Transcript Name of Presentation - Bidvest

Appendix 1:
Divisional Results
Bidfreight
Volume Vicissitude
Results
Positive SA fundamentals support top-line
Working capital impacted by changed credit
terms in Safcor
Rm Trading Profit
400
Rm Revenue
12000
11000
350
+12%
Good overall revenue gains but notably reduced 300
agricultural, steel, coal, and forest product
export volumes
250
10000
9000
8000
Profits match budgeted projections
200
Safcor Panalpina: Record billings, up 29%.
150
Marine: Profits up 22% on higher container &
vehicle traffic. Freightbulk strategy under review 100
Manica: profits up 26%, with Namibia & Naval
excelling. Regional instability a constant
challenge.
7000
3.3%
2.9%
6000
5000
H1 2006
Trading profit
H1 2007
Revenue
…% Trading margin
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
2
Bidfreight
Current contr. to
Group Trading Profit
Volume Vicissitude
13.4%
Terminals:

IVS: profits up 36%; capex will enhance profits.

RDS: customer difficulties resulted in profits declining 12%. Review underway.

Bulk Connections: profits static; reduced coal exports offset by rise in other
product exports as benefits of capex spend create multiple product handling
capability; Spoornet reliability remains a challenge; Negotiations with NPA for
increased lease terms and additional handling rights ongoing.

SABT: profits down 29% on substantially lower agricultural exports; cumulative
capex of >R100m yet to yield return.

SACD: profits up 12%; discussions with NPA in Durban to explore potential for
extended lease terms & larger facilities.

BPO: profits down 13% due to a substantial decline in steel and forest product
exports by major clients. Cost cuts have been completed.
Strategic imperatives & prospects
Majority of one-off cash outflows through the system; management to secure a
positive re-alignment of working capital
Cost control is being complemented by the securing of new revenue
Bidfreight confident of achieving real profit growth for the full year
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
3
Bidserv
Nurturing the small acorns
Results
BidAir profits up 94% (5% of total); integrated
Rm Trading Profit
aviation offering complemented by the
400
acquisition of 60% of Comair’s ground handling
business; ground handling license being sought
350
Rennies Bank: recovery continues, with profits
up 61%
Top Turf profits up 48%, new contract wins
Rm Revenue
3000
2500
300
+17%
2000
Cleaning: Prestige profits flat, net new business 250
good; TMS profits up 95%.
Laundries: revenue up 13% but profits flat;
further volume required but pricing constrained
by influence of large customers
200
Steiner revenue up 19%, profits up 13%
150
Bid Risk: at break even after strikes; further
restructuring required
IPS profits down but above budget; point-of-sale
services being re-evaluated
11.5%
11.8%
1500
1000
H1 2006
Trading Profit
H1 2007
Revenue
…% Trading margin
Industrial Products (Janitorial): profits up 25%
despite abnormal costs
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
4
Bidserv
Current contr. to
Group Trading
Profit
14.7%
Nurturing the small acorns
Office Automation (Minolta & Ocè): revenue & profits flat off high base, improvement
in next period
Travel: profits up 36%; addressing poor margin divisions, debtors management and
technology.
Hotel Amenities (transferred from BidFood): profits up a very creditable 19% on new
contract wins
Mymarket: at break-even, gaining market share
Strategic imperatives & prospects
Mymarket spearheads lucrative group and external client procurement deals,
achieving substantial savings
Prestige has a number of promising new contracts in the pipeline and TMS seeking
expansion opportunities
BidAir has a particularly exciting future and likely to grow its share of profits
New facilities for G Fox and Commercial Sundries
Legislated wage increases difficult to recover (security/cleaning)
Travel and Rennies Bank have further upside
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
5
Bidvest Europe
Going Dutch
Results
Trading profits (pre-IFRS) up 6.5% at £26.3m
Outstanding cooperation and sharing of best
practice between UK and Dutch teams
Deli XL
300

