Non-current liabilities
Current liabilities
6 426 618
1 299 340
54
Total equity & Liabilities
2004
54
6 103 451
Stock
Debtors
1
Creditors
007 749
10 223 066
7 460 182
17 949 024
14 571 382
2003
Consolidated Balance Sheet
Net Debt Position
(R000’s)
2004
2003
2 305 161
2 360 561
Long term interest-bearing
liabilities
923 083
665 583
Short term interest-bearing
liabilities
2 056 149
666 105
Net (debt)/cash
(674 071)
1 028 873
Liquid funds
Consolidated Cash Flow
Statement
Year ended June 30
R000’s
Cash flow from operating activities
2004
% ch
2003
2 757 086
+83.0
1 506 715
Consolidated Cash Flow
Statement
Year ended June 30
R000’s
2004
% ch
2003
Cash flow from operating activities
2 757 086
+83.0
1 506 715
Cash effect of investment activities
(2 933 185)
+151.2
(1 167 628)
Consolidated Cash Flow
Statement
Year ended June 30
R000’s
2004
% ch
2003
Cash flow from operating activities
2 757 086
+83.0
1 506 715
Cash effect of investment activities
(2 933 185)
+151.2
(1 167 628)
Cash effects of financing activities
152 400
Net cash and cash equivalents
2 100 982
(70 234)
-4.5
2 200 344
Divisional Results
Services – Bidfreight
Heavy lifting
Exchange rate impact on trading
patterns
Rm Trading Income
Terminals up strongly
400
450
14000
13000
12000
 RDS & SACD performed
ahead of budget
350
 IVS showed real growth
300
 BMA & SABT flat due to
derived price pressure from
customers and operational
difficulties
250
Strong Rand negatively impacted
Safcor Panalpina, Marine &
Manica
Rm Revenue
11000
10000
9000
8000
200
3.4%
2.9%
150
7000
6000
2003
Trading income
…% Trading margin
2004
Revenue
Services - Bidfreight
STRATEGIC IMPERATIVES and PROSPECTS
NPA negotiations in process
PPP opportunities with NPA & Transnet
Exploiting synergistic opportunities between businesses
(eg. Marine & Terminals on bulk products)
Acquisitive opportunities (eg. terminals, agencies)
R1 change in R/$ exchange rate affects operating income
by R40m (avg rate for F2004: $6.88)
International trade growth well ahead of GDP
16%
Current contr. to Group Trading Income
Services – Bidcorp plc
Recovery overdue
Trading loss of £1.8m vs. £58 000
profit in 2003
Tough trading conditions but
almost breakeven in 2H2004
Main problem: heavy costs in
Shipping on excess capacity
Automotive rationalised into one
brand “Ontime”
Volume:
£ 000’s Trading Income
£m Revenue
80
800
70
60
300
50
-200
1H03
2H03
1H04
2H04
40
30
-700
20
decreased margins &
unbalanced loads
-1200
Specialist:
contracts retained
-1700
France:
making recovery
Property:
no deals in period
10
0
Trading income
Revenue
Services – Bidcorp plc
STRATEGIC IMPERATIVES and PROSPECTS
Realisable net asset value well exceeds book value (ships & property)
Short term strategy:
 3 autonomous business units reporting to Bidvest
 Head office closed in July 2004, management changes at Volume
Transport and Shipping
 Property transactions to be realised
 Automotive - profitability now improving
 Shipping - achieving reasonable profit, could improve
Medium term strategy - Automotive:
 Expanding group automotive activities locally & internationally
 Examining synergies between regional automotive operations
Long term strategy - Freight:
 Expand freight service offering to UK
 Complexities of UK market are stymieing short term progress
Services – Bidserv
Soft service successes
6% real organic growth in revenue – at
the expense of competitors
Rm Trading Income
200
180
160
140
Laundry: strongest performer; secured 120
additional market share; benefits of
100
timely capex; market leader
80
60
Security, whilst profitable, was a
40
disappointment (industry in disarray)
20
Service expansion through acquisitions
0
Rm Revenue
2200
Move to tenders creating margin
pressure – countered by expense
control and annuity income
(Greens)
BidAviation created to leverage off
Fedex / EAS / AHS and extract
synergies
2000
1800
1600
1400
1200
9.6%
9.5%
2003
2004
Trading income
Revenue
…% Trading margin
1000
800
600
400
Services - Bidserv
STRATEGIC IMPERATIVES and PROSPECTS
Development of the newly acquired Greens businesses
