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Appendix 1: Divisional Results. Introduction Segmentals Financials Group Outlook 2 Bidfreight …% Trading margin 2.9% 3.3% Rm RevenueRm Trading Profit.

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Presentation on theme: "Appendix 1: Divisional Results. Introduction Segmentals Financials Group Outlook 2 Bidfreight …% Trading margin 2.9% 3.3% Rm RevenueRm Trading Profit."— Presentation transcript:

1 Appendix 1: Divisional Results

2 Introduction Segmentals Financials Group Outlook 2 Bidfreight …% Trading margin 2.9% 3.3% Rm RevenueRm Trading Profit +12% Appendix 1 Results Positive SA fundamentals support top-line Working capital impacted by changed credit terms in Safcor Good overall revenue gains but notably reduced agricultural, steel, coal, and forest product export volumes Profits match budgeted projections Safcor Panalpina: Record billings, up 29%. Marine: Profits up 22% on higher container & vehicle traffic. Freightbulk strategy under review Manica: profits up 26%, with Namibia & Naval excelling. Regional instability a constant challenge. Volume Vicissitude

3 Introduction Segmentals Financials Group Outlook 3 Bidfreight Current contr. to Group Trading Profit Appendix % Terminals: IVS: profits up 36%; capex will enhance profits. RDS: customer difficulties resulted in profits declining 12%. Review underway. Bulk Connections: profits static; reduced coal exports offset by rise in other product exports as benefits of capex spend create multiple product handling capability; Spoornet reliability remains a challenge; Negotiations with NPA for increased lease terms and additional handling rights ongoing. SABT: profits down 29% on substantially lower agricultural exports; cumulative capex of >R100m yet to yield return. SACD: profits up 12%; discussions with NPA in Durban to explore potential for extended lease terms & larger facilities. BPO: profits down 13% due to a substantial decline in steel and forest product exports by major clients. Cost cuts have been completed. Strategic imperatives & prospects Majority of one-off cash outflows through the system; management to secure a positive re-alignment of working capital Cost control is being complemented by the securing of new revenue Bidfreight confident of achieving real profit growth for the full year Volume Vicissitude

4 Introduction Segmentals Financials Group Outlook 4 Bidserv …% Trading margin 11.8% 11.5% Rm RevenueRm Trading Profit +17% Appendix 1 Nurturing the small acorns Results BidAir profits up 94% (5% of total); integrated aviation offering complemented by the acquisition of 60% of Comairs ground handling business; ground handling license being sought Rennies Bank: recovery continues, with profits up 61% Top Turf profits up 48%, new contract wins Cleaning: Prestige profits flat, net new business good; TMS profits up 95%. Laundries: revenue up 13% but profits flat; further volume required but pricing constrained by influence of large customers Steiner revenue up 19%, profits up 13% Bid Risk: at break even after strikes; further restructuring required IPS profits down but above budget; point-of-sale services being re-evaluated Industrial Products (Janitorial): profits up 25% despite abnormal costs

5 Introduction Segmentals Financials Group Outlook 5 Bidserv Appendix % Current contr. to Group Trading Profit Office Automation (Minolta & Ocè): revenue & profits flat off high base, improvement in next period Travel: profits up 36%; addressing poor margin divisions, debtors management and technology. Hotel Amenities (transferred from BidFood): profits up a very creditable 19% on new contract wins Mymarket: at break-even, gaining market share Strategic imperatives & prospects Mymarket spearheads lucrative group and external client procurement deals, achieving substantial savings Prestige has a number of promising new contracts in the pipeline and TMS seeking expansion opportunities BidAir has a particularly exciting future and likely to grow its share of profits New facilities for G Fox and Commercial Sundries Legislated wage increases difficult to recover (security/cleaning) Travel and Rennies Bank have further upside Nurturing the small acorns

6 Introduction Segmentals Financials Group Outlook 6 Bidvest Europe …% Trading margin 2.3% 2.8% Rm RevenueRm Trading Profit +19% Appendix 1 Going Dutch Results Trading profits (pre-IFRS) up 6.5% at £2 6.3m Outstanding cooperation and sharing of best practice between UK and Dutch teams Deli XL Deli XL: 6.7m (£4.6m) clean profit, cash generated from operations 11m Netherlands: margin of 1.8% versus 1%; real growth in hospitality but institutional market remains challenging; excellent staff morale Deli XL Belgium: reorganisation paying off; sales growth good but margins pressured profits flat at £22m on an 11% rise in sales to £790m; cash flow sound; MOD revenues & profits being replaced A new phenomenon is bad debts – may be isolated and non-recurring but management has resolved to insure against this risk

