Transcript Slide 1

The Bidvest Business Model
An operationally active investment holding company whose core competence is the
management of a balance of cash generative and growth businesses
Market-leading service, trading & distribution businesses
Strategy
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Implementation
Own the cash flows
Control distribution channels
A balance of mature & growth businesses
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
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Businesses actively & successfully managed
Decentralised, focused business units
Market leaders in distribution channels:
• Critical mass for sourcing & funding
• Reaching common customers
• Tying the customer in
Management Focus
► A team of operationally strong, entrepreneurial 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
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1
Unaudited Results
For six months ended December 31 2008
2
Agenda
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Introduction
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Financial Results
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Group Outlook
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Appendices:
• Appendix 1: Geographic and Segmental Revenue and Trading Profit
• Appendix 2: Divisional Results
• Appendix 3: Historic Performance
3
Introduction
Brian Joffe
4
H1 F2009 results summary
Introduction
Revenue
Trading profit
Headline earnings
11% to R60,0bn
6% to R2,6bn
10% to R1,4bn
EPS
9% to 530,4cps
HEPS
9% to 454,0cps
Normalised HEPS*
1% to 494,0cps
DPS
14% to 190cps
Cash generated from operations
41% to R0,9bn
ROFE
from 37.6% in H1 F2008 to 32.4% in H1 F2009
* HEPS, excluding non trading costs of R165m (40cps after tax) related to closure and re-organisation of
operations
Note: IFRS compliant
5
CEO’s opening conclusion
Introduction
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The world has changed, and changed forever; we are living in the new normal
Good people matter more than ever - Bidvest has them
Are we fearful of the economic upheaval? Not a bit
Do we see opportunity? You bet – the Group will continue to adapt
What are our people inspired to do?
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Use their gumption
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Be resourceful
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Strengthen partnerships
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Get back to brass tacks
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Be good housekeepers - we haven’t got limitless cash
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Be alert to the potential a world of uncertainty and difficulty offers
Bidvest gains strength from its diversity and shall succeed – wherever in the world the
Group trades
Financial Results
David Cleasby
7
H1 F2009 – FD’s perspectives
Financials
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Risk aversion prevalent
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Creditworthiness under scrutiny by lenders
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Favourable funding terms less easy to come by
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Overall costs not declining; increased credit spreads with decreasing
base rates
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Bidvest has a fiduciary responsibility to stakeholders to husband its resources
appropriately for the times
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Optimal funding structures will continue to be investigated
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Cash will be conserved
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Working capital will be managed as effectively as we are able
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Internal controls stepped up as increased fraud & criminal activity prevalent
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Consolidated Income Statement
Financials
Avg
R/£ 14.14
H1 2009 in constant
currency
R/£ 14.14
Half-year ended Dec 31 2008
Avg
R/£15.20
Rm’s
H1 2009
% ch
H1 2008
H1 2009
% ch
Revenue
59 990,9
+11.3
53 884,5
57 974,0
+7.6
11% organic growth
► 8% growth excluding exchange rate translation
► 17% growth excl. McCarthy in both periods
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9
Consolidated Income Statement
Financials
Avg
R/£15.20
Rm’s