into national foot print
New contract wins will benefit Laundry and Security
businesses
Annuity income
Benefits of R55m acquisition of SA operation of IPS
(effective 1 April 2004) for full year in 2005
Benefits of transferred-in businesses (Fedex & Express
Air Services) for full year in 2005
8%
Ability to add on similar businesses
Current contr. to Group Trading Income
Services – Renfin
Travel beats Banking
Modest rise in Travel trading income
(+6%)
Despite declines in volumes/prices
Favourable economic conditions did
not assist outbound
Travel acquisitions assisted profits
Intensified competition and structural
changes in the travel industry
Sharp fall in banking trading income
(-59%)
Excessive costs
Currency strength
Narrower dealer margins
Slowdown in tourist encashments
Lower outbound forex
Rm Trading Income
Rm Revenue
150
650
24.3%
600
100
19.4%
550
500
50
450
0
400
2003
Trading income
2004
Revenue
…% Trading margin
Services - Renfin
STRATEGIC IMPERATIVES and PROSPECTS
Management proactive in preparing for change to agency
remuneration
Bank to :
 Focus on reducing cost base
 Growing asset book, corporate FX, trade services
 Regaining lost business in retail operations
Benefits to be derived from investments in banking systems,
infrastructure and training
 IT infrastructure upgrades enable Rennies Bank
to expand activities
5%
Current contr. to Group Trading Income
Foodservice Products – International
Sterling stuff
UNITED KINGDOM:
Trading income up 25% to £40m
3663 gained market share, increased
margins and profitability in all
businesses
Rm Trading Income
500
17000
450
15000
400
Economy more robust with low
inflation
350
Strong performance from Multi-temp,
Frozen, MOD (Kuwait)
£28m capex spent
Depot renewal & alleviation of
inefficiencies
250
Acquisitions which extended customer
service offering:
 Barton Meat (51%)
 Wilson Watson
Rm Revenue
13000
11000
300
9000
7000
200
150
3.4%
3.0%
100
5000
3000
2003
Trading income
2004
Revenue
…% Trading margin
Foodservice Products - International
Upside down under
AUSTRALASIA:
Trading income up 37.8% to £11.5m
AUS EBIT up 19% in AUD
Rm Trading Income
Rm Revenue
5500
140
5000
NZ EBIT up 48% in NZD
Australian & New Zealand dollars
strengthen by approximately 10%
against sterling
5 small acquisitions
Oceanic Foods, R&S, Coolfoods,
Macmont, RWA
2 new divisions (hospitality supplies &
quick service restaurants)
Sale of the retail focused Alice Springs
120
4500
100
4000
80
60
3500
2.7%
3000
2.7%
40
2500
2003
Trading income
2004
Revenue
…% Trading margin
Foodservice Products - International
STRATEGIC IMPERATIVES and PROSPECTS
3663
 Extension of product range to Fresh & Chilled
 Financial turnaround at Swithenbank & Barton Meat
 Increasing capacity
Australia
 Filling in the gaps on the Eastern Seaboard
 Enhanced performance from Melbourne
 Improved purchasing
23%
Crean (New Zealand)
 Benefits from customer gains &
infrastructure investment
Current contr. to Group Trading Income
Foodservice Products – Caterplus (SA):
Defeating deflation
Food price deflation only tempered in
H2
Overseas visitors not as free
spending
Catering Supplies: tough market
Frozen division priced aggressively,
maintaining profitability & volumes
Patleys increased margins despite
reduced rand profit on imports
Vulcan-Caars assisted by exports in
H2
Rm Trading Income
200
180
160
140
120
100
80
60
40
20
0
Rm Revenue
2100
1900
1700
1500
1300
1100
9.1%
8.7%
2003
Trading income
2004
Revenue
…% Trading margin
900
700
500
300
Foodservice Products – Caterplus (SA)
STRATEGIC IMPERATIVES and PROSPECTS
Adapted to deflationary environment
Well positioned to take up buoyancy in the market
Inflation good for businesses
Key: selling customers expanded basket of products
Adaptation of focus:
Move to multi temperature concept
Quietly leading the market in a new direction
7%
Current contr. to Group Trading Income
Foodservice Products – Combined Foods (SA)
Spiced results
Competitive challenges met in
Bidbake, enabling improved results
Crown sales to major customer