7 Introduction Segmentals Financials Group Outlook 7 Bidvest Europe Appendix 1 Current contr. to Group Trading Profit 16.4% Upward pressure on product prices and operating costs. Lower-margin CD sales up 31% (KFC, Pizza Hut) – higher unit values but higher costs due to volumes. Multi-temp sales up 4%, profits up 1%; bad debt hurt costs; Compass non-food contract (2 Jan 07) incurred extra costs; ex-MOD depot at Basingstoke converted to multi-temp site. Frozen, Fresh & Chill sales up 8% but margin still a challenge; bad debts hurt costs; two new sites operational Jan 07; roll-out of major contract. Barton loss making but profitable at the end of the period. Systems alignments at Horeca, profits ahead of expectation in large part due to Asian Games orders Strategic imperatives & prospects Compass non-food service contract exceeding expectations 3663 on track to meet budget despite recent hiccups Expansion into institutional market in Northern Belgium being explored Joint opportunities between 3663 and DeliXL being successfully pursued Going Dutch

8 Introduction Segmentals Financials Group Outlook 8 Bidvest Australasia …% Trading margin 3.8% 3.2% Rm RevenueRm Trading Profit +44% Appendix 1 Street cred Results Australia (A$) Street trade showing organic growth of 10%, at good margin Record 3.6% margin - profits up 25% to $21.9m off an 8% rise in sales to $611m (largely organic) Foodservice: Sydney & Melbourne both profitable and improving; d ecreased cost of doing business; 25% of sales transacted electronically Hospitality: profits up 34%; acquisitions in Melbourne and Geelong to assist with national roll-out and critical mass QSR: profits up 28% on an 11% rise in sales; a key link in the total foodservice supply chain

9 Introduction Segmentals Financials Group Outlook 9 New Zealand (NZ$) Sales up 20% to $158m, profits up 29% to $7.3m; Fresh profits up 163% - taking shape as a national wholesale produce business; Logistics set for annual $30m in sales –national roll-out Finding suitable staff remains a challenge Strategic imperatives & prospects Australia Expanded branch network unparalleled, broadline national offering Suitable acquisitions + organic growth to access additional market space – Bidvest market share 20% Sydney & Melbourne remain below potential New Zealand Business tracking well and strategic objectives unfolding Top three finalist in Most Improved Business category of Top 200 Companies Bidvest Australasia Appendix 1 7.5% Current contr. to Group Trading Profit Street cred

10 Introduction Segmentals Financials Group Outlook 10 Bidfood …% Trading margin 9.2% 8.1% Rm RevenueRm Trading Profit +4% Appendix 1 Mixed bag Results A 37% decline in Bidbake profits masks a good result with tangible underlying improvements Caterplus: 16% rise in profit off a 23% rise in sales; significant market share gains, broadening of choice; energetic focus on customers needs, with the independent trade a top priority; fresh fruit & vegetables introduced BidBake: ferocious competition has resulted in a rightsizing of the business in line with realities Crown: 25% rise in profits off a 19% rise in sales because of astute procurement and equipment sales; installation of a steam steriliser underscores food safety focus for competitive advantage

11 Introduction Segmentals Financials Group Outlook 11 Bidfood Appendix 1 8.0% Current contr. to Group Trading Profit Speciality: 25% rise in profits and a 29% rise in sales off an already high base as range and mix optimisation pays off. Vulcan: 12% rise in profits off a 10% rise in sales; obsolete equipment being replaced to improve product quality; upgraded factory; export focus; Catering and Frozen have been merged under a single management team Strategic imperatives & prospects Strategic initiatives will continue to be reflected in on-the-ground execution Capex and new facilities to yield efficiencies BidBake very challenging but change in emphasis will result in an improved performance during F2008 Mixed bag

12 Introduction Segmentals Financials Group Outlook 12 Bid Industrial and Commercial Products …% Trading margin 7.7% 5.7% Rm RevenueRm Trading Profit +76% Appendix 1 A bright spark Results: Profits up 76% off a 30% rise in revenue EWD Versalec Cables (75%) has settled in well, performing strongly Infrastructure markets strong & growing Copper price surge has reversed and management has adopted a more conservative stocking policy; New distributorship of LS products Nov 06 Stationery & furniture: Profits rise 51% off a 16% rise in revenue Waltons profits up 18%; Gauteng shows materially improved performance Kolok: revenue up 14% in a tough market, profits up 58% as gross margins expand CN Business Furniture: 35% rise in profits off an 18% rise in revenue; strong order books

