Unaudited Results - bidcorp-reports.comGroupwide procurement through BPC and intercompany sourcing...

Unaudited Resultsfor the half-year ended December 31 2018

Unaudited results for the half-year ended December 31 2018

Bidcorp is a complete Foodservice offering

Bidcorp serves multiple customer segments

Bidcorp is internationally diversified across developed and emerging markets

Bidcorp people are entrepreneurial and incentivised to be so

Bidcorp has a proven decentralised business model and best practice learnings are widely shared

Bidcorp growth is organic, acquisitive-organic through bolt-ons, and acquisitive

Bidcorp believes that balance sheet strength with low debt is a strong competitive advantage

Bidcorp proprietary technology enhances customer relationships and efficiencies

Bidcorp strategyA proven and focused business model, which delivers quality earnings, is alert to opportunity, and has international application

2

Interim results in perspectiveBernard Berson

half-year ended December 31 2018


Bidcorp is at the forefront in applying technological solutions in the Foodservice industry Harnessing technology to process customer orders and reinforce customer relationships

Digitisation has accelerated across Bidcorp Group companies

Ecommerce enhances the service we provide and improves productivity

Online customer access to a broad range of products for real-time stocking and transparent pricing

In-house developed ecommerce a portal for customer communication, transacting, and information gathering

Data analytics adding value

Infrastructure set up to deliver products across different temperatures within a very short window

Foodservice complemented by high-quality own-label + processing + manufacturing at purpose built facilities

Groupwide procurement through BPC and intercompany sourcing of products from various geographies

Shared learning and unashamed “stealing” of good ideas leads to in-house best practice across multiple geographies

4


A satisfactory six months within developed markets but emerging markets were challenging Continued positive momentum in Europe, UK and Australasia, worst is behind us in China

Financial highlights of the six months FX provided an EPS tailwind of 2,1% in ZAR reporting Profit decline in Greater China a 3% Group negative impact Listeriosis outbreak in SA a 1% Group negative impact Diversity of interests results in a good overall outcome Other than Spain & Germany, each of the different businesses

contributed positively to the Europe result UK Foodservice team defied negative Brexit sentiment,

increasing profits by 15% in GBP Australia and New Zealand grew in real terms again A commendable effort by the South Africa team in a tough

environment with Foodservice profit up 10% Four small acquisitions plus 30% remaining share of D&D in

Italy Balance sheet retains ample capacity to gear provided the right

opportunities at the right price present themselves ROE meets target at 16%

Growth in current and constant FX Current FX Constant FX

Revenue 9,1% 6,8%

Trading profit 8,3% 6,5%

Headline earnings 9,4% 7,3%

HEPS cents 9,2% 7,1%

Key financial metrics H1F2019 H1F2018

Revenue (R'bn) 66,4 60,9

EBITDA (R'bn) 3,9 3,6

Trading profit (R'bn) 3,3 3,0

Trading margin 4,9% 5,0%

Headline earnings (cents) 700 641

NAV per share (cents) 8341 7293

Cash generated before w/c (cents) 1173 1024

Debt to Equity 18% 13%

EBITDA interest cover 27x 27x

Return on Equity 16% 17%

5


Notable operational features Limited food inflation but upward wage pressure in most businesses due to a tight labour market Real topline growth and customer rebalancing has assisted gross profit margin (23,4% vs 22,9%) China a perfect storm caused by dairy agency loss and disruption – comparative an historic high level of profitability UK CD business is discontinued but valuable lessons learned have made the business much more attractive for sale Intangible write-off on PCL in UK and the business will be exited – further costs likely Australia new generation metro strategy paying off, achieving profitable growth New Zealand continues to benefit from infrastructure upgrades and organic growth focus Brazil has traded well despite a tough market with good real growth and ongoing operational progress Chile has been boosted by 40% due to the acquisition of Foodchoice in October 2018 plus new branches & customer base Overall South Africa performance was pleasing with real growth in Foodservice, driven by independent trade A strong freetrade performance in Netherlands and Belgium drove growth and reflects strategic focus Freetrade and national performed well in the UK at higher margin After a prior period characterised by challenging macros, the Middle East returned a much healthier performance Singapore now includes the new greenfields JV in Vietnam together with the enlarged Malaysia operation Czech and Poland are performing at record levels and investing for future growth

Predominantly organic growth, continuous improvement is an enduring theme Group trading margin at 4,9% for the half with most businesses at record levels

6


0

0.5

1

1.5

2

2.5

3

3.5

4

H1F2018 H2F2018 F2018 H1F2019

Stay-in-business capex Acquisition & expansion Total capex

Continuing investment in growth and modernisation R5,1bn in stay-in-business and acquisition & expansion capex over 18 months

Rand

bill

ion

4,0

3,5

3,0

2,5

2,0

1,5

1,0

0,5

0,0

7

Trading analysisBernard Berson


Segment Overview Group contribution 29,9%, slightly down from 31,0% Record interim margin with both territories at similar levels An organic result with focus on quality of topline Wage pressures is being addressed through mix and productivity Processing a growth segment Investments in infrastructure ongoing Economic and demographic backdrop is supportive

Australia Net sales slightly up in AUD with profit up by 5,2% Exit of sub-optimal contract business largely complete New generation foodservice branches in Sydney, Melbourne

and Brisbane Splitting the branches is yielding good initial returns with

Sydney growing profits by 36%, Melbourne by 28%, and Brisbane by 9%

Foodservice footprint is now 40 branches, all profitable

New Zealand Sales growth of 6,2% with profit up 6,5% on higher GP Foodservice traded strongly with a focus on freetrade,

improved sourcing, and brand development 5 new DCs operational and delivering anticipated return Construction at 3 new sites with 2 further projects in

the pipeline Investment in Processing realising excellent results Market is competitive but our strategy continues to pay off

Australasia(incorporating Australia and New Zealand)

