1
Unaudited ResultsUnaudited ResultsFor the six months ended December 31 2007
2
Agenda
► Introduction and Overview
►Financial Results
►Outlook
►Appendices:• Appendix 1: Divisional Review• Appendix 2: Historic performance
3
Introduction and OverviewIntroduction and OverviewBrian Joffe
4
H1 2008 Results Summary
IntroductionIntroduction
11% to 220c
ROFE
18% to R2,5bn
to 37.6% from 44.6%
13% to R53,9bn
11% to R1,5bn
10% to 498c
Distribution*
HEPS
Headline earnings
Operating Profit
Revenue
* Effected by pro-rata share buy-back
Despite challenging conditions in certain sectors, most businesses were well managed and produced positive results
► Excl. Bid Auto, local and offshore operations grew operating profit by 21%
5
Segment H1 2008 % ch H1 2007 H1 2008 % ch H1 2007
Bidfreight – Improved volumes, particularly agricultural; benefits of recent capex starting to kick in
10 580,9 +11 9 561,5 330,9 +19 279,0
Bidserv – Trend to outsourcing continues; strong performance across the board, driven organically - particularly at TMS; recovery in Security
3 060,0 +19 2 580,4 390,5 +28 305,6
Segments at the forefront of performance
Revenue (Rm) Operating Profit (Rm)
IntroductionIntroduction
6
Segment H1 2008 % ch H1 2007 H1 2008 % ch H1 2007
Bidvest Europe – Strong contribution from Deli XL (+35% in Euros); improved performance at 3663 (+8% in Sterling) – excellent effort given that H1 2007 still included profit from the MOD contract
16 007,1 +7 15 016,6 410,4 +20 341,1
Bidvest Asia Pacific – Growth of 31% from Australia & New Zealand excl. R46m first time contribution from Angliss (well ahead of expectations)
6 575,1 +59 4 131,0 251,3 +61 156,5
Bidfood – Strong operating profit growth of 28% from Caterplus & Speciality; Bidfood Ingredients up 19%
2 249,8 +15 1 956,4 191,4 +24 153,8
Segments at the forefront of performance (contd)
Revenue (Rm) Operating Profit (Rm)
IntroductionIntroduction
7
H1 2008
% ch
H1 2007
H1 2008
% chH1
2007
Bid Industrial and Commercial Products – H1 2007 established a high base, negative impact of weak copper price and firm Rand on margins despite good volume growth in 1st half; good performance from Waltons, especially Gauteng
4 689,6 +9 4 286,3 336,8 - 335,9
Bid Auto – Like-for-like profit, excl. Viamax, declined 27%; negative impact of higher interest rates & NCA (Dec = lowest vehicle sales in 5 years), write-downs of 2nd hand stock taken, losses from small dealerships, new project investment & higher “imposed” inventory, initial NCA insurance premium impact; consumer spending impact on Yamaha & Budget; start-up loss from Value Centres
10 004,5 +4 9 640,2 357,8 +1 355,0
Segments performing below expectations
Revenue (Rm) Operating Profit (Rm)
IntroductionIntroduction
8
Segment H1 2008
%
chH1 2007 H1 2008 % ch H1 2007
Bidpaper Plus – Ongoing consolidation of traditional offering successfully complimented by broader electronic focus; no special projects such as ballot papers, etc. in the period
1 020,4 +5 975,8 126,6 +10 114,8
Segments holding their own
Revenue (Rm) Operating Profit (Rm)
IntroductionIntroduction
9
Financial ResultsFinancial ResultsDavid Cleasby
10
Half-year ended Dec 31 2007Avg
R/£14.14
Avg
R/£ 13.74
Rm’s H1 2008 % ch H1 2007 H1 2008 % ch
Revenue 53 884,5 +12.6 47 871,9 53 240,6 +11.2
ResultsResults
Consolidated Income Statement
► Organic growth of 9.3%► 11.2% growth excluding exchange rate translation► First time contributions from Angliss (R1.3bn) & Viamax (R300m)
H1 F2008 in constant currencyR/£ 13.74
11
Half-year ended Dec 31 2007Avg
R/£14.14
Avg
R/£ 13.74
Rm’s H1 2008 % ch H1 2007 H1 2008 % ch
Revenue 53 884,5 +12.6 47 871,9 53 240,6 +11.2
Operating profit 2 458,1 +17.9 2 085,7 2 440,2 +17.0
NoteNote:: 1. 9% organic growth in Operating Profit 2. Foreign businesses = 30% (R744m) contribution to Operating Profit vs 27% (R599m) in