13 Introduction Segmentals Financials Group Outlook 13 Bid Industrial and Commercial Products Appendix % Current contr. to Group Trading Profit Fasteners & Tape Afcom revenues up 4%, profits up 25%, with better balance between imports and local production achieved Buffalo: 22% rise in profits off a 9% rise in revenue; launch of new DIY range a success Strategic imperatives & prospects Exchange rate variability a challenge Continuing strong performance off a higher base Focus on optimising stock levels A bright spark

14 Introduction Segmentals Financials Group Outlook 14 Bidpaper Plus …% Trading margin 11.8% 11.9% Rm RevenueRm Trading Profit +11% Appendix 1 Congo Fever Results Profits up 11% off a 12% rise in revenue; Printing & Conversion a notable performer; integration of ex-office business complete. Silveray Statmark Improved results in a fiercely competitive market, with sales up 9% Lithotech Profits up 15% off an 18% rise in sales, boosted by DRC project (revenues good even without DRC)

15 Introduction Segmentals Financials Group Outlook 15 Personalisation & Mail grew revenue 19%, notwithstanding prolonged industrial action Significant capex assisted printing & conversion Labels suffered in a tough market Continued growth from e-solutions Lufil continues to grow range of paper converted products Strategic imperatives & prospects Lithotech to continue to reduce capacity in traditional continuous business forms whilst investing in the new growth areas of label, print to post, stationery and e-billing Renewed growth focus on label products Laser & mail to remain a substantial contributor, with increased market presence Further growth in stationery products and New Croxley promotions Bidpaper Plus Appendix 1 5.5% Current contr. to Group Trading Profit Congo Fever

16 Introduction Segmentals Financials Group Outlook 16 Bid Auto …% Trading margin 3.7% 3.5% Rm Trading ProfitRm Revenue +22% Appendix 1 Fleet of foot Results Profits up 22% (Motor Holdings up 18%) on a 16% rise in revenue – ahead of budget. Yamaha revenues up 19% amidst stiff competition. Substantial loss at GAZ negatively impacted result. Financial services profits up 40%, ahead of budget new units, up 6% on , but favourable product mix assists margin; new car pricing remained keen with knock-on effect to used; parts & servicing well up on budget used units sold, up 10% on Budget performed well, with a sharp rise in rental days; significant increase in fleet size; interest rate hikes, higher insurance costs and higher maintenance costs puts pressure on margins Seasonal working capital bulge; excess stock and age profile receiving vigorous attention Fleet Services finance book well ahead of budget; rebalancing mix toward operating leases away from installment sale

17 Introduction Segmentals Financials Group Outlook 17 Burchmores delivered improved performance on the back of an increase in bank repossessions and units purchased internally from McCarthy dealers GAZ restructuring to minimise exposure Strategic imperatives & prospects Projections for a growth slowdown, but no outright contraction foreseen Competition price based but every effort is being made to preserve margin Chinese product options being energetically pursued Acquisition of Shell Autoserv to provide a nationwide presence for servicing out-of-warranty cars and Chinese product Modest rises in new car prices will have a positive impact on used car values Growing vehicle parq is beneficial for recurring parts and service income McCarthy Fleet Services seeking meaningful expansion opportunities A continued good performance is expected with management alert to competitive challenges and executing on identified opportunities Bid Auto Appendix % Current contr. to Group Trading Profit Fleet of foot

18 Introduction Segmentals Financials Group Outlook 18 Corporate Services …% Trading margin Rm Trading IncomeRm Revenue -27% Appendix 1 2.1% Current contr. to Group Trading Profit Results Bidprop up 35% to R36m on back of strategic group development Namibian fishing operations profits decline by 60% to R17m on poor catches and dominance of small fish Ontime Automotive contributes R1.3m

19 Appendix 2: Segmental Outlook Introduction Financials Group Group Outlook

20 Introduction Segmentals Financials Group Outlook 20 OVERALL EFFECT: POSITIVE Bidfreight Bidfreight- sensitivity to anticipated economic variables + effect of rising fixed investment: Infrastructure investment set to gather momentum, likely to benefit from F2008 onwards. BUT capacity constraints should not be underestimated + effect of rising interest rates: Higher interest earnings in Clearing & Forwarding and Marine but this can Be tempered by large customers demanding extended credit terms Alert to easing PCE but recessionary conditions unlikely + effect of relative Rand weakness: Trade weighted impact not sufficient to stimulate exports meaningfully Increased unit values in Clearing & Forwarding without substantially decreased volume (PCE buoyant into F2008 and capital equipment imports set to rise) + GDP growth expected to remain robust Trade volumes to grow ahead of GDP but extenuating factors may result in isolated exceptions e.g. agriculture volatility, steel directed to home market Segmentals Appendix 2