Trading performance – Australasia (Australia and New Zealand)Constant currency - revenue up 2,6%, trading profit up 6,1%, trading margin 6,1% vs 5,9%

937,0 980,9

5,9% 6,1%

0.0%

2.0%

4.0%

6.0%

8.0%

0

500

1000

1500

H1F2018 H1F2019

Trading profit R million (left axis) Trading margin % (right axis)

8,0%

6,0%

4,0%

2,0%

0,0%

9


Segment Overview Group contribution increased to 26,1% from 24,0% A strong start to the year with momentum continuing in to H2 Encouraging performance from manufacturing Vigorous IT, ecommerce and strategic partnership initiatives Labour shortages remain a challenge along with pressure on wages Proactive contingency measures in place for Brexit – stock-up plans

on ex-EU products, engaging with suppliers & customers, sourcing alternative supply routes

Bidfood UK Sales up 7,3% in GBP and trading profit up 14,8% Focus on controlling costs, price reviews, and customer margin

through exiting sub-optimal national accounts Like-for-like freetrade volume up 4,7%, now 37% of mix House brands up 13,7% and now 24% of wholesale turnover Tender conversion rate in national accounts at 44% for H2 Infrastructure upgrades, a new Liverpool depot to open in May Import programme for exclusive brands Acquisition of a specialist ready meal producer for H2 Cautious about H2 but underlying trend is encouraging

Bidfresh Seafood and Produce achieved improved margin Meat has promising potential but will take some time Pricing variability is a feature of these trading businesses

United Kingdom(incorporating Bidfood UK and Bidfresh)

Trading performance – United KingdomConstant currency - revenue up 5,9%, trading profit up 13,5%, trading margin 5,0% vs 4,6%

726,5 856,7

4,6% 5,0%

0.0%

2.0%

4.0%

6.0%

0

200

400

600

800

1000

H1F2018 H1F2019


6,0%

4,0%

2,0%

0,0%

10


Segment Overview Trading margin has improved from 3,6% to 4,4% in two years Group contribution 29,9% vs 27,0% Delivering ahead of earlier expectation with excellent results from

Netherlands, Belgium, Czech and Slovakia, Italy and Poland Iberia a €150m annual revenue business with good potential Germany a medium term strategy to be driven by bolt-on

acquisitions

Netherlands A significant improvement in trading profit as the simplification

strategy and freetrade focus yields higher margin Proximity to customer base and product range optimisation Targeting a strong H2 and a record annual result

Belgium 13% profit increase at higher margin on maintained momentum Horeca business now 31% of total sales Business is on a stable trajectory

Czech and Slovakia A 19,3% growth in profit off a 10,5% rise in revenue Ongoing investment in infrastructure, new factory in Opava Managing the challenge of worker shortages and significant

wage pressures

Europe(Netherlands, Belgium, Czech & Slovakia, Poland, Italy, Baltics, Iberia, Germany)

Trading performance – Europe Constant currency - revenue up 10,8%, trading profit up 15,6%, trading margin 4,4% vs 4,2%

817,0 979,9

4,2% 4,4%

0.0%

2.0%

4.0%

6.0%

0

500

1000

1500

H1F2018 H1F2019


6,0%

4,0%

2,0%

0,0%

11


Trading performance – Europe Constant currency - revenue up 10,8%, trading profit up 15,6%, trading margin 4,4% vs 4,2%

Poland Infrastructure modernisation and expansion yielding good

returns Customer mix now 74% freetrade and 26% national accounts Sales up 13,3%, profit up 25,5%, sales growth in freetrade

15,7%, number of customers up 14,3%, internet sales now 28% of total

Success in achieving customer growth, infrastructure and sales mix are offsetting significant labour cost pressures

Italy Revenue up 29,3%, assisted by D&D acquisition wef

January 2018 Sales to other Bidcorp companies continues to grow Italy is a €500 million annual revenue business,

77% independent trade Anticipate freeing up capacity for higher margin growth

in future

Iberia Acquisition of broadline market leader, Igartza, in the

north of Spain Business now consists of 4 divisions, Guzmán Gastronomía,

Sáenz Horeca, Frustock (Portugal) and Igartza Total sales grew 15,9%, active focus on improving profitability Progress is frustratingly slow but the market potential remains

Germany and Austria An 8,7% increase in sales with good GP but expenses remain

too high and resources have been added to tackle profitability Focus on structuring the base and then expanding

Baltics A 10% rise in total sales at a substantially improved but still

suboptimal margin The new warehouse in Kaunus opening in March 2019 Business now on a sustainable and profitable footing

12


Segment Overview Group contribution 15,3% vs 19,2% largely due to dairy market

disruption in China and listeriosis outbreak in SA affecting Crown China business rebalancing with worst behind it South Africa Foodservice and Chipkins Puratos traded very well Chile grew strongly at better margin as it scales up Brazil continued to outperform in a difficult economy Singapore now a focused foodservice business Malaysia and Vietnam are promising territories

Hong Kong and Macau Sales increased 9,4% with the trading result as expected H2 result will benefit from the exit of a legacy lease in April Product innovation continues Mainland China A substantial reduction in profit as the business transitions from

an agency relationship on dairy to a more broadline distributor with new products and diversified categories

Short term pain but the turning point is already evident A more robust and sustainable business to take on the potential

of the Chinese market Continue to develop the premium product offering and

expansion into second tier cities Singapore An 3,8% rise in sales driven by a 9,7% rise in foodservice Malaysia showing good real growth Start-up costs in 54% Vietnam JV expensed, a promising start Malaysia and Vietnam already contribute 12% of total sales

Emerging Markets(Greater China, Singapore, South Africa, Brazil, Chile, Middle East, Turkey)

Trading performance – Emerging Markets Constant currency - revenue up 7,1%, trading profit down 14,3%, trading margin 4,7% vs 5,9%