segments up substantially; export
sales & non-meat flat
New spice factory enabled
production rationalisation / double
shift to meet demand
Rm Trading Income
Rm Revenue
130
120
110
100
90
12.6%
80
70
60
50
40
11.0%
2003
Trading income
2004
Revenue
…% Trading margin
1100
1000
900
800
700
600
500
400
300
200
100
Foodservice Products – Combined Foods (SA)
STRATEGIC IMPERATIVES and PROSPECTS
Bidbake to :
 Offer new products to enhance service offering
 Leverage customers over scope of product range
Crown well poised to continue growth; new products
5%
Current contr. to Group Trading Income
Commercial Products – Bidoffice
Stout effort
Margin pressure in stationery due to
currency effect on imported product
& pressure on paper prices, but
volumes up
Rm Trading Income
Acquisition of OCE Printing Systems
benefited Automation
350
Rm Revenue
450
5400
400
Minolta produced strong result,
particularly 4th Qtr
300
4900
4400
3900
3400
250
2900
Kolok impacted by grey products but
results acceptable
200
Cecil Nurse star of Furniture
Lithotech strong, exceeded budget
Lithotech France - poor result but
volumes improving (profitable for last
2 months)
150
8.3%
8.1%
2003
2004
100
Trading income
Revenue
…% Trading margin
2400
1900
1400
900
Commercial Products - Bidoffice
STRATEGIC IMPERATIVES and PROSPECTS
Weakening currency will benefit businesses
Waltons Gauteng restructured for more focus
Minolta to enhance brand to leverage growth
Kolok seeking enhanced product offering
Continued migration to value add services for Lithotech
Lithotech France to seek critical mass (improve factory
throughput and efficiencies)
15%
Current contr. to Group Trading Income
Commercial Products – Bidpac
Protecting profitability
Rm Trading Income
Margin maintained despite customers
destocking, rand strength &
manufacturing recession
Market share grew despite decline in
manufacturing volumes – secondary
exporters hurt by rand
Buffalo achieved forward momentum
by product differentiation
New African markets for exports
120
110
100
90
80
70
60
50
40
30
20
10
Rm Revenue
800
700
600
500
14.8%
14.1%
400
300
200
100
2003
Trading income
…% Trading margin
2004
Revenue
Commercial Products – Bidpac
STRATEGIC IMPERATIVES and PROSPECTS
Continued strengthening of demand across all products
and more favourable trading environment
Substantial capex to enhance product range and quality
African exports will gather pace in year ahead
Benefits of partnership with Esselte will in F2005
Strong last quarter
4%
Current contr. to Group Trading Income
Commercial Products – Voltex
Stronger voltage in H2
Trading conditions improved in 2nd
half
Focus on commercial work yielded
substantial success
Copper price gyrations affected
stocking
Non-cable products held margins
Lower dependence on large capex
projects
Rm Trading Income
150
140
130
120
110
100
90
80
70
60
50
Rm Revenue
6.3%
5.5%
2003
Trading income
2004
Revenue
…% Trading margin
2500
2300
2100
1900
1700
1500
1300
1100
900
700
500
Commercial Products - Voltex
STRATEGIC IMPERATIVES and PROSPECTS
National footprint, service capability and breadth of
products
Voltex to accredit itself as “specifiers” – reducing
reliance on contractors
Upgrading skills set to add value
Growth prospects through organic expansion and
market gains
Change of focus to commercial customers
will continue to provide benefits
6%
Current contr. to Group Trading Income
McCarthy
Magic Motoring
R1bn acquisition price at +/- NAV effective January 2004
Healthy contribution
Yamaha benefiting strongly from
Rand strength & increased
disposable income
Rm Trading Income
Rm Revenue
260
6500
Revenue : R5.9bn
5500
210
4500
160
3500
Automotive industry buoyant
New and used car margins under
pressure
Financial services achieved
significant growth
Pro forma attributable earnings for
the full year to June 2004: R191m
after funding cost
110
2500
60
1500
3.7%
10
500
2004
Trading income
Revenue
…% Trading margin
McCarthy
STRATEGIC IMPERATIVES and PROSPECTS
Synergistic benefits in the next 12 months, eg. McCarthy Club
Opportunities in complementary areas, eg.
