Transcript Slide 1

Unaudited Results
For the six months ended December 31 2007
1
Agenda
► Introduction and
Overview
► Financial Results
► Outlook
► Appendices:
Appendix 1: Divisional Review
• Appendix 2: Historic performance
•
2
Introduction and Overview
Brian Joffe
3
H1 2008 Results Summary
Revenue
13% to R53,9bn
Operating Profit
18% to R2,5bn
Headline earnings
11% to R1,5bn
HEPS
10% to 498c
Distribution*
11% to 220c
ROFE
to 37.6% from 44.6%
Despite challenging conditions in certain sectors, most businesses were well
managed and produced positive results
► Excl. Bid Auto, local and offshore operations grew operating profit by 21%
* Effected by
pro-rata share buy-back
Introduction
4
Segments at the forefront of performance
Revenue (Rm)
Operating Profit (Rm)
Segment
H1 2008 % ch H1 2007 H1 2008 % ch H1 2007
Bidfreight – Improved
10 580,9 +11 9 561,5
330,9 +19
279,0
volumes, particularly
agricultural; benefits of recent
capex starting to kick in
Bidserv – Trend to outsourcing 3 060,0 +19 2 580,4
390,5 +28
305,6
continues; strong performance
across the board, driven
organically - particularly at
TMS; recovery in Security
Introduction
5
Segments at the forefront of performance (contd)
Revenue (Rm)
Segment
H1 2008 % ch
Bidvest Europe – Strong
16 007,1
+7
contribution from Deli XL (+35%
in Euros); improved performance
at 3663 (+8% in Sterling) –
excellent effort given that H1
2007 still included profit from the
MOD contract
Bidvest Asia Pacific – Growth
6 575,1
+59
of 31% from Australia & New
Zealand excl. R46m first time
contribution from Angliss (well
ahead of expectations)
Bidfood – Strong operating profit 2 249,8
+15
growth of 28% from Caterplus &
Speciality; Bidfood Ingredients
up 19%
Operating Profit (Rm)
H1 2007 H1 2008 % ch
15 016,6
410,4
+20
H1 2007
341,1
4 131,0
251,3
+61
156,5
1 956,4
191,4
+24
153,8
Introduction
6
Segments performing below expectations
Revenue (Rm)
H1
2008
Bid Industrial and Commercial
Products – H1 2007 established a high
base, negative impact of weak copper
price and firm Rand on margins despite
good volume growth in 1st half; good
performance from Waltons, especially
Gauteng
Bid Auto – Like-for-like profit, excl.
Viamax, declined 27%; negative impact of
higher interest rates & NCA (Dec = lowest
vehicle sales in 5 years), write-downs of
2nd hand stock taken, losses from small
dealerships, new project investment &
higher “imposed” inventory, initial NCA
insurance premium impact; consumer
spending impact on Yamaha & Budget;
start-up loss from Value Centres
% ch
Operating Profit (Rm)
H1
2007
H1
% ch
2008
H1
2007
4 689,6
+9 4 286,3
336,8
-
335,9
10 004,5
+4 9 640,2
357,8
+1
355,0
Introduction
7
Segments holding their own
Revenue (Rm)
Segment
Bidpaper Plus – Ongoing
consolidation of traditional
offering successfully
complimented by broader
electronic focus; no special
projects such as ballot papers,
etc. in the period
H1 2008
%
ch
1 020,4 +5
Operating Profit (Rm)
H1 2007 H1 2008 % ch
975,8
126,6
+10
H1 2007
114,8
Introduction
8
Financial Results
David Cleasby
9
Consolidated Income Statement
Half-year ended Dec 31 2007
Avg
R/£14.14
Avg
R/£ 13.74
H1 F2008 in constant
currency
R/£ 13.74
Rm’s
H1 2008
% ch
H1 2007
H1 2008
% ch
Revenue
53 884,5
+12.6
47 871,9
53 240,6
+11.2
► Organic growth of 9.3%
► 11.2% growth excluding exchange rate translation
► First time contributions from Angliss (R1.3bn) & Viamax (R300m)
Results
10
Consolidated Income Statement
Avg
R/£14.14
Half-year ended Dec 31 2007
Avg
R/£ 13.74
H1 F2008 in constant
currency
R/£ 13.74
Rm’s
H1 2008
% ch
H1 2007
H1 2008
% ch
Revenue
53 884,5
+12.6
47 871,9
53 240,6
+11.2
2 458,1
+17.9
2 085,7
2 440,2
+17.0
Operating profit