581,2 502,0

5,9%4,7%

0.0%

2.0%

4.0%

6.0%

8.0%

0

500

1000

H1F2018 H1F2019

Trading profit R million (left axis) Trading margin % (right axis)8,0%

6,0%

4,0%

2,0%

0,0%

13


Trading performance – Emerging Markets Constant currency - revenue up 7,1%, trading profit down 14,3%, trading margin 4,7% vs 5,9%

South Africa On the basis of Chipkins Puratos being fully consolidated

sales grew 5,4% and trading profit fell 3,3% Foodservice sales increased by 6,0% and profit by 10,3% Crown revenue increased by 3,3% but profit fell by 27,7%,

largely due to the impact on meat processing from the listeriosis outbreak and the effects of FX volatility

Chipkins Puratos grew sales by 5,8% and profit by 15,9% Chile Total sales grew 39% and profit by 68%, boosted by the Viña del

Mar branch, plus Temuco and Antofagasta acquired as part of the Foodchoice acquisition

Santiago, Puerto Montt, and Concepción all grew strongly Trading margin increased from 3,0% to 3,6% with further

potential Having built a solid base the outlook is very promising

Brazil Sales growth 10,4%, profit growth of 20,4%, 4,8% margin Enhanced sales and procurement initiatives yield benefits The new political climate bodes well for H2

Middle East Total sales up 14,4% and profit by 56,8%, margin 5,9% UAE, Saudi Arabia, and Bahrain all improved profitability

substantially whilst Oman had a strong topline result Regional political and economic backdrop has been beneficial

together with brand and sales initiatives

Turkey Strategy evolving to domestic foodservice focused on local

brands and produce with sales up 78% The business is now profitable before interest

14


OutlookWe anticipate continued delivery of good quality earnings and reliable cash flows in our 30th year

Australasia

Bidcorp

• Australia – strategy to self-disrupt by splitting up larger metro branches is paying off and we see plenty of runway to further improve our business

• New Zealand – doubling of capacity in Auckland, the largest market

• We are resolute in retaining a strong balance sheet with low gearing • Bidcorp is a growth business with defensive attributes achieving a good ROE • Our growth is organic, acquisitive-organic through bolt-ons, and acquisitive

United Kingdom• Cautious ahead of the Brexit deadline in March but contingencies in place• Tracking well and, uncertainties aside, budgeting for a record result • Orderly exit from CD and PCL, no distraction

Emerging Markets• Successful transition to a more diverse supplier base in China • Despite an encouraging H1 in most businesses the environment is difficult • Crown in South Africa to recover from the listeriosis episode

Europe• Western Europe anticipating a reasonable finish to the year • Eastern Europe continues to progress and invest in its growth • Alert to further acquisitive opportunities but at the right price

We are a truly international Foodservice Group of entrepreneurial and

decentralised businesses with each team incentivised to do what is right for them in their respective markets

but within a common framework and strategic

direction

After a pleasing first half, that came with its fair share

of hurdles, we believe we can replicate that performance in

the final six months of the 2019 financial year

15

FinancialDavid Cleasby


Underlying financial performance good Translation impacts positive for the period

Continuing operationsHighlights Underlying trading trajectory in home FX in H2F2018 continued

through H1F2019 Revenue R66,4bn (↑9,1%) with constant FX revenue

R65,0bn (↑6,8%) Gross margin rands up 11,3%; GP% at 23,4% (H1F2018: 22,9%) EBITDA (trading) margin of 5,9% maintained Trading margin of 4,9% in line with H1F2018 Translational FX impacts positive through H1 – 2,1% positive effect

on H1 HEPS Headline Earnings R2,3bn (↑9,4%) with constant FX earnings

R2,3bn (↑7,3%) HEPS of 700,2 cps (↑9,2%), constant FX HEPS 686,3 cps (↑7,1%) Interim dividend of 310,0 cps; 2,26x covered by continuing HEPS Excellent free cash flows despite working capital absorption

(normal for H1) and meaningful reinvestment capex Return on funds employed 34%; return on average equity 16%

3,9 3,6

7,1

H1F2019 H1F2018 F2018

EBITDA (R billions)

28,024,5

26,5

H1F2019 H1F2018 F2018

Shareholder equity (R billions)

3,3 3,0

6,0

H1F2019 H1F2018 F2018

Trading profit (R billions)

5,13,2 3,6

H1F2019 H1F2018 F2018

Net debt (R billions)

17


Statement of profit Quality of earnings remains sound, underpinned by solid organic growth

Real constant FX net revenue growth of 6,8%, food inflation immaterial

Gross profit percentage up to 23,4% from 22,9% – trading through the higher cost base

Operating expenses up but well controlled – 12,1% (cost of doing business increases to 18,4% from 17,9%), driven by:• Higher cost to serve independent business mix• Wage pressures for staff , fuel and energy increases in a number of

geographies and by a higher investment base

Trading margin improved in all segments except Emerging Markets:• Australasia has the highest segment margin at 6,1%• Europe showed improvement to 4,4% despite Iberia & Germany

underperforming• UK margin is now 5,0% (4,6%), improvements in Foodservice offset by small

decline in Fresh• Emerging markets at 4,7% significantly impacted by Greater China

New acquisitions (from Q3 F2018) had 0,6% effect on Headline Earnings – H1F2019 results assisted by Q1 & Q2 acquisitions of R195m of revenue and R11m of trading profit

23,4%

18,4%

22,9%

17,9%

23,2%

18,2%

0%

5%

10%

15%

20%

25%

Gross profit % Total expenses %

H1F2019 H1F2018 F2018

5,9%

4,9%

5,9%5,0%

6,0%

5,0%

0%

1%

2%

3%

4%

5%

6%

7%

EBITDA margin % Trading profit margin %

H1F2019 H1F2018 F2018

18


Net interest paid increased by 5,8% to R143,2 million

• Asset management is generally good with a few exceptions

• Higher base rates in Greater China; some areas of overstocking; higher activity levels (Gross profit up by 11,3%)