H1 2009
% ch
H1 2008
H1 2009
% ch
Revenue
59 990,9
+11.3
53 884,5
57 974,0
+7.6
2 614,7
+6.4
2 458,1
2 572,4
+4.7
Trading profit
Trading
Margins
H1 2009 H1 2008
Avg
R/£ 14.14
H1 2009 in constant
currency
R/£ 14.14
Half-year ended Dec 31 2008
Comment
Local
5.7%
6.0%
Materially impacted by Bid Auto
Foreign
3.1%
2.8%
Decline in 3663 offset by improvement in Bidvest Namibia
Group
4.4%
4.6%
Note:
1. All growth in Trading Profit is organic
2. Foreign businesses = 30% contribution to Trading Profit vs 27% in H1 2008
10
Consolidated Income Statement
Financials
Avg
R/£15.20
Rm’s
H1 2009
% ch
H1 2008
H1 2009
% ch
Revenue
59 990,9
+11.3
53 884,5
57 974,0
+7.6
Trading profit
2 614,7
+6.4
2 458,1
2 572,4
+4.7
Net finance expense
(562,9)
+26.4
(445,5)
(557,4)
+25.1
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Avg
R/£ 14.14
H1 2009 in constant
currency
R/£ 14.14
Half-year ended Dec 31 2008
Increase in finance expense due to increased funding rates,
increased utilisation
Foreign interest of R76,5m vs local interest of R486,4m
Net debt offshore of R1,4bn vs local net debt of R6,5bn
Finance cost has peaked
• 2nd half:
─ More internal working capital management & capex scaleback
─ H2 much better from a working capital perspective
─ Falling interest rate environment
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Consolidated Income Statement
Financials
Avg
R/£15.20
Rm’s
H1 2009
% ch
H1 2008
H1 2009
% ch
Revenue
59 990,9
+11.3
53 884,5
57 974,0
+7.6
Trading profit
2 614,7
+6.4
2 458,1
2 572,4
+4.7
Net finance expense
(562,9)
+26.4
(445,5)
(557,4)
+25.1
29,3
-50.4
59,1
29,3
-50.4
Associate Income
Avg
R/£ 14.14
H1 2009 in constant
currency
R/£ 14.14
Half-year ended Dec 31 2008
Associates:
Tiger Auto
(Sold for R212m with effect from Feb 2008)
Enviroserv
(Sold for R569m with effect from Nov 2008)
Comair
Other
Note: Includes dividends received
12
Consolidated Income Statement
Financials
Avg
R/£15.20
Rm’s
H1 2009
% ch
H1 2008
H1 2009
% ch
Revenue
59 990,9
+11.3
53 884,5
57 974,0
+7.6
Trading profit
2 614,7
+6.4
2 458,1
2 572,4
+4.7
Net finance expense
(562,9)
+26.4
(445,5)
(557,4)
+25.1
29,3
-50.4
59,1
29,3
-50.4
(477,5)
-9.2
(525,6)
(469,4)
-10.7
Associate Income
Taxation
Avg
R/£ 14.14
H1 2009 in constant
currency
R/£ 14.14
Half-year ended Dec 31 2008
Effective tax
H1 2009 H1 2008
Comment
rates
Local
25.9%
25.8% No material change
Offshore
27.2%
29.5% Reduction in UK rate by 2%
Group
26.5%
27.0% Sustainable rate of +/- 27%
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Consolidated Income Statement
Financials
Avg
R/£15.20
Rm’s
H1 2009
% ch
H1 2008
H1 2009
% ch
Revenue
59 990,9
+11.3
53 884,5
57 974,0
+7.6
Trading profit
2 614,7
+6.4
2 458,1
2 572,4
+4.7
Net finance expense
(562,9)
+26.4
(445,5)
(557,4)
+25.1
29,3
-50.4
59,1
29,3
-50.4
(477,5)
-9.2
(525,6)
(469,4)
-10.7
(53,6)
n/a
(19,6)
(53,7)
n/a
Associate Income
Taxation
Minority interests
Avg
R/£ 14.14
H1 2009 in constant
currency
R/£ 14.14
Half-year ended Dec 31 2008
H1 2009
H1 2008
Bidvest Namibia
29,7
-2,2
Other
23,9
21,8
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Consolidated Income Statement
Financials
Avg
R/£15.20
Rm’s
H1 2009
% ch
H1 2008
H1 2009
% ch
Revenue
59 990,9
+11.3
53 884,5
57 974,0
+7.6
Trading profit
2 614,7
+6.4
2 458,1
2 572,4
+4.7
Net finance expense
(562,9)
+26.4
(445,5)
(557,4)
+25.1
29,3
-50.4
59,1
29,3
-50.4
(477,5)
-9.2
(525,6)
(469,4)
-10.7
Minority interests
(53,6)
n/a
(19,6)
(53,7)
n/a
Headline earnings
1 364,3
-9.7
1 510,6
1 565,2
+5.8
Associate Income
Taxation
Avg
R/£ 14.14
H1 2009 in constant
currency
R/£ 14.14
Half-year ended Dec 31 2008
Decisive remedial actions deliberately taken to put the Group in a stronger position at a time
of uncertainty and worldwide economic recession:
► 3663 Barton Meat: perennial loss maker closed + other closures - £10,1m charge
► Bid Auto: rationalisation of dealerships – R27m charge
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Consolidated Income Statement
Financials
Avg
R/£15.20
Rm’s
H1 2009
% ch
H1 2008
H1 2009
% ch
Revenue
59 990,9
+11.3
53 884,5
57 974,0
+7.6
Trading profit
2 614,7
+6.4
2 458,1
2 572,4
+4.7
Net finance expense
(562,9)
+26.4
(445,5)
(557,4)
+25.1
29,3
-50.4
59,1
29,3
-50.4
(477,5)
-9.2
(525,6)
(469,4)
-10.7
Minority interests
(53,6)
n/a
(19,6)
(53,7)
n/a
Headline earnings
1 364,3
-9.7
1 510,6
1 565,2
+5.8
454,0
-8.9
498,1
454,1
-9.8
Associate Income
Taxation
HEPS (cps)
Avg
R/£ 14.14
H1 2009 in constant
