Transcript Slide 1

Audited Results
For twelve months ended
June 2008
Infinite possibilities when Bidvest people
take on a challenge
1
Agenda
►
Introduction
►
Financial Results
►
Group Outlook
►
Appendices:
•
Appendix 1: Geographic and Segmental contributions to Revenue and
Trading Profit
•
Appendix 2: Detailed segmental results
•
Appendix 3: Effects of economic drivers by segment
•
Appendix 4: Historic Performance
•
Appendix 5: The Bidvest Business Model
2
Introduction and
Overview
Brian Joffe
3
F2008 results summary
Introduction
Revenue earnings
16% to R110,5bn
Gross profit
18% to R21,7bn
Trading profit
17% to R5,3bn
Headline earnings
11% to R3,2bn
HEPS
10% to 1068cps
DPS
11% to 495cps
ROFE
Note: IFRS compliant
from 50% in F2007 to 42% in F2008
4
F2008 – Bidvest people managed their environment
Introduction
Commendable performance from the Bidvest team in tough markets
►Smart trading and instances of market share gains support result
►Individuals and companies under unrelenting affordability pressure in all markets
►Increase in business bad debts in H2
Taking trading advantage of price inflation
►Inflation has been turned to profit advantage in foodservice businesses
►Cost-push inflation in food and energy did not crimp overall margin
Working capital
►Cash applied lower than in F2007 due to sharp improvement in H2
►Working capital absorption, excl. McCarthy, reduced by 60%
►Inventory up in support of trading strategy - to profit, where feasible, from escalating
prices
Strength of Australian dollar assisted translation
5
Segments at the forefront of performance
Introduction
Revenue (Rm)
Segment
Bidfreight - Strong Bulk
result (e.g. agricultural &
petro-chemical volumes);
weaker consumer
imports but evidence of
improving exports; bulkcategory capex pays off
Bidserv – Critical mass
in outsourcing,
investment in facilities
and assertiveness in
tackling competitive
markets underpins a
record result
F2007
% ch.
18 772,4
+17.2
21 992,7
5 243,2
+22.5
6 424,5
Trading Profit (Rm)
F2008 F2007
% ch.
F2008
585,6
+18.0
690,8
660,0
+27.1
838,7
6
Segments at the forefront of performance
Introduction
Revenue (Rm)
Segment
Bidvest Europe - Strong
contribution from Deli XL
(+31% in Euros); 3663 flat –
solid effort given weakening
economy; resistance to
selling price increases;
reorganisation of sales team
yielding results
Bidvest Asia Pacific R97m full year trading profit
from Angliss (well ahead of
expectations); market share
gains, Australia up 44%, New
Zealand up 33% despite
weakening economy &
drought
F2007
% ch.
29 962,5
+12.4
33 683,8
8 863,6
+63.2
14 467,4
Trading Profit (Rm)
F2008 F2007
% ch.
F2008
757,5
+16.1
879,8
346,5
+59.1
551,4
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Segments at the forefront of performance
Introduction
Revenue (Rm)
Trading Profit (Rm)
Segment
F2007
% ch.
F2008 F2007
% ch.
F2008
Bidfood – Caterplus &
Speciality trading profit up
23% despite weakness in
chain restaurant market;
Bidfood Ingredients trading
profit up 47% - management
team having an impact &
Bakery Ingredients turned
around
3 733,2
+18.4
4 418,9
+31.4
358,8
273,1
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Segments holding their own
Introduction
Revenue (Rm)
Trading Profit (Rm)
Segment
F2007
% ch.
F2008 F2007
% ch.
F2008
Bid Industrial and
Commercial – Voltex up 7% off
high F2007 base - good
volume growth and benefits
from higher copper price and
weaker Rand in H2; stronger
H2 from Kolok, good
performance from Waltons,
especially Gauteng
8 369,1
+12.4
9 403,0
728,3
+8.5
790,1
Bidpaper Plus – Lack of big
export projects; slowdown in
traditional paper-based
solutions; strong growth in
electronic billing; Stationery has
grown market share; rising cost
pressures
1 823,8
+6.2
1 937,4
226,9
-3.0
220,2
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Segments holding their own
Introduction
Revenue (Rm)
Segment
F2007
% ch.
Bid Auto - Like-for-like profit
18 656,3
declined 26%; R204m (excl.
funding costs) contribution from
Viamax in its first full year
exceeded expectations; new
vehicles volumes down, but
some margin recovery in used
vehicles in H2; 6 dealerships
and 12 Value Servs closed;
higher new “imposed” inventory,
used vehicle working capital
levels managed down in H2;
initial NCA insurance premium
impact; consumer spending
impact on Yamaha & Budget
continues
-1.0
Trading Profit (Rm)
F2008 F2007
18 467,5
724,5
% ch.