H1 2007
Consolidated Income Statement
Operating Margins H1 2008 H1 2007
Local 5.7% 5.6% Bidfreight and Bidserv compensated for Voltex and McCarthy margins
Offshore 3.1% 2.7% Angliss contributed for the first time at (higher average margins); improvement in Deli XL margins
Group 4.6% 4.4%
ResultsResults
H1 F2008 in constant currencyR/£ 13.74
12
Half-year ended Dec 31 2007Avg
R/£14.14
Avg
R/£ 13.74
Rm’s H1 2008 % ch H1 2007 H1 2008 % ch
Revenue 53 884,5 +12.6 47 871,9 53 240,6 +11.2
Operating profit 2 458,1 +17.9 2 085,7 2 440,2 +17.0
Net finance expense (445,5) -98.0 (225,0) (443,9) -97.3
Consolidated Income Statement
► Offshore interest of R55,5m vs local interest of R390,0m ► Net debt offshore of R647,4m vs local net debt of R6,7bn ► R104m interest increase over H2 2007 – rate increases, increased capex,
acquisitions and working capital absorption
ResultsResults
H1 F2008 in constant currencyR/£ 13.74
13
Half-year ended Dec 31 2007Avg
R/£14.14
Avg
R/£ 13.74
Rm’s H1 2008 % ch H1 2007 H1 2008 % ch
Revenue 53 884,5 +12.6 47 871,9 53 240,6 +11.2
Operating profit 2 458,1 +17.9 2 085,7 2 440,2 +17.0
Net finance expense (445,5) -98.0 (225,0) (443,9) -97.3
Associate income 59,1 +56.8 37,7 59,1 +56,8
Associates:Tiger Auto Enviroserv Comair First time contributionOther
Consolidated Income Statement
Note: Note: Includes dividends received
ResultsResults
H1 F2008 in constant currencyR/£ 13.74
14
Half-year ended Dec 31 2007Avg
R/£14.14
Avg
R/£ 13.74
Rm’s H1 2008 % ch H1 2007 H1 2008 % ch
Revenue 53 884,5 +12.6 47 871,9 53 240,6 +11.2
Operating profit 2 458,1 +17.9 2 085,7 2 440,2 +17.0
Net finance expense (445,5) -98.0 (225,0) (443,9) -97.3
Associate income 59,1 +56.8 37,7 59,1 +56,8
Taxation (525,6) -1.3 (519,1) (521,3) -0.4
Effective tax rates H1 2008 H1 2007
Local 26.0% 27.3% Reduction in corporate tax rate to 28% = R10.5m benefit
Offshore 25.8% 26.6%
Corporate rate reductions in UK & Netherlands, offset to some extent by reduction in some allowances and adjustment in net deferred tax asset; Angliss has lower sovereign tax rate; no benefit on tax losses in Belgium
Group 26.0% 27.1% Sustainable rate of +/- 27%
Consolidated Income Statement
ResultsResults
H1 F2008 in constant currencyR/£ 13.74
15
Half-year ended Dec 31 2007Avg
R/£14.14
Avg
R/£ 13.74
Rm’s H1 2008 % ch H1 2007 H1 2008 % ch
Revenue 53 884,5 +12.6 47 871,9 53 240,6 +11.2
Operating profit 2 458,1 +17.9 2 085,7 2 440,2 +17.0
Net finance expense (445,5) -98.0 (225,0) (443,9) -97.3
Associate income 59,1 +56.8 37,7 59,1 +56,8
Taxation (525,6) -1.3 (519,1) (521,3) -0.4
Minority interests (19,6) +30.7 (28,3) (19,6) +30.7
Namsov: Materially downVersalec: Slightly downBid Auto: Slightly down
Consolidated Income Statement
ResultsResults
H1 F2008 in constant currencyR/£ 13.74
16
Half-year ended Dec 31 2007Avg
R/£14.14
Avg
R/£ 13.74
Rm’s H1 2008 % ch H1 2007 H1 2008 % ch
Revenue 53 884,5 +12.6 47 871,9 53 240,6 +11.2
Operating profit 2 458,1 +17.9 2 085,7 2 440,2 +17.0
Net finance expense (445,5) -98.0 (225,0) (443,9) -97.3
Associate income 59,1 +56.8 37,7 59,1 +56,8
Taxation (525,6) -1.3 (519,1) (521,3) -0.4
Minority interests (19,6) +30.7 (28,3) (19,6) +30.7
Headline earnings 1 510,6 +11.5 1 355,2 1 502,7 +10.9
Consolidated Income Statement
►8.3% organic growth in headline earnings►20.0% growth excl. McCarthy (bought 4 years ago for R0,7bn net and
earned R2bn operating profit to date)ResultsResults
H1 F2008 in constant currencyR/£ 13.74
17
Half-year ended Dec 31 2007Avg
R/£14.14
Avg
R/£ 13.74
Rm’s H1 2008 % ch H1 2007 H1 2008 % ch
Revenue 53 884,5 +12.6 47 871,9 53 240,6 +11.2
Operating profit 2 458,1 +17.9 2 085,7 2 440,2 +17.0
Net finance expense (445,5) -98.0 (225,0) (443,9) -97.3