Deli XL: €6.7m (£4.6m) “clean” profit, cash
generated from operations €11m

Netherlands: margin of 1.8% versus 1%; real
growth in hospitality but institutional market
remains challenging; excellent staff morale

Rm Trading Profit
350
250
200
Deli XL Belgium: reorganisation paying off;
sales growth good but margins pressured
150
3663
 3663
profits flat at £22m on an 11% rise in
sales to £790m; cash flow sound; MOD
revenues & profits being replaced
phenomenon is bad debts – may be
isolated and non-recurring but management
has resolved to insure against this risk
 A new
Appendix
1
Introduction
Financials
Segmentals
Rm Revenue
16000
15000
14000
13000
12000
11000
+19%
10000
9000
8000
7000
2.8%
2.3%
6000
5000
H1 2006
Trading Profit
H1 2007
Revenue
…% Trading margin
Group Outlook
6
Bidvest Europe
Current contr. to
Group Trading
Profit
Going Dutch
16.4%
Upward pressure on product prices and operating costs.
Lower-margin CD sales up 31% (KFC, Pizza Hut) – higher unit values but higher
costs due to volumes.
Multi-temp sales up 4%, profits up 1%; bad debt hurt costs; Compass non-food
contract (2 Jan 07) incurred extra costs; ex-MOD depot at Basingstoke converted to
multi-temp site.
Frozen, Fresh & Chill sales up 8% but margin still a challenge; bad debts hurt costs;
two new sites operational Jan 07; roll-out of major contract.
Barton loss making but profitable at the end of the period.
Systems alignments at Horeca, profits ahead of expectation in large part due to Asian
Games orders
Strategic imperatives & prospects
Compass non-food service contract exceeding expectations
3663 on track to meet budget despite recent hiccups
Expansion into institutional market in Northern Belgium being explored
Joint opportunities between 3663 and DeliXL being successfully pursued
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
7
Bidvest Australasia
Street cred
Results
Australia (A$)
“Street” trade showing organic growth of 10%,
at good margin
Rm Trading Profit
200
Rm Revenue
7000
6000
Record 3.6% margin - profits up 25% to $21.9m 150
off an 8% rise in sales to $611m (largely
organic)
Foodservice: Sydney & Melbourne both
profitable and improving; decreased cost of
100
5000
+44%
3.8%
3.2%
4000
doing business; 25% of sales transacted
electronically
Hospitality: profits up 34%; acquisitions in
Melbourne and Geelong to assist with national
roll-out and critical mass
QSR: profits up 28% on an 11% rise in sales; a
key link in the total foodservice supply chain
Appendix
1
Introduction
Financials
Segmentals
50
3000
H1 2006
Trading Profit
H1 2007
Revenue
…% Trading margin
Group Outlook
8
Bidvest Australasia
Street cred
New Zealand (NZ$)
Sales up 20% to $158m, profits up 29% to $7.3m; Fresh profits up 163% - taking
shape as a national wholesale produce business; Logistics set for annual $30m in
sales –national roll-out
Finding suitable staff remains a challenge
Strategic imperatives & prospects
Australia
Expanded branch network unparalleled, broadline national offering
Suitable acquisitions + organic growth to access additional
market space – Bidvest market share 20%
Sydney & Melbourne remain below potential
New Zealand
Business tracking well and strategic objectives unfolding
Top three finalist in “Most Improved Business” category of
Top 200 Companies
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
7.5%
Current contr. to
Group Trading
Profit
9
Bidfood
Mixed bag
Results
Rm Trading Profit
200
180
Caterplus: 16% rise in profit off a 23% rise in
160
sales; significant market share gains,
140
broadening of choice; energetic focus on
120
customers needs, with the independent trade a
+4%
100
top priority; fresh fruit & vegetables introduced
80
9.2%
BidBake: ferocious competition has resulted in a 60
rightsizing of the business in line with realities
40
Crown: 25% rise in profits off a 19% rise in sales 20
0
because of astute procurement and equipment
A 37% decline in Bidbake profits masks a good
result with tangible underlying improvements
sales; installation of a steam steriliser
underscores food safety focus for competitive
advantage
H1 2006
Trading Profit
Rm Revenue
1500
8.1%
500
H1 2007
Revenue
…% Trading margin
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