• Additional 1 day of average working capital (equates to R570 million)

Effective tax rate (excluding associate income and capital items) is 24,5% (H1F2018: 25,1%), guiding to approximately 25% on average for the year (mix dependent)

Associates and Jointly Controlled entities share of profit is R32,9 million (Netherlands specialist businesses and 50% of Chipkins Puratos) and will remain immaterial

Minority interests of R15,5 million are small and will remain a feature due to owner-managers often retaining a stake on acquisition

Capital items – Impairment of assets of R5 million

Discontinued operations – comprise the UK Logistics businesses (CD and PCL)

• CD sale process underway; much improved operational performance and customer base at sustainable revenue levels

• PCL – Customer relationship broken, significant losses in H1F2019 (intangible asset impairment £25,3 million), Bidcorp exiting this activity

Statement of profit cont’d Finance charges, taxation, associates, minority interests and capital items

19


Cash generated from operations before working capital – R3,9 billion (H1F2018: R3,4 billion)• 100% of EBITDA and 119% of trading profit (H1F2018: 95% of EBITDA and 113% of trading profit)• Non cash items mainly comprise share based payments and provision movements

Working capital• Typical working capital cycle is for absorption in H1 and generation in H2• R1,5 billion absorbed in H1F2019 vs R1,8 billion absorbed in H1F2018• Generally well managed and focus has had some benefits but also some impacts in H1F2019:

• Structural – value add procurement activities create longer supply chains on imported products• Activity levels – 9,1% revenue growth across Group and some overstocking (in small pockets)• Acquisitions – D&D in Italy (not in H1F2018 base) and others (Iberia and other bolt-ons)

• Net average working capital cycle 11 days (H1F2018: 10 days)

Cash effects of investing activities of R1,6 billion• Maintenance and expansion capital expenditure of R1,3bn compares with depreciation & amortisation of R0,6bn• Acquisitions consumed R0,3 billion, none of which are a singularly material

Cash and cash equivalents of continuing operations R5,3bn Net debt up at R5,1 billion equivalent to 0,65x net debt / EBITDA (H1F2018: R3,2 billion = 0,45x net debt / EBITDA)

Cash flows Solid cash flow in the period while investment in asset base continues to create capacity for growth

20


Financial position Financial position remains strong

Strong balance sheet underpinned by reliable cash flows allows flexibility to achieve strategic growth objectives, organic and acquisitive

Shareholders equity impacted by retained profit, dividends paid, and FCTR movements

Liquidity management• No material changes from June 2018 position• 36% of gross borrowings termed to beyond December 2019, significant term funding

under renegotiation

• Weighted average interest rate on foreign borrowings 2,4%, same as F2018

Risk management• Debt is matched to the underlying assets for a natural hedge; mixture of fixed and

floating interest rates

Solvency• Debt to equity ratio 18% (H1F2018: 13%)• Net debt to annualised EBITDA 0,65x (H1F2018: 0,45x)• Trading profit interest cover 22,9x (H1F2018: 22,3x)

Returns• Return on average shareholder equity 16,2% vs 17,0% (H1F2018) • Return on average ROFE of 33,7% vs 37,1% (H1F2018)• FX period end rates 10% higher at Dec 2018 vs Dec 2017 which has diluted returns

24,6 26,8 28,3

3,23,6

5,1

1.0

2.0

3.0

4.0

5.0

6.0

20.0

22.0

24.0

26.0

28.0

30.0

H1F2018 F2018 H1F2019

Equity R billion Net debt R billion

22,3 26,2 22,9

13,0% 13,4%

17,9%

0%

5%

10%

15%

20%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

H1F2018 F2018 H1F2019

EBITDA interest cover x Net debt to equity %

21


Financial base supportive of business to deliver continued real growth in home currencies:

• Bidcorp remains cash generative (managed well)

• Debt to equity ratio low at 18% with ample headroom to fund our organic and acquisitive growth

• Absorption of working capital in H1 expected to reverse to some extent in H2, but continued growth requires absolute investment into working capital

• Rolling over some of term debt early at favourable rates

• Looking to create funding ’war chest’ ahead of anticipated opportunities as global conditions tighten(impact of rising US and European interest rates on our markets)

• Strength of financial position provides a cushion for the vagaries of markets and unanticipated events (Bidcorp operates across more than 35 different countries and 20 different currencies)

• Core philosophy of naturally hedging assets and liabilities remains

Businesses are managed and measured in their local currencies, above average returns remain the core driver ofperformance measurement

Currency volatility to remain a feature into H2F2019; ZAR is the reporting currency however non-ZAR profits 91% of Group

International shareholder base remains stable (52%), focus on long-term shareholder following

Bidcorp anticipating to continue delivering real growth in earnings for H2F2019

Financial guidance Sound financial position supportive of continued growth into H2 F2019

22

Supplementary informationOperations


Australasia31%

United Kingdom

25%

Europe29%

Emerging Markets

15%

Australasia United Kingdom Europe Emerging Markets

Australasia25%

United Kingdom

26%

Europe33%

Emerging Markets

16%

Australasia United Kingdom Europe Emerging Markets

Trading profit by constant currency Revenue by constant currency

International Operations Geographically diversified

24


Group overview Despite some notable hurdles the Group has again achieved pleasing real growth in revenue and profit

A record result in Australasia, UK and Europe Constant currency revenue and trading profit growth from continuing operations of 6,8% and 6,5% respectively was organic Low inflation in our territories means real revenue growth of 5% was achieved Trading margin would have been 5,1% without the twin once-off effects of the China dairy agency dislocation and listeriosis

in South Africa The ZAR/EUR was 3,7% weaker, the ZAR/AUD was 1,7% stronger, and the ZAR/GBP was 3,9% weaker Whilst we report in South African rand as a Johannesburg Stock Exchange listed group, all businesses are managed and measured in their

home currencies; South Africa constitutes approximately 6% of revenue and 9% of profit Acquisitions contributed R195 million to Group revenue (0,3%) and R11,0 million (0,4%) to trading profit The investment in acquisitions was R337,5 million Outlook for the remainder of F2019 Trading remains satisfactory in all territories and we see China has having reached an inflection point on the way to recovery There are some unknowns in a few territories, notably the Brexit issue in the UK, but we anticipate real growth for the full year