 Financial leasing
 Van rentals
 Fleet management
 FML
 Private leasing
Organic and acquisitive growth planned for McCarthy
 Product extensions
 Dealerships
9%
 Distributorships
Sustainable growth supported by lower interest
rates and > 10 year average age of the SA car parq
Benefits of twelve months earnings in 2005
Current contr. to Group Trading Income
Corporate Services
Namsov adversely impacted by Rand
but grew trading profit by 11.8%
Investment income: mainly share
dealing profits
Bidvest Network Services (I-Fusion)
 Profitable for the year
 State of the art network
 Positioned for growth
mymarket.com
 Annualised billings R850m
 Further growth anticipated
Property rental income from Group
companies at arm’s length
Rm Trading Income
Rm Revenue*
100
55
50
45
40
35
30
25
20
15
10
90
80
70
60
50
40
30
20
10
2003
Trading income
2004
Revenue
*Revenue = Bidnet & Mymarket.com
(No’s excl Namsov)
Strategy & Outlook
BEE update
Dinatla acquisition of 15% of Bidvest completed
Dinatla partnership has :
4 board seats; assisted in appointment of 7 new HD
commercial directors
–
Assisted with the Bidvest Charter
Facilitated in creating linkages for BEE procurement
Underlying JV’s addressed
Dinatla New Ventures formed to pursue large investment
opportunities
49% (incl.
other
funders)
15%
Dinatla
Bidvest
51%
DNV
BEE partners,
incl Dinatla
Bidvest Corporate Governance
Large Board a result of Group culture
Bidvest built by merger with like-minded entrepreneurs
Clear division of power, accountability and responsibility
–
Separation of roles of Chairman and Chief Executive
Cyril Ramaphosa appointed non-executive Chairman
Brian Joffe as Chief Executive ensures continuation of proven
Group strategies
Effective committees
Ongoing evaluation of board composition to ensure efficacy
Key growth drivers
Cross-selling between businesses not yet fully
exploited
Acceleration of outsourcing trend – eg, benefit to
Bidserv & Bidoffice
Organic growth through product extension &
geographic spread
Exposure to growth areas of the economy,
supplemented by acquisitive growth
Potential impact of World Cup
2010
Bidserv:
•Hygiene services
•Purified water
•Laundry
•Janitorial & cleaning products
McCarthy:
• Lease and/or purchase
• Hire vehicles (Budget Car Hire)
Bidpac:
Fasteners for construction
industry
Renfin:
•Forex
•Travel agencies
Voltex:
Electrical product distribution
to stadiums, housing, hotels,
bulk infrastructure, etc
Food Service Products:
Catering supplies & equipment
Bidfoffice:
• Stationery
• Office automation
• Furniture
Prospects for 2005
Cost base more efficient
2005 HEPS will benefit from:
inclusion of McCarthy for full year
owning 100% of Bidvest plc for full year
Bidcorp and Lithotech France should contribute to
profits
Price inflation would benefit Rand value of margins
Budgets based on prevailing exchange rates but will
benefit from any weakening of the Rand
MANAGEMENT IS BUDGETING FOR A GOOD RESULT
Appendices
Appendix 1:
Financial
Statements
Consolidated Income Statement
For the year ended June 30
2004
R000s
Revenue
Percentage
Change
Audited
2003
Audited
Restated
2002
Audited
Restated
51,262,213
47,073,375
8.9
41,950,388
Trading income
Trading income before translation gains
Translation gains (losses)
Amortisation of goodw ill
Net capital items
2,555,652
2,553,201
2,451
(77,622)
(40,157)
2,244,121
2,259,197
(15,076)
(64,887)
(61,548)
13.9
13.0
2,012,611
1,909,966
102,645
(52,646)
(11,467)
Net operating income
2,437,873
2,117,686
15.1
1,948,498
Net finance expense
Income before taxation
Taxation
Income after taxation
Income from associates
Trading profits
Impairment of and goodw ill in associates