F2008
+2,6
743,0
10
Financial Results
David Cleasby
11
Consolidated Income Statement
Financials
Avg
R/£14.64
Year ended June 30 2008
Rm’s
Revenue
Avg
R/£ 13.95
2008
% ch
110 477,6
+16
2007
F2008 in constant
currency R/£13.95
2008
% ch
95 655,5 108 132,7
+13
►Organic growth of 13%
►13% growth excluding exchange rate translation
►Full year contributions from Angliss (R3bn) and Viamax (R544m)
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Consolidated Income Statement
Financials
Avg
R/£14.64
Year ended June 30 2008
Rm’s
Revenue
Trading profit
Trading
Margins
F2008
F2007
Local
6.2%
6.0%
Offshore
3.2%
3.1%
Group
4.8%
4.7%
Avg
R/£ 13.95
2008
% ch
110 477,6
+16
5 334,9
+17
2007
F2008 in constant
currency R/£13.95
2008
% ch
95 655,5 108 132,7
+13
4 546,8
5 269,4
+16
Bidserv & Bidfood compensated for Voltex & Bidpaper
Plus margins
Full year contribution from Angliss (lower inherent margins
due to trading nature of the business) vs improvement in
Deli XL & Australian margins
Note:
1. EBITDA up 20%: R6,9bn in F2008 vs R5,7bn in F2007
2. 11% organic growth in Trading Profit
3. Foreign businesses = 31% (R1,6bn) contribution to Trading Profit vs 29% (R1,3bn) in F2007
13
Consolidated Income Statement
Financials
Year ended June 30 2008
Rm’s
Avg
R/£14.64
Avg
R/£ 13.95
2008
% ch
110 477,6
+16
Trading profit
5 334,9
+17
4 546,8
5 269,4
+16
Net finance expense
(931,0)
+64
(566,2)
(924,6)
+63
Revenue
►
►
►
►
2007
F2008 in constant
currency R/£13.95
2008
% ch
95 655,5 108 132,7
+13
H1 = R445m; H2 = R486m
Increase in interest due to funding of increased capex, acquisitions and working
capital absorption
Offshore interest of R138,2m vs local interest of R792,8m
Net debt offshore of R0,7bn vs local net debt of R4,8bn
14
Consolidated Income Statement
Financials
Year ended June 30 2008
Rm’s
Avg
R/£14.64
Avg
R/£ 13.95
2008
% ch
110 477,6
+16
Trading profit
5 334,9
+17
4 546,8
5 269,4
+16
Net finance expense
(931,0)
+64
(566,2)
(924,6)
+63
122,0
+78
68,4
122,0
+78
Revenue
Associate Income
2007
F2008 in constant
currency R/£13.95
2008
% ch
95 655,5 108 132,7
+13
Associates:
Tiger Auto (Sold for R212m with effect from March 2008)
Enviroserv (To be sold for R569m with effect from Q2 F2009)
Comair
Full year contribution
Other
Note: Includes dividends received
15
Consolidated Income Statement
Financials
Avg
R/£14.64
Year ended June 30 2008
Rm’s
Avg
R/£ 13.95
2008
% ch
110 477,6
+16
Trading profit
5 334,9
+17
4 546,8
5 269,4
+16
Net finance expense
(931,0)
+64
(566,2)
(924,6)
+63
122,0
+78
68,4
122,0
+78
(1 200,0)
+16
(1 033,2)
(1 184,5)
+15
Revenue
Associate Income
Taxation
Effective tax
rates
F2008
F2007
Local
26.5%
27.4%
Offshore
26.3%
23.6%
Group
26.5%
27.1%
2007
F2008 in constant
currency R/£13.95
2008
% ch
95 655,5 108 132,7
+13
Reduction in corporate tax rate to 28%; F2007 benefitted
from utilisation of assessed tax losses
Corporate rate reductions in UK & Netherlands; Angliss
lower sovereign tax rate; no benefit on tax losses in
Belgium
Sustainable rate of +/- 27%
16
Consolidated Income Statement
Financials
Year ended June 30 2008
Rm’s
Avg
R/£14.64
Avg
R/£ 13.95
2008
% ch
110 477,6
+16
Trading profit
5 334,9
+17
4 546,8
5 269,4
+16
Net finance expense
(931,0)
+64
(566,2)
(924,6)
+63
122,0
+78
68,4
122,0
+78
(1 200,0)
+16
(1 033,2)
(1 184,5)
+15
(87,1)
(82,0)
Revenue
Associate Income
Taxation
Minority interests
Bidvest Namibia:
Versalec:
BidAuto:
(82,0)
-6
2007
F2008 in constant
currency R/£13.95
2008
% ch
95 655,5 108 132,7
+13
-6
Namsov - significantly better H2
► Forms part of Bidvest Namibia (mainly comprising Bid Industrial and Manica
businesses in Namibia)
Slightly down
Slightly up
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Consolidated Income Statement
Financials
Year ended June 30 2008
Rm’s
Avg
R/£14.64
Avg
R/£ 13.95
2008
% ch
110 477,6
+16
Trading profit
5 334,9
+17
4 546,8
5 269,4
+16
