Bidvest Group Limited · JSE:BVT
Bidvest — FY2006 Earnings Presentation
52 slides from Bidvest's earnings presentation, September 2006
Slide 1: Audited Results for the twelve months ended June 2006
Audited Results 18 For the twelve months ended June 30 2006
Slide 2: Agenda
Agenda Introduction Financial Results Segmental Outlook Group Outlook Appendices: Appendix 1: Divisional Results Appendix 2: Historic Performance Appendix 3: Impact of external environment on Bidvest - various outcomes Introduction Financials Segmentals Group Outlook
Slide 3: Introduction
Introduction Brian Joffe Introduction Financials Segmentals Group Outlook
Slide 4: We are not hostage to our environment; we shape our future
We are not hostage to our environment; we shape our future Consistent HEPS increase since listing 900 45 P e r c e n ta g e r e a l g r o w th 800 40 35 C e n ts p e r s h a r e 700 30 600 25 500 20 400 15 300 10 200 5 100 0 0 -5 BVT Nominal HEPS BVT Real HEPS growth (%) Bidvest CAGR over the last 1
Slide 5: We are not hostage to our environment; we shape our future
We are not hostage to our environment; we shape our future Since listing, Bidvest’s REAL HEPS has outperformed GDP by an 45 average of more than 5 times 45 40 40 P e r c e n ta g e r e a l g r o w th P e r c e n ta g e r e a l g r o w th 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 91 92 93 94 95 96
Slide 6: F2006 review
F2006 review Key messages in F2006 Corrective Action in F2006 20% growth in trading profit (17% organic) Dart Line exited beginning H2 at £59m – at significant premium to carrying value Strong revenues (volume gains); flat Volume Distribution France average exchange rate against Sterling exited begi
Slide 7: Group reorganisation
Group reorganisation Board changes: Size reduced from 32 to 24 members All major business units represented Strengthened non-executive Strengthened BEE representation Appointment of David Cleasby as FD designate Group reorganised to: Realise synergies, cross-selling opportunities and
Slide 8: Group reorganisation (contd)
Group reorganisation (contd) Bidfreight Bidserv Bidvest Europe Bidvest Bidfood (incl. Australasia (Caterplus & Renfin & Combined Konica Foods) Minolta) Bid Industrial Bidpaper Bid Auto Bid Prop Corporate & Commercial Plus Products Introduction Introduction Introduction Financials Financials Group Se
Slide 9: BEE update
BEE update Refinancing by Dinatla due by December 2006 5m share buyback to partially neutralise the effect of pending 18m options Partnership entrenched BEE codes Lock-ins to be addressed Companies to get accreditation Bidvest transformation progressing Introduction Introduction Introd
Slide 10: F2006 results summary
F2006 results summary Revenue +23% to R77,3bn Trading Profit +20% to R3,7bn Headline earnings +22% to R2,4bn HEPS +23% to 804,6cps DPS +21% to 369,0cps ROFE 53% in F2005 vs 54% in F2006 Note: IFRS compliant Introduction Introduction Financials Segmentals Group Outlook
Slide 11: Segmental performance
Segmental performance Revenue (Rm) Trading Profit (Rm) Segment F2005 % ch. F2006 F2005 % ch. F2006 Bidfreight 13 268,3 +17,6 15 601,9 455,9 +17,8 536,9 Bidserv 4 172,3 +10,0 4 587,8 466,9 +18,8 544,7 Bidvest Europe 14 836,5 +49,2 22 132,0 532,8 +22,2 651,2 Bidvest Australasia 5 691,1 +14,3 6 505,8 1
Slide 12: Financial Results
Financial Results David Cleasby Introduction Financials Segmentals Group Outlook
Slide 13: Consolidated Income Statement
Consolidated Income Statement Year ended June 30 2006 Avg Avg R/£ 11.43 R/£ 11.53 Rm’s 2006 % ch vs 2005 2005 Revenue 77 276,5 +23,0 62 811,8 Includes 1st time contribution of R5,6bn by Deli XL (9,5 months) Like-for-like revenue growth of 15% NOTE : Constant currency comparison unnecesary due to
Slide 14: Consolidated Income Statement