Outside shareholders' interest
Income attributable to shareholders
Number of shares in issue (w eighted 000)
(168,902)
2,268,971
(678,079)
1,590,892
(110,982)
2,006,704
(80,163)
13.1
(601,908)
1,404,796
1,868,335
(525,472)
13.2
1,342,863
24,691
25,092
(401)
30,328
31,568
(1,240)
17,735
27,788
(10,053)
(74,759)
(97,451)
(129,557)
1,540,824
1,337,673
300,643
308,116
15.2
1,231,041
299,089
Headline earnings per share ( cents )
546.7
464.5
17.7
432.8
Earnings per share (cents)
512.5
434.1
18.1
411.6
Distribution per share (cents)*
-interim
-final
250.2
113.4
136.8
220.0
108.0
112.0
13.7
190.0
90.0
100.0
Consolidated Income Statement
For the year ended June 30
HEADLINE EARNINGS
The following adjustments to income attributable to shareholders were taken into
account in the calculation of headline earnings:
Income attributable to shareholders
Net amortisation of goodwill
Amortisation of goodwill
Outside shareholders' interest
Net loss on disposal and discontinuance of businesses
Loss on disposal and discontinuance of businesses
Tax relief
Outside shareholders' interest
Net loss on disposal of assets
Loss (surplus) on disposal of assets
Tax relief
Outside shareholders' interest
Impairment of and goodwill in associates
Headline earnings
1,540,824
75,009
77,622
(2,613)
26,202
38,595
(12,392)
(1)
1,090
1,562
(472)
-
1,231,041
49,411
52,646
(3,235)
3,913
11,797
(4,363)
(3,521)
104
(330)
434
1,337,673
61,449
64,887
(3,438)
11,626
36,130
(16,017)
(8,487)
19,233
25,418
(7,385)
1,200
401
1,240
1,643,526
1,431,221
10,053
14.8
1,294,522
Rand / Sterling exchange rates
Opening rate
Closing rate
Average rate
12.457
11.285
11.939
15.905
12.457
14.288
11.338
15.905
14.544
The Group has changed its accounting policies in accordance with recently amended statements of Generally Accepted Accounting Practice, with regard to
secondary tax on companies and business combinations. Secondary tax on companies in now treated as part of the tax charge in the income statement as opposed
to an appropriation in equity; and the Group no longer provides for amortisation of goodwill arising from business combinations subsequent to March 31 2004.
These changes have resulted in an additional charge to income, net of outside shareholders interest, of R13m for the year (2003: R43m) ; and a reduction of
goodwill amortisation of R13m in the current year. Had these changes not taken place, the headline earnings per share for the year would have been 551,2 cents
per share (2003: 479,0 cents per share) , an increase of 15,1%, and earnings per share would have been 512,8 cents per share (2003: 448,6) an increase of 14,3%.
Consolidated cash flow statement
For the year ended June 30
2004
Audited
2003
Audited
2002
Audited
R000s
Cash flow from operating activities
Operating income net of capital items
Depreciation and other non-cash items
Changes in working capital
Cash generated by operations
Net finance expense
Taxation paid
Dividends paid - Company
- subsidiaries
Cash effects of investment activities
Net additions to fixed assets
Net additions to intangible assets
Net acquisition of subsidiaries, businesses,
associates and investments
Cash effects of financing activities
Proceeds from shares issued - Company
- subsidiaries
Purchase of treasury shares
Distribution of share premium to shareholders
Net borrowings raised
Net increase (decrease) in cash and cash equivalents
2,798,728
2,515,495
742,849
502,505
3,760,849
(102,907)
(645,451)
(168,608)
(45,155)
1,506,715
2,182,573
746,026
(261,904)
2,666,695
(110,982)
(521,617)
(475,284)
(52,097)
1,967,371
2,001,144
543,348
207,183
2,751,675
(80,163)
(395,737)
(267,763)
(40,641)