Net finance expense
(931,0)
+64
(566,2)
(924,6)
+63
122,0
+78
68,4
122,0
+78
(1 200,0)
+16
(1 033,2)
(1 184,5)
+15
Revenue
Associate Income
Taxation
2007
F2008 in constant
currency R/£13.95
2008
% ch
95 655,5 108 132,7
+13
Minority interests
(82,0)
-6
(87,1)
(82,0)
-6
Headline earnings
3 237,8
+11
2 912,0
3 195,1
+10
►8% organic growth in earnings
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Consolidated Income Statement
Financials
Year ended June 30 2008
Rm’s
Avg
R/£14.64
Avg
R/£ 13.95
2008
% ch
110 477,6
+16
Trading profit
5 334,9
+17
4 546,8
5 269,4
+16
Net finance expense
(931,0)
+64
(566,2)
(924,6)
+63
122,0
+78
68,4
122,0
+78
(1 200,0)
+16
(1 033,2)
(1 184,5)
+15
Revenue
Associate Income
Taxation
2007
F2008 in constant
currency R/£13.95
2008
% ch
95 655,5 108 132,7
+13
Minority interests
(82,0)
-6
(87,1)
(82,0)
-6
Headline earnings
3 237,8
+11
2 912,0
3 195,1
+10
HEPS (cents)
1 068,0
+10
970,0
1 053,5
+9
Diluted HEPS (cents)
1051,0
+11
947,2
1 037,1
+9
Diluted HEPS – 308,1m diluted weighted avg shares in issue - share buy-back
of 5,6m shares from shareholders in May 2008 in lieu of interim distribution
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Consolidated Income Statement
Financials
Year ended June 30 2008
Rm’s
Avg
R/£14.64
Avg
R/£ 13.95
2008
% ch
110 477,6
+16
Trading profit
5 334,9
+17
4 546,8
5 269,4
+16
Net finance expense
(931,0)
+64
(566,2)
(924,6)
+63
122,0
+78
68,4
122,0
+78
(1 200,0)
+16
(1 033,2)
(1 184,5)
+15
Revenue
Associate Income
Taxation
2007
F2008 in constant
currency R/£13.95
2008
% ch
95 655,5 108 132,7
+13
Minority interests
(82,0)
-6
(87,1)
(82,0)
-6
Headline earnings
3 237,8
+11
2 912,0
3 195,1
+10
HEPS (cents)
1 068,0
+10
970,0
1 053,5
+9
Diluted HEPS (cents)
1051,0
+11
947,2
1 037,1
+9
Distribution
495,0*
+11
446,4
495,0
+11
* Interim distribution effected by pro-rata share buy-back; distribution policy still +/- 2x covered by HEPS
20
Consolidated Cash Flow Statement – Rm’s
Financials
Year ended June 30 2007
Year ended June 30 2008
Cash generated from ops
Working capital utilised
Net Finance charges
Taxation
Distributions
Cash effects of investment act’s
Cash effects of financing act’s
►Investment activities of R4bn:
•R2,7bn
in capex vs R1,7bn in F2007, mainly Bidfreight, Bidserv, BidAuto and Bidvest Europe
•R1,3bn spent on acquisitions, mainly Viamax (R960m)
►In the 4 years to June 2008:
•R8,8bn
cash generated from operations after working capital, tax and distributions, supported the
•R11,6bn spent on acquisitions & investments of businesses for medium term growth
•Full benefits still to manifest
21
Net Working Capital Days
Financials
2
-3
9
8
14
10
Net days
Debtors days
Stock days
Creditors days
H1 2006
F2006
H1 2007
F2007
H1 2008
F2008
Some lengthening in working capital cycle, although H2 was proportionately better
►Inventory – increased strategic buying & ‘imposed’ stock
►Debtors - quality of debtors book is sound
►Creditors - impact of importing stock with shorter credit lines
►Banking assets are up R219m (increased lending achieved) vs banking liabilities up R153m
22
Working capital movements
Financials
Rm’s
Group working capital
McCarthy working capital
Group working capital movement,
excl. McCarthy
F2008
% ch
F2007
730
47%
1 367
(338)
14%
(392)
392
60%
975
60% reduction in working capital, excl. McCarthy where ‘imposed’ new vehicle
over-stocking occurred
► Additional working capital invested in Chinese vehicles (R310m)
►
23
Net working capital flows vs cash generated - Rbn
Financials
Year ended June 30 2008
H1 2006
H2 2006
H1 2007
H2 2007
H1 2008
H2 2008
Upward trend in cash generated – cash positive international businesses
► Net working capital typically better in 2nd half
►
24
Gearing
Financials
Target interest cover range
H1 2006
►
►
F2006
H1 2007
F2007
H1 2008
F2008
Interest cover of 5.7x vs target of 5-6x; EBITDA interest cover of 7.3x