currency
R/£ 14.14
Half-year ended Dec 31 2008
HEPS, excluding non trading costs of R165m (40cps after tax) related to closure and re-organisation
of operations, would have been 1% down
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Consolidated Income Statement
Financials
Avg
R/£15.20
Rm’s
H1 2009
% ch
H1 2008
H1 2009
% ch
Revenue
59 990,9
+11.3
53 884,5
57 974,0
+7.6
Trading profit
2 614,7
+6.4
2 458,1
2 572,4
+4.7
Net finance expense
(562,9)
+26.4
(445,5)
(557,4)
+25.1
29,3
-50.4
59,1
29,3
-50.4
(477,5)
-9.2
(525,6)
(469,4)
-10.7
Minority interests
(53,6)
n/a
(19,6)
(53,7)
n/a
Headline earnings
1 594,1
+7.7
1 480,0
1 565,2
+5.8
HEPS (cps)
454,0
-8.9
498,1
454,1
-9.8
Diluted HEPS (cps)
450,3
-7.5
487,0
450,5
-8,5
Associate Income
Taxation
Avg
R/£ 14.14
H1 2009 in constant
currency
R/£ 14.14
Half-year ended Dec 31 2008
302,9m vs 310,2m diluted weighted avg shares in issue
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Consolidated Income Statement
Financials
Avg
R/£15.20
Rm’s
H1 2009
% ch
H1 2008
H1 2009
% ch
Revenue
59 990,9
+11.3
53 884,5
57 974,0
+7.6
Trading profit
2 614,7
+6.4
2 458,1
2 572,4
+4.7
Net finance expense
(562,9)
+26.4
(445,5)
(557,4)
+25.1
29,3
-50.4
59,1
29,3
-50.4
(477,5)
-9.2
(525,6)
(469,4)
-10.7
Minority interests
(53,6)
n/a
(19,6)
(53,7)
n/a
Headline earnings
1 594,1
+7.7
1 480,0
1 565,2
+5.8
HEPS (cps)
454,0
-8.9
498,1
454,1
-9.8
Diluted HEPS (cps)
450,3
-7.5
487,0
450,5
-8,5
Distribution (cps)
190,0
-13,6
220,0
190,0
-13.6
Associate Income
Taxation
Avg
R/£ 14.14
H1 2009 in constant
currency
R/£ 14.14
Half-year ended Dec 31 2008
Dividend cover of 2,4x
18
Consolidated Cash Flow Statement – Rm’s
Financials
Half-year ended Dec 31 2007
Half-year ended Dec 31 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:
• No material acquisitions
• Capex of R1,2bn is similar to H1 2008
►In the 4½ years to Dec 2008:
• R9,8bn cash generated from operations
after working capital, tax and distributions, supported
the R12,5bn spent on acquisitions & investments of businesses for medium term growth
• Full benefits still to manifest
19
Net Working Capital Days
Financials
Half-year ended Dec 31 2008
9
5
17
9
16
Net days
Debtors days
Stock days
Creditors days
H1 2007
F2007
H1 2008
F2008
H1 2009
Some improvement in working capital management:
►Inventory
- increased strategic buying & longer supply chain
► Debtors - quality of debtors book is sound, but increasing debtor delinquencies
► Creditors - impact of importing stock with shorter credit lines
20
Net working capital flows vs cash generated
Financials
Half-year ended Dec 31 2008
H1 2006
H2 2006
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H1 2007
H2 2007
H1 2008
H2 2008
H1 2009
Upward trend in half on half cash generated
Working capital utilisation typically better in 2nd half
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Gearing
Financials
Half-year ended Dec 31 2008
Target interest cover range
H1 2007
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F2007
H1 2008
F2008
H1 2009
Clean EBITDA interest cover of 6.1x; Interest cover of 4.7x vs target of 5-6x
Full year interest cover should be back within target range
22
Group Outlook
Brian Joffe
23
CEO’s closing conclusion
Group Outlook
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Business cycles are an age-old hardy perennial – this is a necessary corrective phase
Bidvest remains entrepreneurial
Management are really energised
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We know our businesses but we don’t pretend to know the future
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We manage for all eventualities, although the following unknowns could have a big effect:
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Interest rates
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Exchange rates
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Deflation will become an issue
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Operating conditions are still challenging
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Difficult times provide opportunity and Bidvest is alert to the potential this offers
Bidvest will, at best, maintain HEPS in F2009
Joffe’s take on the businesses
Group Outlook
Revenue (Rm)
Bidfreight
H1 2008
Deterioration in trade
volumes as half
proceeded, Liquids and
Bulk maintained
10 580,9
% ch. H1 F2009
+1.4
10 729,3
Trading Profit (Rm)
H1 2008
% ch.