Consolidated Income Statement Year ended June 30 2006 Avg Avg R/£ 11.43 R/£ 11.53 Rm’s 2006 % ch vs 2005 2005 Revenue 77 276,5 +23,0 62 811,8 Trading profit 3 677,3 +20,1 3 062,6 Trading 2006 2005 margins* Local 5,8% 5,9% Increased contribution from McCarthy, lower contribution from Bidfood Offshore
Slide 15: Consolidated Income Statement
Consolidated Income Statement Year ended June 30 2006 Avg Avg R/£ 11.43 R/£ 11.53 Rm’s 2006 % ch vs 2005 2005 Revenue 77 276,5 +23,0 62 811,8 Trading profit 3 677,3 +20,1 3 062,6 Offshore interest of R76,2m vs local interest of R266,1m Net debt offshore of R0,1bn vs local net debt of R1,4bn La
Slide 16: Consolidated Income Statement
Consolidated Income Statement Year ended June 30 2006 Avg Avg R/£ 11.43 R/£ 11.53 Rm’s 2006 % ch vs 2005 2005 Revenue 77 276,5 +23,0 62 811,8 Trading profit 3 677,3 +20,1 3 062,6 Associates:Tiger Wheels, Enviroserv, Compu-clearing Increased profit largely due to Enviroserv and first full year of
Slide 17: Consolidated Income Statement
Consolidated Income Statement Year ended June 30 2006 Avg Avg R/£ 11.43 R/£ 11.53 Rm’s 2006 % ch vs 2005 2005 Revenue 77 276,5 +23,0 62 811,8 Trading profit 3 677,3 +20,1 3 062,6 Effective tax F2006 F2005 rates Local 26,3% 29,1% Lower STC and utilisation of assessed tax losses Net finance expense (3
Slide 18: Consolidated Income Statement
Consolidated Income Statement Year ended June 30 2006 Avg Avg R/£ 11.43 R/£ 11.53 Rm’s 2006 % ch vs 2005 2005 Revenue 77 276,5 +23,0 62 811,8 Trading profit 3 677,3 +20,1 3 062,6 Improved performance from Namsov Net finance expense (342,4) +20,1 (285,1) Associate Income 48,9 +25,7 38,9 Taxation NOTE
Slide 19: Consolidated Income Statement
Consolidated Income Statement Year ended June 30 2006 Avg Avg R/£ 11.43 R/£ 11.53 Rm’s 2006 % ch vs 2005 2005 Revenue 77 276,5 +23,0 62 811,8 Trading profit 3 677,3 +20,1 3 062,6 Earnings Total foreign headline earnings = 27% of Group (23% in F2005) Net finance expense (342,4) +20,1 (285,1) Associ
Slide 20: Consolidated Income Statement
Consolidated Income Statement Year ended June 30 2006 Avg Avg R/£ 11.43 R/£ 11.53 Rm’s 2006 % ch vs 2005 2005 Revenue 77 276,5 +23,0 62 811,8 Trading profit 3 677,3 +20,1 3 062,6 Net finance expense HEPS (342,4) +20,1 (285,1) Share buybacks: 5m shares at avg price of R100,50 ( ’05=7,5m shares at a
Slide 21: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement Rm’s F2006 F2005 EBITDA (clean) 4 632,2 3 895,2 Working capital: (cash applied)/retained (161,0) 344,5 Cash generated by operations 4 490,3 4 200,5 Cash effects of investment activities (2 368,4) (2 223,7) Working capital investments consistent with growth rates in
Slide 22: Segmental Outlook
Segmental Outlook: Anthony Dawe Lindsay Ralphs Fred Barnes Myron Berzack Brand Pretorius Introduction Financials Segmentals Group Outlook
Slide 23: Bidfreight - sensitivity to anticipated economic variables
Bidfreight- sensitivity to anticipated economic variables + effect of reduced, but still strong, GDP growth: Growing GDP = growing Bidfreight volumes + effect of relative Rand weakness: Increased value per unit handled in Clearing & Forwarding Mild Rand weakness assist export volumes, without
Slide 24: Bidserv - sensitivity to anticipated economic variables
Bidserv – sensitivity to anticipated economic variables + effect of GDP: Rising GDP benefits office automation spend and corporate travel Bidserv inured to slower GDP due to annuity-nature of income and built-in balance of businesses - effect of relative Rand weakness: Impact on corporate SA
Slide 25: Bidvest Food Interests - sensitivity to anticipated economic variables
Bidvest Food Interests – sensitivity to anticipated economic variables General influencing factors: + effect of mild inflation worldwide for food traders (currently occurring across the board) + effect of low interest rate environment worldwide, despite recent increases + effect of GDP growth in