Operating
Margins
H1 2008 H1 2007
Local
5.7%
5.6%
Offshore
3.1%
2.7%
Group
4.6%
4.4%
Bidfreight and Bidserv compensated for Voltex and McCarthy
margins
Angliss contributed for the first time at (higher average
margins); improvement in Deli XL margins
Note:
1. 9% organic growth in Operating Profit
2. Foreign businesses = 30% (R744m) contribution to Operating Profit vs 27% (R599m) in
H1 2007
Results
11
Consolidated Income Statement
Half-year ended Dec 31 2007
Avg
R/£14.14
Avg
R/£ 13.74
H1 F2008 in constant
currency
R/£ 13.74
Rm’s
H1 2008
% ch
H1 2007
H1 2008
% ch
Revenue
53 884,5
+12.6
47 871,9
53 240,6
+11.2
Operating profit
2 458,1
+17.9
2 085,7
2 440,2
+17.0
Net finance expense
(445,5)
-98.0
(225,0)
(443,9)
-97.3
►
►
►
Offshore interest of R55,5m vs local interest of R390,0m
Net debt offshore of R647,4m vs local net debt of R6,7bn
R104m interest increase over H2 2007 – rate increases, increased capex,
acquisitions and working capital absorption
Results
12
Consolidated Income Statement
Half-year ended Dec 31 2007
Avg
R/£14.14
Avg
R/£ 13.74
H1 F2008 in constant
currency
R/£ 13.74
Rm’s
H1 2008
% ch
H1 2007
H1 2008
% ch
Revenue
53 884,5
+12.6
47 871,9
53 240,6
+11.2
Operating profit
2 458,1
+17.9
2 085,7
2 440,2
+17.0
Net finance expense
(445,5)
-98.0
(225,0)
(443,9)
-97.3
59,1
+56.8
37,7
59,1
+56,8
Associate income
Associates:
Tiger Auto
Enviroserv
Comair
Other
First time contribution
Note: Includes dividends received
Results
13
Consolidated Income Statement
Half-year ended Dec 31 2007
Avg
R/£14.14
Avg
R/£ 13.74
H1 F2008 in constant
currency
R/£ 13.74
Rm’s
H1 2008
% ch
H1 2007
H1 2008
% ch
Revenue
53 884,5
+12.6
47 871,9
53 240,6
+11.2
Operating profit
2 458,1
+17.9
2 085,7
2 440,2
+17.0
Net finance expense
(445,5)
-98.0
(225,0)
(443,9)
-97.3
59,1
+56.8
37,7
59,1
+56,8
(525,6)
-1.3
(519,1)
(521,3)
-0.4
Associate income
Taxation
Effective tax
rates
Local
H1 2008
H1 2007
26.0%
27.3%
Offshore
25.8%
26.6%
Group
26.0%
27.1%
Reduction in corporate tax rate to 28% = R10.5m benefit
Corporate rate reductions in UK & Netherlands, offset to some
extent by reduction in some allowances and adjustment in net
deferred tax asset; Angliss has lower sovereign tax rate; no
benefit on tax losses in Belgium
Sustainable rate of +/- 27%
Results
14
Consolidated Income Statement
Half-year ended Dec 31 2007
Avg
R/£14.14
Avg
R/£ 13.74
H1 F2008 in constant
currency
R/£ 13.74
Rm’s
H1 2008
% ch
H1 2007
H1 2008
% ch
Revenue
53 884,5
+12.6
47 871,9
53 240,6
+11.2
Operating profit
2 458,1
+17.9
2 085,7
2 440,2
+17.0
Net finance expense
(445,5)
-98.0
(225,0)
(443,9)
-97.3
59,1
+56.8
37,7
59,1
+56,8
(525,6)
-1.3
(519,1)
(521,3)
-0.4
(19,6)
+30.7
(28,3)
(19,6)
+30.7
Associate income
Taxation
Minority interests
Namsov:
Versalec:
Bid Auto:
Materially down
Slightly down
Slightly down
Results
15
Consolidated Income Statement
Half-year ended Dec 31 2007
Avg
R/£14.14
Avg
R/£ 13.74
H1 F2008 in constant
currency
R/£ 13.74
Rm’s
H1 2008
% ch
H1 2007
H1 2008
% ch
Revenue
53 884,5
+12.6
47 871,9
53 240,6
+11.2
Operating profit
2 458,1
+17.9
2 085,7
2 440,2
+17.0
Net finance expense
(445,5)
-98.0
(225,0)
(443,9)
-97.3
59,1
+56.8
37,7
59,1
+56,8
(525,6)
-1.3
(519,1)
(521,3)
-0.4
Minority interests
(19,6)
+30.7
(28,3)
(19,6)
+30.7
Headline earnings
1 510,6
+11.5
1 355,2
1 502,7
+10.9
Associate income
Taxation
►8.3% organic growth in headline earnings
►20.0% growth excl. McCarthy (bought 4 years ago for R0,7bn net and
earned R2bn operating profit to date)
Results
16
Consolidated Income Statement
Half-year ended Dec 31 2007
Avg
R/£14.14
Avg
R/£ 13.74
H1 F2008 in constant
currency
R/£ 13.74
Rm’s
H1 2008
% ch
H1 2007
H1 2008
% ch
Revenue
53 884,5
+12.6