R’m(Continuing operations - excluding UK CD and PCL)

Half-year endedDecember 31 2018

Half-year endedDecember 31 2017 Change

Revenue (as reported in actual FX) 66 413,6 60 873,5 9,1%Trading profit (as reported in actual FX) 3 277,4 3 025,2 8,3%Trading margin 4,9% 5,0% (0,8)%

25


Operational features for Australia

Foodservice 90% of sales, Meat 3%, Fresh produce 3%, Liquor at 3% and Logistics 1%

Foodservice has 40 profitable branches; revenue grew 3% and profit by 7% despite exiting a large (A$70 million pa) low-margin contract, low inflation, housing market contraction and a drought together with the bedding in of the new multi-sites in Sydney, Melbourneand Brisbane

Melbourne and Brisbane are now split in to three smaller branches whilst Sydney is split in to two; the new more flexible branches are performing very well in a short time and we are growing the market; customers respond well to the improved service intensity

Geographical expansion opportunities identified in Western Australia and Victoria

Outlook for the remainder of F2019

Liquor is being rolled out to the branches Richlands (Brisbane) to open in February and Dandenong (Melbourne) in July, warehouse expansion in Launceston completed in

April 2019, construction on the new Cairns and Bendigo (greenfields) sites starts in March The business anticipates a positive second half

Australasia New metro multi-sites in Sydney, Melbourne and Brisbane are performing very well

26


Operational features for New Zealand

Sales up 6,2% and profits up 6,5% despite expenses of new DCs opened in Hamilton, Nelson, Greymouth, Timaru and Invercargill

All of the five new sites are trading satisfactorily; Plymouth, Christchurch and North Auckland DCs are due to open by mid-year with further new sites in Wellington (foodservice) and Christchurch (processing) identified for development

Fresh site at Christchurch was upgraded with new butchery equipment

Opmetrix sales force automation software rolled out plus other administrative system upgrades and AI to enhance productivity

Outlook for the remainder of F2019

Annualised sales are now close to NZ$1,2 billion with core foodservice complemented by fresh vegetables, meat and processed foods

North Auckland (Hobsonville) property doubles capacity in this important market

Labour supply and wages remains a challenge but productivity improvement initiatives ameliorate some of the pressure

Q2 ended on a good note so the business is well set to end F2019 with a higher profit

Australasia Doubling capacity in Auckland as part of the strategy to invest in maintaining a competitive advantage

27


Operational features for United Kingdom Bidfood UK Returns once again exceeded an ambitious budget, with sales up 7%, profit up 15% A function of clear focus on managing margin per unit and per customer and controlling costs Independent and freetrade multiple had strong volume growth Liquor is a growing and popular offering that is being well executed Own brand sales up 13,7% with margin per unit higher than the branded and tertiary ranges, own brand 23,7% (22,4%) of Wholesale revenue

and delivering over 30% of total customer margin Removing slow moving bespoke lines and delisting SKU’s to bring stock value down and rationalise IT modernisation investment ongoing whilst ecommerce sales continue to rise in freetrade and national accounts Supplier responses to Brexit issues have been analysed at product level for core range of products; a proactive communication package has

been produced; stock-up plans are complete for top 80% of lead products ex EU where considered high risk based on supplier responses; additional stock holding of 7500 pallets at a cost of £550,000; additional stock holding of £7,5 million gives up to 8 weeks additional stocks

Bidfresh Seafood and Produce achieved improved margin, Meat has promising potential Outlook for the remainder of F2019 Five years of determined focus and success means the UK will be our largest single market by revenue and profits in F2019 We can only manage that which is within our capacity to do but wherever external challenges are presented by Brexit we are as well prepared

as we can be and we are not complacent Acquisition of a manufacturer of texture modified and other ready meal products in H2

United Kingdom Proactively preparing for Brexit

28


Operational features for Europe A strong result across all major businesses as the strategy increasingly yields accelerating return on sales and return on funds employed Netherlands reaping the benefits of the repositioning of the sales mix with double-digit growth in freetrade and 62% growth in profit Belgium benefitting from concentration on street and institutional trade with profits on track to exceed F2018 this year Remaining 30% of the D&D business in Italy bought out; market is difficult but business focused on multi-site strategy The Guzmán business in Spain remains a work in progress and the Group now has a strong presence in Iberia In Czech and Slovakia HORECA and retail demand is strong, assisted by a buoyant economic backdrop and a focused management effort In Poland, freetrade is now 74% of total sales, boosting margin to 3,4%; the vigorous expansion programme is complete for now The Baltics business is now well placed to be a modern and successful foodservice operator In Germany, the goal is to become a €500 million revenue business within five years through organic and acquisitive growth Outlook for the remainder of F2019 Eastern Europe will continue to do well, benefiting from years of investment, economic growth and excellent management Netherlands, Belgium and Italy are all growing well ahead of their markets due to clear focus on freetrade Spain has substantial scope to improve returns and to grow organically and through acquisitions Germany is in settling down mode for now as we learn and then we’ll see where we go in the largest market in Europe It will be a challenge to see the same percentage growth in profits in the second half but the team are ambitious for the year

Europe Executing well on a long term strategy and reaping the returns

29


Operational features for Emerging Markets Absent two notably disruptive events in China and South Africa, the underlying performance was pleasing in trying conditions Despite the temporary dip in profits for the half this remains a very profitable R1,0 billion annualised profit business Foodservice and Chipkins Puratos delivered excellent results in South Africa and operate at world-class levels; Foodservice own brand