Slide 26: Bid Industrial - sensitivity to anticipated economic variables
Bid Industrial – sensitivity to anticipated economic variables Fixed investment spend supports demand for electrical products and furniture Gautrain, 2010 •Electrical and furniture spend •Office developments, hotels, apartments, hospitals, retail nodes General infrastructure spend •Golf estate
Slide 27: Bid Auto - sensitivity to anticipated economic variables
Bid Auto – sensitivity to anticipated economic variables General economy - effect of slower GDP growth: Business and consumer confidence impacts purchases more than GDP Annuity financial services income cushions downturns Replacement cycle pushed out, but service income boosted - effect of r
Slide 28: Group Outlook
Group Outlook Brian Joffe Introduction Financials Group Group Outlook
Slide 29: Outlook for F2007
Outlook for F2007 Corrective action taken will have recurring benefits: Problem children now largely dealt with Bidfood action Management is happy with the way the group looks now Focus on organic and acquisitive growth Within Africa: exploit diverse opportunities Internationally: food
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Slide 31: Appendix 1: Divisional Results
Appendix 1: Divisional Results
Slide 32: Bidfreight
Bidfreight Capitalising on capex Results Rm Trading Profit Rm Revenue Pleasing momentum maintained in H2 550 16000 Upgrades reinforce competitive advantage – 15000 500 capex R227m 14000 450 13000 18% overall increase in profits combined with 400 +18% 12000 good cash generation 11000 350 Seamless exe
Slide 33: Bidfreight
Bidfreight Capitalising on capex Terminals: IVS: profits up 16%; high tank occupancy, margin maintenance, capacity expansion 14.5% RDS: profits flat on margin pressure by major customers Current contr. to Bulk Connections: profits rise 51%; Spoornet reliability a Group Trading Profit challenge
Slide 34: Bidserv
Bidserv A shiner Results Margin pressure, but increased market share Rm Trading Profit Rm Revenue 600 5000 Revenue up 10% and profits up 19% Noteworthy performances from TMS, Minolco & 550 Ocè, and Bid Travel 4500 Cleaning: Prestige profits up slightly off a high 500 base; TMS comes of age with prof
Slide 35: Bidserv
Bidserv A shiner Greens: Top Turf disappoints, but good orders going forward Office Automation (Minolta & Ocè): profits up 36% off an already high base; grasps opportunity provided by digital office demand Bidair: profits flat, but pleasing, ground handling licence still being sought Travel: profits
Slide 36: Bidvest Foodservice Europe
Bidvest Foodservice Europe Delicious Results Consolidated profits up 26% to £56m Rm Trading Profit Rm Revenue 700 23000 Deli XL 22000 650 Deli XL acquired effective 12/9/05 – combined 21000 600 20000 €8.5m (£5.9m) profit after amortisation of intangibles 550 19000 500 18000 Deli XL Netherlands:
Slide 37: Bidvest Foodservice Europe
Bidvest Foodservice Europe Delicious Capex £34m (5 depots complete, Edinburgh on schedule) Lower margin CD sales up 39% (KFC, Pizza Hut) – higher unit values; new Lichfield depot opened in January; focus on operating efficiencies Multi-temp record high margin; profits up 10% Frozen, Fresh & Chill pr
Slide 38: Bidvest Foodservice Australasia
Bidvest Foodservice Australasia Upping the run rate Results Rm Trading Profit Rm Revenue Australia (A$) 7000 Record 3% margin - profits up 28% to $33.5m off a 10% rise in sales to $1.1bn (8% organic), 230 Foodservice profits up 25% (margin 3.4%) 6000 “Street” focus at higher margin, cost control, ho
Slide 39: Bidvest Australasia
Bidvest Australasia Upping the run rate New Zealand (NZ$) Sales up 26% to $273m (organic growth 19%), profits up 13% to $11.7m; Fresh initiative - profits up 225% Coping well with adverse economic variables Strategic imperatives & prospects Australia Upgrade capex in Australia largely complete – enh