47 871,9
53 240,6
+11.2
Operating profit
2 458,1
+17.9
2 085,7
2 440,2
+17.0
Net finance expense
(445,5)
-98.0
(225,0)
(443,9)
-97.3
59,1
+56.8
37,7
59,1
+56,8
(525,6)
-1.3
(519,1)
(521,3)
-0.4
Minority interests
(19,6)
+30.7
(28,3)
(19,6)
+30.7
Headline earnings
1 510,6
+11.5
1 355,2
1 502,7
+10.9
HEPS (cents)
498,1
+10.1
452,4
495,5
+9.5
Diluted HEPS (cents)
487,0
+10.6
440,3
484,4
+10.0
Associate income
Taxation
Diluted weighted avg. shares in issue of 310,195m (+ 0.8%); issue of shares for
outstanding options in Dec ‘06 as part of Dinatla transaction + buy back from Dinatla
Results
17
Consolidated Income Statement
Half-year ended Dec 31 2007
Avg
R/£14.14
Avg
R/£ 13.74
H1 F2008 in constant
currency
R/£ 13.74
Rm’s
H1 2008
% ch
H1 2007
H1 2008
% ch
Revenue
53 884,5
+12.6
47 871,9
53 240,6
+11.2
Operating profit
2 458,1
+17.9
2 085,7
2 440,2
+17.0
Net finance expense
(445,5)
-98.0
(225,0)
(443,9)
-97.3
59,1
+56.8
37,7
59,1
+56,8
(525,6)
-1.3
(519,1)
(521,3)
-0.4
Minority interests
(19,6)
+30.7
(28,3)
(19,6)
+30.7
Headline earnings
1 510,6
+11.5
1 355,2
1 502,7
+10.9
HEPS (cents)
498,1
+10.1
452,4
495,5
+9.5
Diluted HEPS (cents)
487,0
+10.6
440,3
484,4
+10.0
*220,0
+11.1
198,0
220,0
+11.1
Associate income
Taxation
Distribution
* Effected by pro-rata share buy-back; +/- same cost as dividend, but earnings accretive and of
benefit to all shareholders; still the equivalent of +/-2x covered dividend
Results
18
Consolidated Cash Flow Statement – Rm’s
Half-year ended December 31 2006
Half-year ended December 31 2007
3179
Cash generated from ops
2630
Working capital utilised
-2527
-2306
Net Finance charges
-367
-178
-691
Taxation
-703
-772
Distributions
-630
Cash effects of investment act’s
-2322
1777
-3500 -2500 -1500 -500
500
Cash effects of financing act’s
1500 2500
-1303
-746
-3500 -2500 -1500 -500
500
1500 2500
►Investment activities of R2,322bn:
•
•
R1,280bn in capex; mainly Bidfreight, Bidserv, Bid Auto and Bidvest Europe
R1,042bn spent on acquisitions, mainly Viamax (R960m)
►In the 3,5 years to December 2007:
•
•
•
R6,8bn cash generated from operations after working capital, tax & distributions supported
R9,8bn spent on acquisitions & investments to position businesses for medium term growth
Full benefits still to manifest
Results
19
Net working capital flows vs cash generated - Rbn
Half-year ended December 31 2007
Net working capital
Cash generated by operations
4
3.2
3.0
3
2
2.6
2.2
2.2
2.0
1.8
1.4
1.0
0.9
1
0
-1
-2
-3
-1.1
-1.2
-2.3
H1 2005
H2 2005
H1 2006
H2 2006
H1 2007
-2.5
H2 2007
H1 2008
►Upward trend in cash generated
►Net working capital typically better in 2nd half
Results
20
Working capital analysis
Group working capital
McCarthy working capital
Group working capital excl. McCarthy
H1 2008
(Rm)
% ch
H1 2007
(Rm)
2 527
+10
2 306
931
+87
498
1 596
-13%
1 828
►13% reduction in working capital, excl. McCarthy where “imposed”
over-stocking occurred
►Additional new project working capital invested in Chinese vehicles
and Value Centres will only start generating returns from H2 2008
Results
21
Net Working Capital Days
60%
40%
1
2
-3
9
5
14
Net days
39
37
41
37
39
40
Debtors days
31
27
30
30
32
33
Stock days
-66
-59
20%
0%
-20%
-69
-62
-74
-58
F2005
H1 2006
F2006
H1 2007
Creditors days
-40%
-60%
F2007
H1 2008
Some changes in working capital cycle, evidenced through increased imports in a number of
businesses, are reflected in stock days; very little creditor funding
► However, elements of the group are still strategically over-stocked and paying close
attention to trading out of this position whilst protecting margin
► The quality of the debtors book is satisfactory; provisioning has increased