10
Bidfood
Mixed bag
Speciality: 25% rise in profits and a 29% rise in sales off an already high base as
range and mix optimisation pays off.
Vulcan: 12% rise in profits off a 10% rise in sales; obsolete equipment being
replaced to improve product quality; upgraded factory; export focus;
Catering and Frozen have been merged under a single management team
Strategic imperatives & prospects
Strategic initiatives will continue to be reflected in on-the-ground execution
Capex and new facilities to yield efficiencies
BidBake very challenging but change in emphasis will result in an improved
performance during F2008
8.0%
Current contr. to
Group Trading Profit
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
11
Bid Industrial and Commercial Products
A bright spark
Results:
Profits up 76% off a 30% rise in revenue
EWD
Versalec Cables (75%) has settled in well,
performing strongly
Infrastructure markets strong & growing
Copper price surge has reversed and
management has adopted a more conservative
stocking policy;
New distributorship of LS products Nov 06
Stationery & furniture:
Profits rise 51% off a 16% rise in revenue
Waltons profits up 18%; Gauteng shows
materially improved performance
Kolok: revenue up 14% in a tough market, profits
up 58% as gross margins expand
CN Business Furniture: 35% rise in profits off an
18% rise in revenue; strong order books
Appendix
1
Introduction
Financials
Segmentals
Rm Trading Profit
350
Rm Revenue
6000
300
5000
250
+76%
200
150
7.7%
4000
5.7%
100
3000
H1 2006
Trading Profit
H1 2007
Revenue
…% Trading margin
Group Outlook
12
Bid Industrial and Commercial Products
A bright spark
Fasteners & Tape
Afcom revenues up 4%, profits up 25%, with better balance between imports and
local production achieved
Buffalo: 22% rise in profits off a 9% rise in revenue; launch of new DIY range a
success
Strategic imperatives & prospects
Exchange rate variability a challenge
Continuing strong performance off a higher base
Focus on optimising stock levels
15.4%
Current contr. to
Group Trading Profit
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
13
Bidpaper Plus
Congo Fever
Results
Profits up 11% off a 12% rise in revenue;
Printing & Conversion a notable performer;
integration of ex-office business complete.
Silveray Statmark
Improved results in a fiercely competitive
market, with sales up 9%
Rm Trading Profit
190
170
900
150
800
130
700
+11%
110
Lithotech
Rm Revenue
1000
90
Profits up 15% off an 18% rise in sales,
70
boosted by DRC project (revenues good even
50
without DRC)
600
11.9%
11.8%
500
400
H1 2006
Trading Profit
H1 2007
Revenue
…% Trading margin
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
14
Bidpaper Plus
Congo Fever
Personalisation & Mail grew revenue 19%, notwithstanding prolonged
industrial action
Significant capex assisted printing & conversion
5.5%
Labels suffered in a tough market
Continued growth from e-solutions
Lufil continues to grow range of paper converted products
Strategic imperatives & prospects
Current contr. to
Group Trading Profit
Lithotech to continue to reduce capacity in traditional continuous business
forms whilst investing in the new growth areas of label, print to post, stationery
and e-billing
Renewed growth focus on label products
Laser & mail to remain a substantial contributor, with increased market
presence
Further growth in stationery products and “New Croxley” promotions
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
15
Bid Auto
Fleet of foot
Results
Profits up 22% (Motor Holdings up 18%) on a 16%
rise in revenue – ahead of budget. Yamaha revenues
up 19% amidst stiff competition. Substantial loss at
GAZ negatively impacted result.
Financial services profits up 40%, ahead of budget
32 967 new units, up 6% on 31 019, but favourable
product mix assists margin; new car pricing remained
keen with knock-on effect to used; parts & servicing
well up on budget
30 014 used units sold, up 10% on 27 192
Rm Trading Profit
500
450
9000
400
8000
350
Seasonal working capital bulge; excess stock and
age profile receiving vigorous attention
7000
+22%
300
250
Budget performed well, with a sharp rise in rental
days; significant increase in fleet size; interest rate