Associate income 59,1 +56.8 37,7 59,1 +56,8
Taxation (525,6) -1.3 (519,1) (521,3) -0.4
Minority interests (19,6) +30.7 (28,3) (19,6) +30.7
Headline earnings 1 510,6 +11.5 1 355,2 1 502,7 +10.9
HEPS (cents) 498,1 +10.1 452,4 495,5 +9.5
Diluted HEPS (cents) 487,0 +10.6 440,3 484,4 +10.0
Consolidated Income Statement
ResultsResults
H1 F2008 in constant currencyR/£ 13.74
Diluted weighted avg. shares in issue of 310,195m (+ 0.8%); issue of shares for outstanding options in Dec ‘06 as part of Dinatla transaction + buy back from Dinatla
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Half-year ended Dec 31 2007Avg
R/£14.14
Avg
R/£ 13.74
Rm’s H1 2008 % ch H1 2007 H1 2008 % ch
Revenue 53 884,5 +12.6 47 871,9 53 240,6 +11.2
Operating profit 2 458,1 +17.9 2 085,7 2 440,2 +17.0
Net finance expense (445,5) -98.0 (225,0) (443,9) -97.3
Associate income 59,1 +56.8 37,7 59,1 +56,8
Taxation (525,6) -1.3 (519,1) (521,3) -0.4
Minority interests (19,6) +30.7 (28,3) (19,6) +30.7
Headline earnings 1 510,6 +11.5 1 355,2 1 502,7 +10.9
HEPS (cents) 498,1 +10.1 452,4 495,5 +9.5
Diluted HEPS (cents) 487,0 +10.6 440,3 484,4 +10.0
Distribution *220,0 +11.1 198,0 220,0 +11.1
Consolidated Income Statement
* Effected by pro-rata share buy-back; +/- same cost as dividend, but earnings accretive and of benefit to all shareholders; still the equivalent of +/-2x covered dividend
ResultsResults
H1 F2008 in constant currencyR/£ 13.74
19
Consolidated Cash Flow Statement – Rm’s
►Investment activities of R2,322bn: • R1,280bn in capex; mainly Bidfreight, Bidserv, Bid Auto and Bidvest Europe• R1,042bn spent on acquisitions, mainly Viamax (R960m)
►In the 3,5 years to December 2007: • R6,8bn cash generated from operations after working capital, tax & distributions supported• R9,8bn spent on acquisitions & investments to position businesses for medium term growth• Full benefits still to manifest
-746
-1303
-630
-703
-178
-2306
-3500 -2500 -1500 -500 500 1500 2500
Half-year ended December 31 2007
1777
-2322
-772
-691
-367
-2527
-3500 -2500 -1500 -500 500 1500 2500
Cash generated from ops
Working capital utilised
Net Finance charges
Taxation
Distributions
Cash effects of investment act’s
Cash effects of financing act’s
3179 2630
Half-year ended December 31 2006
ResultsResults
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Net working capital flows vs cash generated - Rbn
1.40.9
-2.3
1.0
2.22.6
3.0
-1.2
-2.5
-1.1
3.2
2.21.8 2.0
-3
-2
-1
0
1
2
3
4Net working capital Cash generated by operations
►Upward trend in cash generated►Net working capital typically better in 2nd half
H1 2005 H2 2005 H1 2006 H2 2006 H1 2007 H2 2007 H1 2008
ResultsResults
Half-year ended December 31 2007
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H1 2008 (Rm)
% ch H1 2007 (Rm)
Group working capital 2 527 +10 2 306
McCarthy working capital 931 +87 498
Group working capital excl. McCarthy 1 596 -13% 1 828
Working capital analysis
ResultsResults
►13% reduction in working capital, excl. McCarthy where “imposed” over-stocking occurred
►Additional new project working capital invested in Chinese vehicles and Value Centres will only start generating returns from H2 2008
22
-69 -62 -74 -58 -66 -59
31 27 30 30 32 33
39 37 41 37 39 40
-60%
-40%
-20%
0%
20%
40%
60%
► Some changes in working capital cycle, evidenced through increased imports in a number of businesses, are reflected in stock days; very little creditor funding
► However, elements of the group are still strategically over-stocked and paying close attention to trading out of this position whilst protecting margin
► The quality of the debtors book is satisfactory; provisioning has increased ► Banking assets are up R200m (increased lending achieved) vs banking liabilities up R80m
Net Working Capital Days
ResultsResults