H1 2009
330,9
+10.5
365,5
25
Joffe’s take on the businesses
Group Outlook
Bidfreight
26
Joffe’s take on the businesses
Group Outlook
Revenue (Rm)
Bidserv
Competitive advantages
and scale assist as
market turns down, Bank
and Industrial
exceptional
H1 2008
2 955,0
% ch. H1 F2009
+23.3
3 644,7
Trading Profit (Rm)
H1 2008
% ch.
H1 2009
384,8
+27.2
489,4
27
Joffe’s take on the businesses
Group Outlook
Bidfreight
Bidserv
28
Joffe’s take on the businesses
Group Outlook
Revenue (Rm)
Trading Profit (Rm)
Bidvest Europe
H1 2008
% ch.
H1 2009 H1 2008 % ch.
H 12009
3663 profits - 25% in £,
cost control strong, major
focus on margins; Deli XL
Netherlands profits up 16%
in € and Belgium up 79% in
€; Horeca margin 3.2%
16 007,1
+20.8
19 329,9
-3.4
396,3
410,4
29
Joffe’s take on the businesses
Group Outlook
Bidfreight
Bidserv
Bidvest Europe
30
Joffe’s take on the businesses
Group Outlook
Revenue (Rm)
Bidvest Asia Pacific
Stress in all markets but
staff highly motivated to
achieve, Australia up 15%,
New Zealand up 12% in
spite of four consecutive
quarters of GDP decline,
Singapore down on
overstocked market
H1 2008
% ch.
6 575,2
+33.7
Trading Profit (Rm)
H1 2009 H1 2008 % ch.
H 12009
+13.7
285,7
8 790,2
251,3
31
Joffe’s take on the businesses
Group Outlook
Bidfreight
Bidserv
Bidvest Europe
Bidvest Asia Pacific
32
Joffe’s take on the businesses
Group Outlook
Revenue (Rm)
Bidfood
Caterplus tackles a weak
market aggressively, highly
disciplined working capital
management, profits up
16%; Speciality profit up
10%, higher income
consumers cutting back
sharply; Bidfood
Ingredients traded well
with profit up 18%,
deflationary tendencies
evident
H1 2008
% ch.
2 195,3
+20.7
Trading Profit (Rm)
H1 2009 H1 2008 % ch.
H1 2009
+16.9
217,6
2 650,8
186,1
33
Joffe’s take on the businesses
Group Outlook
Bidfreight
Bidserv
Bidvest Europe
Bidvest Asia Pacific
Bidfood
34
Joffe’s take on the businesses
Group Outlook
Revenue (Rm)
Bid Industrial and
Commercial
Voltex down 5%, sharply
weaker copper price;
Waltons, Kolok, Afcom,
Buffalo, and Vulcan showed
good growth; Furniture
notably weak
H1 2008
% ch.
4 594,1
+8.2
Trading Profit (Rm)
H1 2009 H1 2008 % ch.
H 12009
-1.4
324,9
4 969,1
329,5
35
Joffe’s take on the businesses
Group Outlook
Bidfreight
Bidserv
Bidvest Europe
Bidvest Asia Pacific
Bidfood
Bid Industrial and Commercial
36
Joffe’s take on the businesses
Group Outlook
Revenue (Rm)
Bidpaper Plus
Strong results from Silveray
and Labels, selected gains
in market share, cost
pressure, pricing sensitivity
as markets weaken,
vigorous asset
management
H1 2008
% ch.
1 020,4
+14.4
Trading Profit (Rm)
H1 2009 H1 2008 % ch.
H 12009
+2.9
130,3
1 167,6
126,6
37
Joffe’s take on the businesses
Group Outlook
Bidfreight
Bidserv
Bidvest Europe
Bidvest Asia Pacific
Bidfood
Bid Industrial and Commercial
Bidpaper Plus
38
Joffe’s take on the businesses
Group Outlook
Revenue (Rm)
Bid Auto
Motor retail profits down
92%; import & distribution
declined sharply but limited
by previous diversification;
new car sales down 24%,
used up 12%; 7 Value
Centres and 16 Value Serve
outlets rationalised; working
capital prioritised, cash
retained
H1 2008 % ch. H1 2009
9 989,5
-11.7
8 822,5
Trading Profit (Rm)
H1 2008
% ch.
H1 2009
353,6
-39.4
214,4
39
Joffe’s take on the businesses
Group Outlook
Bidfreight
Bidserv
Bidvest Europe
Bidvest Asia Pacific
Bidfood
Bid Industrial and Commercial
Bidpaper Plus
Bid Auto
40
41