(33% of net revenue) and online (64% of net revenue) both important drivers; Crown managed revenue growth of 3% despite impact of listeria

FX volatility remained a challenge in China; evolution of the product mix means post the exit of a large dairy co-op customer in China, the product mix has better balance and more value add; over ten years, China has been built from nothing to a more than HK$2 billionannualised revenue business

Hong Kong is a HK$2,6 billion annualised revenue business and a key Asian market for Bidcorp, the backbone of its China strategyand BPC

Malaysia is performing to expectation Vietnam (through a 54% JV) is operational with a Ho Chi Minh office and Danang branch Whilst small, Latin America is proving satisfactory thanks to excellent management who are quick to embrace Group-wide learningsOutlook for the remainder of F2019 It will be a challenge for the Foodservice team in South Africa to deliver the same exceptional result but Crown is recovering China will show increasing improvements month to month from the low base in H1 The Middle East is set to enjoy a better year all round and whilst small, Turkey is encouraging and providing learnings Bidcorp is diversified and regions are not always synchronised so at some point the Emerging Markets segment will have its day in the sun

Emerging Markets Holding the line when times get tough

30


BidOne ecommerce and CRM development Continues to evolve and embrace the best of worldwide IP, leveraged for the greater benefit of the Group

Bidfood Procurement Community (BPC) Sales increased by 32% as Group companies buy in to the procurement advantages this provides; new opportunities are being executed

and there is strong momentum BPC is working on all product categories but Seafood has seen sales increase significantly as they have established expertise in this field With almost $10 billion in sales, Bidcorp has major Group-wide purchasing power

Ecommerce and Procurement Group-wide benefits

31

Supplementary informationBidcorp segment profits detail


ZAR’ millionRevenueH1F2019

Share of Group %

Change%

RevenueConstant currency

H1F2019Change

%

Australasia 16 047,8 24,2 1,2 16 268,9 2,6

United Kingdom 17 208,8 25,9 10,0 16 559,8 5,9

Europe 22 451,6 33,8 14,8 21 665,9 10,8

Emerging Markets 10 705,4 16,1 9,1 10 512,8 7,1

Total 66 413,6 9,1 65 007,4 6,8

Segment revenue detailContinuing operations

33


ZAR’ millionTrading profit

H1F2019Margin

%Share of Group

%Change

%Trading profit

H1F2018Margin

%Share of Group

%

Bidfood 3 319,5 5,0 8,4 3 061,7 5,0

Australasia 980,9 6,1 29,9 4,7 937,0 5,9 31,0

United Kingdom 856,7 5,0 26,1 17,9 726,5 4,6 24,0

Europe 979,9 4,4 29,9 19,9 817,0 4,2 27,0

Emerging Markets 502,0 4,7 15,3 (13,6) 581,2 5,9 19,2

Corporate (42,1) (36,5)

Total 3 277,4 4,9 8,3 3 025,2 5,0

Segment trading profits detail Continuing operations

34


ZAR’ millionTrading profit

H1F2019Margin

%Share of Group

%Change

%Trading profit

H1F2018Margin

%Share of Group

%

Bidfood 3 261,9 5,0 6,5 3 061,7 5,0

Australasia 994,5 6,1 30,9 6,1 937,0 5,9 31,0

United Kingdom 824,4 5,0 25,6 13,5 726,5 4,6 24,0

Europe 944,7 4,4 29,3 15,6 817,0 4,2 27,0

Emerging Markets 498,3 4,7 15,5 (14,3) 581,2 5,9 19,2

Corporate (41,0) (36,5)

Total 3 220,9 4,9 6,5 3 025,2 5,0

Segment trading profits detail (Constant currency)Continuing operations

35

Supplementary informationFinancial analysis


Continuing operations ZAR’ million

Half-year ended Dec 31 2018

Avg R/£ 18,34

Half-year endedDec 31 2017Avg R/£ 17,65

H12019 Currency effectsR/£ 17,65

Revenue 66 413,6 9,1% 60 873,5 65 007,4 6,8%

Condensed interim statement of profit or loss

Continuing revenue grew 9,1% to R66,4 billion (F2018: R60,9 billion), in constant currency growth was 6,8%

On an organic constant currency basis revenue growth was 4,7% (i.e. excluding acquisitions from Q3 F2018 to date which contributed R1.3 billionin the period)

Segment revenue performance

• Australasia: R16,0 billion – 1,2% growth (Local FX: 2,6% growth)Sales slightly up on last year, a great result considering the exit of further contract business in Australia. Free trade now represents 76,9%(H1F2018 – 73%) of sales

• United Kingdom: R17,2 billion – 10,0% increase (Local FX: 5,9% growth) Foodservice UK’s independent and multiple free trade categories showed continued growth, both in margins and volumes.Bidfresh sales were in line with H1F2018

• Europe: R22,5 billion – 14,8% growth (Local FX: 10,8% growth)Eastern European jurisdictions continue to show record revenue growth. DAC Italy sales to Bidcorp sister companies growing

• Emerging Markets: R10,7 billion – 9,1% growth (Local FX: 7,1% growth)Chile – pleasing organic growth supported by contributions from 2 new branches in Temuco and Antofagata. Brazil showed strong sales growth through the launch of own branded products. Greater China revenue growth of 4,8% and Africa grew revenue by 5,3%

37




Avg R/£ 18,34


H1F2019 Currency effectsR/£ 17,65

Revenue 66 413,6 9,1% 60 873,5 65 007,4 6,8%

Trading profit 3 277,4 8,3% 3 025,2 3 220,9 6,5%


Gross profit percentage increased to 23,4% (H1F2018: 22,9%). Gross margins have benefitted from the better mix of business (Australia), as well as better pricing margins achieved to cover off an increasing cost base (New Zealand and Europe), despite lower margins in Greater China and South Africa