9-321 5 14
Debtors days
Stock days
Creditors days
F2005 H1 2006 F2006 H1 2007 F2007 H1 2008
Net days
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Gearing
H1 2005 F2005 H1 2006 F2006 H1 2007 F2007 H1 2008
► Interest cover of 5.5x; target of 5-6x► R3.6bn increase in debt from H2 2007:
• Acquisition R1bn• Net capex of R1,3bn• Net working capital of R2,5bn
ResultsResults
Target interest cover range
2.4
4.23.8
7.3
3.0
1.51.0
11.6 11.410.3
5.5
8.0
10.79.3
0
1
2
3
4
5
6
7
8
0
2
4
6
8
10
12
14Net interest-bearing debt (Rbn) Interest cover (x)
24
OutlookOutlookBrian Joffe
25
Bidfreight ► Further benefits from recent capex on higher volume utilisation► Demand for port-based services to continue► Increased capacity to yield further returns
Bidserv ► Benefits from contracts won in F2007► Security recovery to continue► Super licence to scale up BidAir► TMS
• Strong performance to continue• International expansion potential (petro-chemical industry expertise)
► Positive momentum expected to continue as outsourcing continues to grow
OutlookOutlook
Operational Prospects – 2nd half F2008
26
Operational Prospects – 2nd half F2008
OutlookOutlook
Bidvest foodservice ► First full year contribution from Angliss► Continued strong performance from Australasia► Contract wins and geographic expansion will benefit Deli XL► Further benefits from UK wholesale restructure► Food inflation offers opportunity to make trading gains and improve
market position► Bidvest foodservice is a strong strategic investment:
• 3rd largest foodservice business in the world• The trend towards eating outside of the home continues• The ability to grow our international footprint to extend reach • Big opportunity for improved returns in the recently acquired businesses as
they begin to conform to Bidvest performance standards
27OutlookOutlook
Operational Prospects – 2nd half F2008
Bid Industrial & Commercial Products ► Benefit from copper price increases and weaker Rand► Positive & negative effects of the electricity crisis:
• Voltex geared to distribute large-scale alternate power sources and power saving as well as participate in accelerating infrastructure spend, but
• Commercial & Industrial building activity, as well as mining activity, may be further dampened
► Weaker currency will assist Kolok► Improved earnings trend at Waltons set to continue, especially Gauteng
Bidpaper Plus► Laser and Mail, Electronic Products, and Labels and Packaging are
growing as traditional print products continue to contract ► Positioned to regain previously lost market share in stationery
production and distribution, but at lower margins
28
Bid Auto ► Positioned for somewhat improved performance in H2 2008:
• No further deterioration in new and used car volumes expected, but margins still being eroded
• Trading out of over-stocked position whilst protecting margin• Positive contribution from Viamax for the full year
Extract synergies with McCarthy Fleet Services, achieve scale► A fundamentally good business, selling strong brands – has paid for
itself almost 3x over since acquisition
Operational Prospects – 2nd half F2008
OutlookOutlook
29OutlookOutlook
Group Prospects - H2 2008
Management initiatives►R10bn invested over last 3,5 years is bolstering competitive advantage
at an important time►Absolute profit growth targets have been stretched► 2nd half earnings are usually stronger
• Historically contribute +/-55%►Focus on working capital:
• Usually better in 2nd half; aggressive targets set►Credit squeeze has opened up a window of opportunity for corporates
with strong balance sheets seeking keenly priced deals
Management is therefore budgeting for a higher rate of earnings growth in H2 F2008 than H1 F2008
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