Slide 40: Bidfood
Bidfood Gruel(ing) Results Rm Trading Profit Rm Revenue Profits decline 5%, sales up 13%: margin 4000 squeeze continues, aggressive competition 500 Caterplus: increased market penetration; sales up 12%, high distribution costs; marginal profit 400 improvement 3000 300 -5% BidBake: poor; yeast import
Slide 41: Bidfood
Bidfood Gruel(ing) Strategic imperatives & prospects Catering and Frozen have been merged under a single management team Rising to the challenge of improving market share and pursuing new growth sectors Overhead cost containment Launch of BidBros cash and carry concept; national roll-out plan Purcha
Slide 42: Bid Industrial & Commercial Products
Bid Industrial & Commercial Products Copper Tone Results: Profits rise 26% off an 19% rise in revenue – Rm Trading Profit Rm Revenue electrical wholesale (EWD) profits up 67% 500 7000 EWD 450 Versalec Cables acquired 1 March ’06 – earnings enhancing 400 6000 Infrastructure market strong Smart buying
Slide 43: Bid Industrial & Commercial Products
Bid Industrial & Commercial Products Copper Tone Strategic imperatives & prospects Continuing growth off a high base Infrastructure momentum favours electrical wholesaling Refreshing of stationery store formats Waltons Transnet stationery tender – BEE credentials accepted Good management of gross ma
Slide 44: Bidpaper Plus
Bidpaper Plus Pushing the envelope Results Rm Trading Profit Rm Revenue 2000 Profits up a commendable 14%, led by 200 1900 Lithotech 1800 Silveray Statmark 180 1700 +14% 1600 Pushing up the quality curve; exciting product 160 1500 initiatives 140 1400 Lithotech 1300 120 13.3% 1200 Decline in traditi
Slide 45: Bidpaper Plus
Bidpaper Plus Pushing the envelope Strategic imperatives & prospects Lithotech capex focused on envelope, filing, label, print to post, stationery and e- billing Silveray Statmark re-establishing itself as the superior alternative in the retail stationery market Re-launch of Croxley – new and redesi
Slide 46: Bid Auto
Bid Auto Ama good good Results Rm Trading Profit Rm Revenue Profits up 31% on a 19% rise in revenue – entirely 650 18000 organic Financial services profits up 42%; 50 000 accounts 600 16000 Best new vehicle market ever – volumes 550 compensates for ongoing low dealer new car margins 14000 500 Record
Slide 47: Bid Auto
Bid Auto Ama good good Strategic imperatives & prospects Market likely to slow from 20%+ to high single digits with McCarthy aiming for 13% growth - affordable, entry level cars driving sales – total sales target 98 000 (60/40 new used) Anticipated upturn in used vehicle market 16.9% First time buye
Slide 48: Corporate Services
Corporate Services Results Rm Trading Income Rm Revenue Bidprop up 18% 120 110 10500 Namsov profit up from R12.5m to R75.9m 100 Ontime Automotive now profitable (R7.3m) 90 8500 80 Significantly lower investment income 70 6500 60 +18% 50 4500 40 30 20 2500 10 0 500 3.1% 2005 2006 Trading Profit Reven
Slide 49: Appendix 2: Historic Performance
Appendix 2: Historic Performance
Slide 50: Historic performance
Historic performance Operating profit & margins Annualised Returns 4000 60 50 53 54 3000 49 51 5.2% 40 4.9% Rm 2000 4.9% 30 % 31 32 4.8% 4.8% 20 25 27 1000 4.9% 4.7% 4.5% 10 4.4% 4.4% 0 0 2002 2003 2004 2005 2006 2003 2004 2005 2006 1H 2H ROFE ROE HEPS DPS 1000 400 800 207.0 436.0 300 172.2 600 353.
Slide 51: Appendix 3: Impact of external influences on Bidvest - various outcomes
Appendix 3: Impact of external influences on Bidvest – various outcomes
Slide 52: Economic environment influences - various outcomes
Economic environment influences – various outcomes Bid Bid Paper Bid Variables Freight Bidserv Europe Aus/NZ Food Industrial Plus Auto Rand (fiscal yr): Rel. Strength 1&5 2&5 4 4 2&5 3&5 3 2 Rel. Weakness 2&5 1&5 4 4 1&5 1&5 3 1 Interest rates: Rising 1&5 2&5 2 &5 2&5 2&5 3&5 3&5 2 Declining 2&5 1&5