21 Introduction Segmentals Financials Group Outlook 21 OVERALL EFFECT: MODERATELY POSITIVE Industry specific factors - Legislated minimum wages are a negative due to labour intensity of Bidserv - effect of HIV/AIDS, again due to relative labour intensity - Competition from SMME contractors is not proving an insurmountable threat + Tertiary and secondary GDP to grow ahead of overall GDP: Growing base of commercial activity, retail/tourism/leisure/non-residential buildings/travel Stimulates recurring income, business well balanced, but heightened competition attracted - effect of relative Rand weakness: No discernable net negative impacts experienced or anticipated + effect of mild inflation: Mildly positive but competition will restrain pricing power + effect of rising fixed investment Multiplier benefits across entire business landscape Bidserv Bidserv – sensitivity to anticipated economic variables Segmentals Appendix 2

22 Introduction Segmentals Financials Group Outlook 22 Bidvest Food Interests Bidvest Food Interests – sensitivity to anticipated economic variables Segmentals UK: Wealthy, competitive, flexible and relatively fast growing top-tier economy; predictable environment Ever alert to expansion options; trading skills are continuously tested in a demanding & sophisticated market Australasia: Growth slower but resources boom underpins prospects; excellent macro economic management Breadth, depth and business mix cushions vulnerability to external shocks South Africa: + Top line prospects remain promising in a growing economy + Expanding discretionary income Scope for increased sophistication of offering and business practices OVERALL EFFECT: POSITIVE General influencing factors: + food price increases + markets served remain strong but competition is cut-throat and pricing power constrained + Increased wealth and disposable income spurs out-of- home consumption + Upward pressure on labour & distribution costs Benelux: Positive outlook, helped by cyclical upswing in Germany & France, lower corporate taxes in Netherlands Appendix 2

23 Introduction Segmentals Financials Group Outlook 23 Modest inflation is good for a trading business but sharp rises in raw material inputs may lead to certain projects being uneconomic Bid Industrial & Commercial Products Bid Industrial & Commercial Products – sensitivity to anticipated economic variables Segmentals OVERALL EFFECT: BROADLY POSITIVE Fixed investment set to gain momentum, with emphasis shifting to non- residential Likely areas identified for capitalising on: public transportation, 2010 facilities, airports, power generation, urbanisation, water, roads, ports & harbours, bulk infrastructure, electrical, telephonic and water reticulation, regional mining, government facilities & socio-economic spend, plus commercial, leisure & residential buildings Effect of relative Rand weakness: No discernible negative impacts on the whole, if anything stimulatory Accentuates impact of high USD copper prices + stocking levels and trading activities Relief from cheap import competition, division will still selectively import Interest rates Retail expansion off a low base Appendix 2

24 Introduction Segmentals Financials Group Outlook 24 Industry-specific features Vigorous competition and choice + manufacturers terms pressuring dealer margins SA car parq expanding appreciably plus appearance of cheap Chinese vehicles General economy - effect of slower GDP growth: Business and consumer confidence of greater relevance, consumer slowdown set to bite H2 of F2007 Annuity financial services income will cushion volume sales slowdown Replacement cycle pushed out, but service/after market revenues boosted - effect of rising interest rates: Undermines affordability, but volume/entry level exposure a quarter of sales and set to expand – poor public transport in SA Relative shift in favour of used cars evident Financial services income up - effect of slower growth in PCE: Rate of growth in new to slow but used takes up slack; PDI buyers +/- 30% of total now + effect of rising fixed investment: Commercial vehicle sales have soared and set to remain strong + effect of relative Rand weakness: Stimulating automotive exports; export credits assist vehicle affordability, modest price increases have taken affect January Bid Auto Bid Auto – sensitivity to anticipated economic variables Group Segmentals OVERALL EFFECT: NEUTRAL Appendix 2

25 Introduction Segmentals Financials Group Outlook 25 A team of operationally strong 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 Management Focus Control distribution channels: Implementation 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 Strategy 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 The BIDVest Business Model Market-leading service, trading & distribution businesses Inside back cover


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