Trading margins – Australasia 6,1% from 5,9% (H1F2018)– UK 5,0% from 4,6% (H1F2018)– Europe 4,4% from 4,2% (H1F2018)– EM 4,7% from 5,9% (H1F2018)

Operating expenses:• Overall cost of doing business increased to 18,4% (H1F2018: 17,9%) on higher sales and distribution activity, wage pressure across Europe and the

cost of new invested operational capacity Cost growth has been a factor for the past year (H2F2018: 18,5% ; H1F2019: 18,4%)

Trading margins H1F2019 H1F2018 Comment

Bidfood 4,93% 4,97% Trading margin remained flattish

38




Avg R/£ 18,34



Revenue 66 413,6 9,1% 60 873,5 65 007,4 6,8%

Trading profit 3 277,4 8,3% 3 025,2 3 220,9 6,5%

Net finance expense (143,2) (5,8%) (135,4) (143,8) (6,1%)


Growth not out of line with overall trading profit growth

36% of gross debt termed beyond December 2019

Acquisition related debt €155 million and £25 million is repayable in August 2019. Discussions regarding the rollover of these debt facilities are underway and a favourable outcome is expected

Lower working capital absorption of R1,45 billion (H1F2018: R1,83 billion)

Bidcorp remains well capitalised, with trading profit interest cover at 22,9 times (H1F2018: 22,3 times)

Share of profit of associates and jointly-controlled entity 32,9 29,3 32,5

Principally attributable the Chipkins Puratos joint-venture interest in South Africa and various investments made by Bidfood in the Netherlands into various specialist businesses

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Avg R/£ 18,34



Revenue 66 413,6 9,1% 60 873,5 65 007,4 6,8%

Trading profit 3 277,4 8,3% 3 025,2 3 220,9 6,5%



Taxation (752,0) (5,2%) (714,7) (741,4) (3,7%)


H1F2019 H1F2018 Comment

Effective tax rate(ex capital items and associates and JV’s)

24,5% 25,1% Effective tax rate slightly lower due to significant profit growth from the UK and the Czech Republic(statutory rates – 19%)Estimated sustainable tax rate going forward remains approximately 25% but country mix dependent

40


Headline earnings: Net capital items of R4,9m relates to an impairment of property in the Netherlands. Positive currency effect of 2,1% on ZAR headline earnings. Average rand FX rate weaker versus sterling (3,9%), euro (3,7%) & Czech krona (4,0%) offset by

stronger rand average FX rate versus AUS dollar (1,7%) & NZ dollar (0,8%) Using January closing FX rates as an approximation to determine our year end rates versus F2018 average FX rates

Weaker rand: euro – 4,2%, Czech krona – 3,3%, Sterling – 4,2%, AUS dollar – 0,8% and NZ dollar – 2,4%



Avg R/£ 18,34



Revenue 66 413,6 9,1% 60 873,5 65 007,4 6,8%

Trading profit 3 277,4 8,3% 3 025,2 3 220,9 6,5%



Taxation (752,0) (5,2%) (714,7) (741,4) (3,7%)

Non-controlling interests (15,5) (10,8) (15,4)

Headline earnings 2 332,6 9,4% 2 131,8 2 286,5 7,3%

HEPS (cps) 700,2 9,2% 641,0 686,3 7,1%


41




Avg R/£ 18,34



Revenue 66 413,6 9,1% 60 873,5 65 007,4 6,8%

Trading profit 3 277,4 8,3% 3 025,2 3 220,9 6,5%



Taxation (752,0) (5,2%) (714,7) (741,4) (3,7%)

Non-controlling interests (15,5) (10,8) (15,4)

Headline earnings 2 332,6 9,4% 2 131,8 2 286,5 7,3%

HEPS (cps) 700,2 9,2% 641,0 686,3 7,1%

Diluted HEPS (cps) 698,9 9,3% 639,2 685,1 7,2%

Distribution (cps) 310,0 10,7% 280,0


Dividend cover of approximately 2,26x continuing HEPS

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0,3

-1,6

-0,9

-0,7

-0,1

-1,5

3,9

2.5 2.0 1.5 1.0 0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5

0,3

-1,6

-0,8

-0,8

-0,1

-1,8

3,4

2.5 2.0 1.5 1.0 0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

Condensed interim consolidated cash flow statement

Dec 31 2018 (ZAR billion) Dec 31 2017 (ZAR billion)

Cash generated by operations before working capital absorption was R3,9 billion, an increase of 14,8% over H1F2018. Lower utilisation of working capital of R1,5 billion (H1F2018: R1,8 billion) was pleasing in the face of higher activity levels, some overstocking and impacts from recent acquisitions

Free cash flow (excluding dividends paid) was better than H1F2018 by R0,9 billion Investment activities

• Significant investment took place in the period through strategic investment in infrastructure in Australia, New Zealand, Czech Republic, Foodservice UKand South Africa

• Gross capex percentage of net revenue was 2,0% (H1F2018: 1,8%)• Gross capex was 2,1x (H1F2018: 2,0x) depreciation and amortisation

Non-cash items: Largely made up of non-cash trade receivable provision movements and share based payments

2,5 2,0 1,5 1,0 0,5 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5

Cash generated from ops pre wc

Working capital absorption

Net finance charges

Taxation

Distributions

Cash effects of investment act’s

Cash effects of financing act’s

2,5 2,0 1,5 1,0 0,5 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0

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Cash generated by operations, net working capital and cash conversion

Working capital vs cash generated by operations % Cash conversion of CGO*after working capital

Cash generation by operations before working capital increased by 14,8%

Working capital absorption improved by R0,4 billion

Strong cash conversion in H1F2019 The Group generally absorbs working capital in the first half of the financial

year and generates in the second half of the financial year

R billion

(1,8)

0,8

(1,0) (1,5)