► Banking assets are up R200m (increased lending achieved) vs banking liabilities up R80m
►
Results
22
Gearing
Net interest-bearing debt (Rbn)
Interest cover (x)
8
14
7
6
7.3
11.6
11.4
10.3
5
4
8
8.0
6
3.8
3.0
5.5
2.4
4
2
1
0
9.3
4.2
3
2
10
10.7
Target interest cover range
12
1.5
1.0
H1 2005
F2005
H1 2006
F2006
H1 2007
F2007
H1 2008
0
► Interest cover of 5.5x; target of 5-6x
► R3.6bn increase in debt from H2 2007:
•
•
•
Acquisition R1bn
Net capex of R1,3bn
Net working capital of R2,5bn
Results
23
Outlook
Brian Joffe
24
Operational Prospects – 2nd half F2008
Bidfreight
► Further benefits from recent capex on higher volume utilisation
► Demand for port-based services to continue
► Increased capacity to yield further returns
Bidserv
► Benefits from contracts won in F2007
► Security recovery to continue
► Super licence to scale up BidAir
► TMS
• Strong performance to continue
• International expansion potential (petro-chemical industry expertise)
► Positive momentum expected to continue as outsourcing continues to
grow
Outlook
25
Operational Prospects – 2nd half F2008
Bidvest foodservice
► First full year contribution from Angliss
► Continued strong performance from Australasia
► Contract wins and geographic expansion will benefit Deli XL
► Further benefits from UK wholesale restructure
► Food inflation offers opportunity to make trading gains and improve
market position
► Bidvest foodservice is a strong strategic investment:
• 3rd largest foodservice business in the world
• The trend towards eating outside of the home continues
• The ability to grow our international footprint to extend reach
• Big opportunity for improved returns in the recently acquired businesses as
they begin to conform to Bidvest performance standards
Outlook
26
Operational Prospects – 2nd half F2008
Bid Industrial & Commercial Products
► Benefit from copper price increases and weaker Rand
► Positive & negative effects of the electricity crisis:
Voltex geared to distribute large-scale alternate power sources and power
saving as well as participate in accelerating infrastructure spend, but
• Commercial & Industrial building activity, as well as mining activity,
may be further dampened
► Weaker currency will assist Kolok
► Improved earnings trend at Waltons set to continue, especially Gauteng
•
Bidpaper Plus
► Laser and Mail, Electronic Products, and Labels and Packaging are
growing as traditional print products continue to contract
► Positioned to regain previously lost market share in stationery
production and distribution, but at lower margins
Outlook
27
Operational Prospects – 2nd half F2008
Bid Auto
► Positioned for somewhat improved performance in H2 2008:
No further deterioration in new and used car volumes expected, but
margins still being eroded
• Trading out of over-stocked position whilst protecting margin
• Positive contribution from Viamax for the full year
Extract synergies with McCarthy Fleet Services, achieve scale
► A fundamentally good business, selling strong brands – has paid for
itself almost 3x over since acquisition
•
Outlook
28
Group Prospects - H2 2008
Management initiatives
► R10bn invested over last 3,5 years is bolstering competitive advantage
at an important time
► Absolute profit growth targets have been stretched
► 2nd half earnings are usually stronger
•
Historically contribute +/-55%
► Focus on working capital:
• Usually better in 2nd half; aggressive targets set
► Credit squeeze
has opened up a window of opportunity for corporates
with strong balance sheets seeking keenly priced deals
Management is therefore budgeting for a higher rate of earnings
growth in H2 F2008 than H1 F2008
Outlook
29
30