hikes, higher insurance costs and higher
maintenance costs puts pressure on margins
Rm Revenue
10000
6000
3.5%
3.7%
200
5000
4000
H1 2006
Trading Profit
H1 2007
Revenue
…% Trading margin
Fleet Services finance book well ahead of budget;
rebalancing mix toward operating leases away from
installment sale
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
16
Bid Auto
Fleet of foot
Burchmores delivered improved performance on the back of an increase in bank
repossessions and units purchased internally from McCarthy dealers
GAZ restructuring to minimise exposure
Strategic imperatives & prospects
Projections for a growth slowdown, but no outright contraction foreseen
Competition price based but every effort is being made to preserve margin
Chinese product options being energetically pursued
Acquisition of Shell Autoserv to provide a nationwide presence for servicing out-of-warranty
cars and Chinese product
Modest rises in new car prices will have a positive impact on used car values
Growing vehicle parq is beneficial for recurring parts and service income
McCarthy Fleet Services seeking meaningful expansion opportunities
A continued good performance is expected with management
alert to competitive challenges and executing on
identified opportunities
17.0%
Current contr. to Group
Trading Profit
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
17
Corporate Services
Results
Rm Trading Income
120
110
100
Namibian fishing operations profits decline by
60% to R17m on poor catches and dominance of 90
80
small fish
70
Ontime Automotive contributes R1.3m
60
-27%
50
40
30
20
10
0
Rm Revenue
1000
Bidprop up 35% to R36m on back of strategic
group development
900
800
700
600
500
400
300
200
100
2.1%
H1 2006
Trading Profit
H1 2007
Revenue
…% Trading margin
Current contr. to
Group Trading Profit
Appendix
1
Introduction
Financials
Segmentals
Group Outlook
18
Appendix 2:
Segmental Outlook
Introduction
Financials
Group
Group Outlook
Bidfreight- sensitivity to anticipated economic
variables
+ GDP growth expected to remain robust
Trade volumes to grow ahead of GDP but extenuating factors may result in
 isolated exceptions e.g. agriculture volatility, steel directed to home market
+ effect of relative Rand weakness:
Trade weighted impact not sufficient to stimulate exports meaningfully
Increased unit values in Clearing & Forwarding without substantially
decreased volume (PCE buoyant into F2008 and capital equipment imports
set to rise)
+ effect of rising interest rates:
Higher interest earnings in Clearing & Forwarding and Marine but this can
Be tempered by large customers demanding extended credit terms
Alert to easing PCE but recessionary conditions unlikely
+ effect of rising fixed investment:
Infrastructure investment set to gather momentum, likely to benefit from
F2008 onwards. BUT capacity constraints should not be underestimated
OVERALL EFFECT: POSITIVE
Introduction
Appendix
2
Financials
Segmentals
Segmentals
Group Outlook
20
Bidserv – sensitivity to anticipated economic
variables
+ Tertiary and secondary GDP to grow ahead of overall GDP:
Growing base of commercial activity, retail/tourism/leisure/non-residential
buildings/travel
Stimulates recurring income, business well balanced, but heightened
competition attracted
- effect of relative Rand weakness:
No discernable net negative impacts experienced or anticipated
+ effect of mild inflation:
Mildly positive but competition will restrain pricing power
+ effect of rising fixed investment
Multiplier benefits across entire business landscape
Industry specific factors
- Legislated minimum wages are a negative due to labour intensity of Bidserv
- effect of HIV/AIDS, again due to relative labour intensity
- Competition from SMME contractors is not proving an insurmountable threat
OVERALL EFFECT: MODERATELY POSITIVE
Introduction
Appendix
2
Financials
Segmentals
Segmentals
Group Outlook
21
Bidvest Food Interests – sensitivity to anticipated
economic variables
General influencing factors:
+ food price increases
+ markets served remain strong but competition is cut-throat and pricing power constrained
+ Increased wealth and disposable income spurs out-of- home consumption