3,4 3,4

6,8

3,9

H1F2018 H2F2018 F2018 H1F2019

Net working capital Cash generated by operations

* CGO – Cash generated by operations

95% 95% 100%113% 113% 119%

H1F2018 F2018 H1F2019

EBITDA Trading profit

% Cash conversion of CGO *before working capital

44%

81%

63%52%

97%

75%

H1F2018 F2018 H1F2019

EBITDA Trading profit

44


-63 -64 -61 -62

34 35 32 33

40 41 39 40

Continuing operations net working capital days

10 11

Debtors days

Stock days

Creditors days

Net days

Net 7-month rolling average and month end working capital days relatively consistent with H1F2018 Impacts in H1F2019

• Some excess stocking in South Africa due to late arrival of containers of isolate and starch; as well as the higher casings stock on hand

• Activity levels higher (9,1% revenue growth)• Acquisitions – D&D Italy (not in H1F2018 base), Igartza (Iberia) and other bolt-ons

11 12

Half year end working capital days 7-month rolling average working capital days

H1F2018 H1F2019 H1F2018 H1F2019

45


1,7 3,2 3,6 5,1

24,422,3

26,2

22,9

0.0

5.0

10.0

15.0

20.0

25.0

30.0

F2017 H1F2018 F2018 H1F2019-0.3

1.0

2.3

3.5

4.8

6.0

Net interest-bearing debt (ZARbn) Trading interest cover (x)

Gearing

Target interest cover range

A conservative approach to gearing with trading profit interest cover at 22,9x (H1F2018: 22,3x) exceeds Group benchmark of 5 - 6x Net debt to annualised EBITDA of 0,65x Ample headroom to fund organic or acquisitive expansion. However, we remain conscious of the need to balance gearing

and shareholder returns

5 – 6x

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Supplementary informationBidcorp historical results


Continuing trading margin %

3,6% 3,66% 4,97% 5,05% 4,97% 4,93%

PF 2015 PF 2016 F2017 F2018 H1F2018 H1F2019

Continuing operations returns % (annualised)

Bidcorp Historic Performance

Headline earnings per share Dividend per share (cents)

• H1F2019: 4-year CAGR = 14,5%

* PF2015 and PF2016 = Proforma (Continuing and Discontinued operations)

37,1 33,7

17,0 16,2

H1F2018 H1F2019

%

ROFE ROE

499,1 600,3 641,0 700,2815,2

580,9 580,7641,9

PF 2015 PF 2016 F2017 F2018 H1F2019

cps

241 250 280 310

250 280

F2016 F2017 F2018 H1F2019

cps

Interim Div Final Div

500 5601282,91181,0

1080,0

• H1F2019: 4-year trading margin CAGR = 8,2%

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Unaudited Resultsfor the half-year ended December 31 2018

Unaudited ResultsBidcorp strategy�A proven and focused business model, which delivers quality earnings, is alert to opportunity, and has international application Interim results in perspectiveBidcorp is at the forefront in applying technological solutions in the Foodservice industry �Harnessing technology to process customer orders and reinforce customer relationships A satisfactory six months within developed markets but emerging markets were challenging �Continued positive momentum in Europe, UK and Australasia, worst is behind us in China Predominantly organic growth, continuous improvement is an enduring theme �Group trading margin at 4,9% for the half with most businesses at record levels Continuing investment in growth and modernisation �R5,1bn in stay-in-business and acquisition & expansion capex over 18 months Trading analysisTrading performance – Australasia (Australia and New Zealand)�Constant currency - revenue up 2,6%, trading profit up 6,1%, trading margin 6,1% vs 5,9%Trading performance – United Kingdom�Constant currency - revenue up 5,9%, trading profit up 13,5%, trading margin 5,0% vs 4,6%Trading performance – Europe �Constant currency - revenue up 10,8%, trading profit up 15,6%, trading margin 4,4% vs 4,2%Trading performance – Europe �Constant currency - revenue up 10,8%, trading profit up 15,6%, trading margin 4,4% vs 4,2%Trading performance – Emerging Markets �Constant currency - revenue up 7,1%, trading profit down 14,3%, trading margin 4,7% vs 5,9%Trading performance – Emerging Markets �Constant currency - revenue up 7,1%, trading profit down 14,3%, trading margin 4,7% vs 5,9%Outlook�We anticipate continued delivery of good quality earnings and reliable cash flows in our 30th year FinancialUnderlying financial performance good �Translation impacts positive for the period Statement of profit �Quality of earnings remains sound, underpinned by solid organic growth Statement of profit cont’d �Finance charges, taxation, associates, minority interests and capital items Cash flows �Solid cash flow in the period while investment in asset base continues to create capacity for growthFinancial position �Financial position remains strong Financial guidance �Sound financial position supportive of continued growth into H2 F2019� Supplementary informationInternational Operations �Geographically diversified Group overview �Despite some notable hurdles the Group has again achieved pleasing real growth in revenue and profit Australasia �New metro multi-sites in Sydney, Melbourne and Brisbane are performing very well Australasia �Doubling capacity in Auckland as part of the strategy to invest in maintaining a competitive advantage United Kingdom �Proactively preparing for Brexit Europe �Executing well on a long term strategy and reaping the returns Emerging Markets �Holding the line when times get tough Ecommerce and Procurement �Group-wide benefitsSupplementary informationSegment revenue detail�Continuing operationsSegment trading profits detail �Continuing operations Segment trading profits detail (Constant currency)�Continuing operations Supplementary informationCondensed interim statement of profit or lossCondensed interim statement of profit or lossCondensed interim statement of profit or lossCondensed interim statement of profit or lossCondensed interim statement of profit or lossCondensed interim statement of profit or lossCondensed interim consolidated cash flow statement Cash generated by operations, net working capital and cash conversionContinuing operations net working capital daysGearingSupplementary informationBidcorp Historic Performance Unaudited Results

Unaudited Results - bidcorp-reports.comGroupwide procurement through BPC and intercompany sourcing...

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