R1,8bn increase in debt vs F2007:
• Acquisition R1,3bn
• Net capex of R2,8bn
• Net working capital of R0,7bn
25
Group Outlook
Brian Joffe
26
Operational Prospects – F2009
Group Outlook
Bidfreight
► Substantial prior capex will continue to pay dividends, particularly in Bulk
► Organic growth is immediate focus together with tighter debtor and cash
management
► Agricultural volume potential (maize exports vs wheat imports)
► Liquid bulk upgrades on hold until agreement can be reached with Ports
authorities
• Port services demand buoyant
• Higher pricing necessary to compensate for capacity shortage
Bidserv
► Airports Company “super license” a step-change for BidAir
► TMS
• Continued strong profit performance together with foreign expansion potential
► Bidvest Bank – new foreign exchange products
► Critical mass in soft services plus market reach will enable Bidserv to once
again grow profits – particularly in tourism, aviation and mining
27
Operational Prospects – F2009
Group Outlook
Foodservice
► Asian potential barely exploited - excellent local trading skills and
facilities positions Bidvest strongly; expansion remains on the agenda
► Cost pressures in Australia, New Zealand and SA could impinge on
margin but management actions/market strength will ensure growth
continues
► Contract wins, bolt-ons, and tighter cost control will benefit Deli
Netherlands & Belgium; focus on cost controls and improved efficiencies
► 3663 is strongly positioned to weather competitive stresses and will
benefit from industry consolidation but short term customer price
resistance should not be underestimated and profit growth will be
difficult to achieve
28
Operational Prospects – F2009
Group Outlook
Bid Industrial & Commercial Products
► Electrical Wholesaling:
• Challenge: declining residential/commercial market
• Opportunity: civil engineering investment on a broad front, energy efficiency
initiatives, accommodation investments ahead of World Cup 2010, political
imperative of low-cost housing
► Kolok: upward momentum in H2 continues into H1 F2009
► Waltons: Improving earnings to continue, led by Gauteng market and
promotional gifts
► Vulcan to capitalise on modernized facilities and new products
Bidpaper Plus
► Newer technology e-business opportunities are being vigorously
exploited, supported by cash generated from traditional ex-growth
activities
► Retail exposure to remain tough
29
Operational Prospects – F2009
Group Outlook
Bid Auto
► Management is striving to maintain profitability in what is the most
difficult vehicle market for five years
• New vehicle volumes to fall further
• Rationalisation where necessary, selective additions (e.g. Suzuki)
• Positive used market volume momentum to continue
• Parts and service revenues will grow
• Focus on Chery profitability through Value Centres and independents
• Viamax provides good profitability and return, with renewals augmenting
contract run-outs
• Addition of Viamax provides scale economies and synergy savings for
newly named McCarthy Fleet Solutions
► Yellow metal distribution orientated toward price conscious/owner
operated market
30
Group Prospects – F2009
Group Outlook
Group
► Bidvest has a diversity of drivers to profit from good times and bad
► Management and staff well incentivised to stretch the performance
envelope
► Competitor weaknesses will be exploited
► Scanning for keenly priced acquisitions: vendor aspirations are more
realistic
► Equity is now more attractive relative to the servicing cost of debt;
Bidvest will continue to re-assess the most attractive means of optimising
its WACC and funding
► Difficult times bring opportunity for a group with an opportunistic culture
► Bidvest will not disappoint in F2009
Management is therefore budgeting for earnings growth in F2009
31
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