(3,136,445)
(909,602)
(14,817)
(1,167,628)
(991,232)
(8,442)
(1,596,063)
(695,118)
(18,759)
(2,212,026)
(167,954)
(882,186)
314,018
83,702
1,009
(115,417)
(528,163)
872,887
(70,234)
31,710
7,670
(401,333)
(168,797)
460,516
525,622
596,462
506
(26,756)
(159,743)
115,153
268,853
896,930
(23,699)
Net cash and cash equivalents at the beginning of the year
Currency adjustments
2,220,344
(95,663)
2,202,331
(250,840)
1,058,213
247,188
Net cash and cash equivalents at the end of the year
2,100,982
2,220,344
2,202,331
-
-
-
Net cash equivalents are made up as follows
Cash on hand and in the bank
Bank overdrafts shown as current portion of interest bearing debt
2,305,161
(204,179)
2,100,982
2,360,561
(140,217)
2,220,344
2,745,492
(543,161)
2,202,331
Consolidated Balance Sheet
At June 30
2004
Audited
2003
Audited
2002
Audited
6,406,635
3,663,846
1,959,223
262,727
498,853
21,986
4,904,544
3,493,246
689,218
219,340
384,072
118,668
5,089,552
3,602,498
681,903
262,747
378,997
163,407
Current assets
Other current assets
Liquid funds
11,542,389
9,237,228
2,305,161
9,666,838
7,306,277
2,360,561
10,027,552
7,282,060
2,745,492
Total assets
17,949,024
14,571,382
15,117,104
Capital and reserves
Shareholders' interest
Outside shareholders' interest
6,426,618
6,056,612
370,006
6,103,451
5,412,659
690,792
6,370,033
5,563,617
806,416
Non- current liabilities
Deferred taxation
Post-retirement obligations
Life assurance fund
Long-term portion of interest bearing borrowings
Long- term portion of banking liabilities
1,242,783
89,554
225,040
5,106
923,083
-
972,050
115,824
190,179
665,583
464
588,136
252,048
200,250
135,838
-
Current liabilities
Other current liabilities
Current portion of interest bearing borrowings
10,279,623
8,166,917
2,112,706
7,495,881
6,794,077
701,804
8,158,935
6,887,622
1,271,313
Total equity and liabilities
17,949,024
14,571,382
15,117,104
302,169
302,679
311,217
1356
1561
1569
R000s
ASSETS
Non-current assets
Fixed assets
Intangible assets
Deferred tax
Investments and advances
Banking and other advances
EQUITY AND LIABILITIES
Number of shares in issue
Net tangible asset value per share (cents)
Statement of changes in
shareholders’ interest
For the year ended June 30
2004
Audited
2003
Restated
Audited
2002
Restated
Audited
5,412,659
5,563,617
3,860,494
R000s
Shareholders' interest at the beginning of the year
Share capital issued
- capitalisation issue
- cash issue
- in terms of the share incentive scheme
- repurchase of shares by subsidiary
(26)
127
(153)
(427)
62
(489)
770
107
623
71
(31)
Share premium arising on shares issued
- in terms of the share incentive scheme
- cash issue
- refund of share premium to shareholders
- repurchase of shares by subsidiary
- share issue costs
(559,852)
83,617
(528,163)
(115,264)
(42)
(537,993)
31,780
(168,797)
(400,844)
(132)
409,300
40,067
557,377
(159,743)
(26,725)
(1,676)
Movement in non-distributable reserves
- foreign currency translation reserve
- on acquisition of business
- transferred to distributable reserves
(172,579)
(169,698)
1,313
(4,194)
(474,927)
(474,927)
-
329,882
329,882
-
Movement in retained income
- income attributable to shareholders
- dividends and capitalisation issues
- transfer from non-distributable reserves
1,376,410
1,540,824
(168,608)
4,194
862,389
1,337,673
(475,284)
963,171
1,231,041
(267,870)
-
Shareholders' interest at the end of the year
6,056,612
5,412,659
5,563,617
Segmental analysis
For the year ended June 30
2004
2003
The Services Division
Bidfreight
Bidcorp plc
Namsov fishing
Bidserv
Renfin
16,675,368
12,105,642
1,463,166
282,827
2,165,517
658,216
18,292,281
13,676,421
1,956,688
282,107
1,735,005
642,060
(8.8)