+ Upward pressure on labour & distribution costs
Benelux:
Positive outlook, helped by cyclical upswing in Germany & France, lower corporate taxes in Netherlands
UK:
Wealthy, competitive, flexible and relatively fast growing top-tier economy; predictable environment
Ever alert to expansion options; trading skills are continuously tested in a demanding & sophisticated market
Australasia:
Growth slower but resources boom underpins prospects; excellent macro economic management
Breadth, depth and business mix cushions vulnerability to external shocks
South Africa:
+ Top line prospects remain promising in a growing economy
+ Expanding discretionary income
Scope for increased sophistication of offering and business practices
OVERALL EFFECT: POSITIVE
Introduction
Appendix
2
Financials
Segmentals
Segmentals
Group Outlook
22
Bid Industrial & Commercial Products – sensitivity to
anticipated economic variables
 Fixed investment set to gain momentum, with emphasis shifting to nonresidential
Likely areas identified for capitalising on: public transportation, 2010
facilities, airports, power generation, urbanisation, water, roads, ports &
harbours, bulk infrastructure, electrical, telephonic and water reticulation,
regional mining, government facilities & socio-economic spend, plus
commercial, leisure & residential buildings
 Effect of relative Rand weakness:
 No discernible negative impacts on the whole, if anything stimulatory
 Accentuates impact of high USD copper prices
 + stocking levels and trading activities
 Relief from cheap import competition, division will still selectively import
 Interest rates
 Retail expansion off a low base
 Modest inflation is good for a trading business but sharp rises in raw
material inputs may lead to certain projects being uneconomic
OVERALL EFFECT: BROADLY POSITIVE
Introduction
Appendix
2
Financials
Segmentals
Segmentals
Group Outlook
23
Bid Auto – sensitivity to anticipated economic
variables
General economy
- effect of slower GDP growth:
Business and consumer confidence of greater relevance, consumer slowdown set to
bite H2 of F2007
Annuity financial services income will cushion volume sales slowdown
Replacement cycle pushed out, but service/after market revenues boosted
- effect of rising interest rates:
Undermines affordability, but volume/entry level exposure a quarter of sales and set to
expand – poor public transport in SA
Relative shift in favour of used cars evident
Financial services income up
- effect of slower growth in PCE:
Rate of growth in new to slow but used takes up slack; PDI buyers +/- 30% of total now
+ effect of rising fixed investment:
Commercial vehicle sales have soared and set to remain strong
+ effect of relative Rand weakness:
Stimulating automotive exports; export credits assist vehicle affordability, modest price
increases have taken affect January
Industry-specific features
Vigorous competition and choice + manufacturers terms pressuring dealer margins
SA car parq expanding appreciably plus appearance of cheap Chinese vehicles
OVERALL EFFECT: NEUTRAL
Introduction
Appendix
2
Financials
Segmentals
Group
Segmentals
Group Outlook
24
The BIDVest Business Model
Inside back cover
Market-leading service, trading & distribution businesses
Strategy
Implementation
 Own the cash flows
 Businesses actively & successfully managed
 Control distribution channels
Control distribution
channels:
 Decentralised,
focused
business units
 A balance of mature & growth businesses
 Market leaders in distribution channels:
 Critical mass for sourcing & funding
 Reaching common customers
 Tying the customer in
 Funds allocated across asset base according to
proven return criteria
 Vigorous capital management - cash used from
mature businesses to fund growth businesses
and acquisitions
 Identifying acquisitive value
Management Focus
 A team of operationally strong owner-managers:
 Financial disciplines (working capital, managing sustainable returns)
 Corporate office frees up businesses to perform
 Financial integrity
 Proven ability to correct underperformance (incl organic growth record from acquisitions)
 Proven ability to create value in businesses
Introduction
Financials
Segmentals
Group Outlook
25