(11.5)
(25.2)
0.3
24.8
2.5
16,424,403
12,984,127
1,078,403
320,993
1,505,982
534,898
The Foodservice Product Division
Bidvest United Kingdom
Bidvest Australasia
Caterplus
Combined Foods
22,266,741
14,161,750
5,176,737
1,967,570
960,684
22,557,416
15,348,018
4,385,736
1,970,925
852,737
(1.3)
(7.7)
18.0
(0.2)
12.7
21,121,321
14,556,975
4,184,514
1,653,732
726,100
The Commercial Products Division
Bidoffice
Bidpac
Voltex
7,777,656
4,766,335
748,224
2,263,097
7,584,909
4,743,195
730,579
2,111,135
2.5
0.5
2.4
7.2
5,500,712
3,512,837
625,537
1,362,338
The Automotive Producta Division
McCarthy
5,904,843
-
-
-
58,206
50,298
7,908
93,920
90,665
3,255
R000s
Percentage
Change
2002
REVENUE
Corporate Services
Bidvest Network Solutions
MyMarket.com
Inter Group eliminations
(1,420,601)
(1,455,151)
51,262,213
47,073,375
(38.0)
(44.5)
142.9
-
8.9
159,387
159,225
162
(1,255,435)
41,950,388
Segmental analysis
For the year ended June 30
TRADING INCOME
The Services Division
Bidfreight
Bidcorp plc
Namsov fishing
Bidserv
Renfin
763,685
417,273
(21,833)
35,201
205,600
127,444
750,502
395,400
834
31,497
166,713
156,058
11.8
23.3
(18.3)
718,570
355,971
14,034
104,509
134,317
109,739
The Foodservice Product Division
Bidvest United Kingdom
Bidvest Australasia
Caterplus
Combined Foods
889,581
459,948
137,954
170,343
121,336
843,449
449,611
119,823
179,817
94,198
5.5
2.3
15.1
(5.3)
28.8
672,927
376,150
84,725
132,493
79,559
The Commercial Products Division
Bidoffice
Bidpac
Voltex
636,944
383,910
110,878
142,156
613,342
393,845
103,069
116,428
3.8
(2.5)
7.6
22.1
487,675
313,715
84,142
89,818
The Automotive Producta Division
McCarthy
217,606
29.9
133,439
(9,096)
(2,172)
108,904
35,803
Corporate Services
Bidvest Netw ork Solutions
MyMarket.com
Investment and other income
Bid Properties
47,836
578
(7,709)
10,346
44,621
2,555,652
36,828
(5,042)
(7,242)
8,317
40,795
2,244,121
1.8
5.5
24.4
9.4
13.9
2,012,611
Appendix 2:
Corporate
Corporate Services
2004
2003
Share dealing profits
64.9
51.8
Div from associates
7.9
9.9
Translation (Losses)/Gains on
cash
2.5
(15.1)
(65.0)
(38.3)
Investment income
Other costs
Appendix 3:
Dinatla transaction
& BEE
Dinatla Transaction
Dinatla consortium owns 15% of Bidvest
The transaction:
A. Dinatla
 Ownership vested
 Price between R42-R60 in Oct 2006
 Right of early settlement
 Board representation
 Unfettered voting rights
 No hurdle price – the closer to R42 the better for Dinatla
Dinatla Transaction
Dinatla consortium owns 15% of Bidvest
The transaction:
B. Bidvest
 No financial impact
 Positive BEE equity scorecard impact (BEE equity ownership
increased to approximately 35%)
 Retain existing business
 New business opportunities
Dinatla Transaction
Dinatla consortium owns 15% of Bidvest
The transaction:
C. Current Shareholders
 Bidvest ords + a 17% dividend enhancement for 3 years
Dinatla Transaction
Dinatla consortium owns 15% of Bidvest
The transaction:
D. Shareholders affected by the transaction sold 15% of their
shares to Dinatla.
For every 100 shares:



85 ordinary Bidvest shares with a 17% dividend enhancement
15 BidBEE loan notes with no dividend
• subject to a minimum of R42 and a maximum of R60
per share
• at recommendation of BidBEE board with 1 year
extension option (75% vote by loan note holders)
6 Bidvest call options at a R60 strike price
BEE at Bidvest BEE Scorecard
–
Credits
Bidvest progress
 Equity ownership
20%
√
 Management &
executive positions
10%
√
 Employment equity
10%
√
 Skills development
20%
√
 Procurement
20%
√
 Enterprise development 10%
√
 Residual 10% reserved for sector specific issues
********
Good = > 65%
Satisfactory = 40% - 64.9%
Limited = < 40%