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Audited Results For the twelve months ended June 30 2005.

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Presentation on theme: "Audited Results For the twelve months ended June 30 2005."— Presentation transcript:

1 Audited Results For the twelve months ended June

2 Agenda Introduction Financial Results Divisional Results Group Matters Outlook

3 Introduction

4 * H1 includes first time contributions from McCarthy and acquired minorities, whereas H is materially comparable to H Results Summary Revenue +22,5% to R62,8bn Trading income +24,4% to R 3,2bn Headline earnings +27,1% to R 2,1bn HEPS +26,2% to 686,6 cps (+29% in H1*; + 23% in H2*) DPS +22,3% to 306,0 cps ROFE 51% in 2004 vs 55% in 2005 Note: F2005 accounts not prepared i.t.o. IFRS

5 Financial Results

6 R000s H1 2005H2 2005Total 2005 Revenue Trading income (margin) (4,7%) (5,4%) (5,0%) Net finance expense( )( ) Associate Income Taxation( )( )( ) Minority interests(3 482)(7 693)(11 175) Headline earnings HEPS (cents)319,5367,1686,6 DPS (cents)133,8172,2306,0 Consolidated Income Statement Year ended June

7 Segmental Performance Segment Trading Income Performance H1 2005H Bidfreight SA+7%+25% BidcorpR25m turnaroundR14m turnaround Bidserv+49%+34% Renfin-9%-23% International Foodservices+12%+21% Caterplus+11% Combined Foods+21%-4% Bidoffice – Office Products-3%+13% Bidoffice – Printing & Paper Conversion*-19%+16% Bid Industrial+25%+14% McCarthyn/a+21% * Lithotech France: R15,0m loss in H1 vs R4,5m profit in H2

8 Consolidated Income Statement Foreign businesses 35% (R22,1bn) vs 41% (R21,1bn) in 2004 (impact of McCarthy) Local businesses Like-for-like revenue growth of 8,6% excluding McCarthy Year ended June in constant currency: Avg R/£ Actual: Avg R/£ Actual: Avg R/£ Rms 2005 % ch vs % ch vs 2004 Revenue62 811,8+22, , ,9+24,1

9 Consolidated Income Statement Year ended June in constant currency: Avg R/£ Actual: Avg R/£ Actual: Avg R/£ Rms 2005 % ch vs % ch vs 2004 Revenue62 811,8+22, , ,9+24,1 Trading income (margin) 3 164,6 (5,0%) +24,42 544,1 (5,0%) 3 188,9+25, Trading margins 5,0% Group Return to profitability at Bidcorp; Strong performance from offshore Foodservice 2,9%3,3%*Offshore Excluding McCarthy, group margin improves from 5,1% to 5,4% 6,1%5,8%Local NOTES: 1) Offshore margins include a R10,5m (R16,9m) loss from Lithotech France 2) Foreign businesses = 23% (R726,1m) contribution to Trading Income vs 24% (R611,4m) in 2004 Excluding McCarthy, 10% increase in H1 trading income and 15% for full year

10 * Offshore margins include a R21.8m loss from Bidcorp plc and a R17.0m loss from Lithotech France Bidvest plc margins 3.1% in 2004 vs 2.9% in %Offshore Trading Margins Consolidated Income Statement Year ended June in constant currency: Avg R/£ Actual: Avg R/£ Actual: Avg R/£ Rms 2005 % ch vs % ch vs 2004 Revenue62 811,8+22, , ,9+24,1 Trading income (margin) 3 164,6 (5,0%) +24,42 544,1 (5,0%) 3 188,9+25,3 Capital Items(17,2)-57,2(40,2)(17,2)n/c

11 Rms 2005 % ch vs % ch vs 2004 Revenue62 811,8+22, , ,9+24,1 Trading income (margin) 3 164,6 (5,0%) +24,42 544,1 (5,0%) 3 188,9+25,3 Net finance expense(277,7)+64,4(168,9)(280,1)+65,8 Net interest: R0,29bn net debt offshore; R0,75bn net debt in SA R2,6bn debt for McCarthy & offshore minority acquisitions added +/-R200m to interest bill, but more than offset at earnings line Interest cover = 11x (15x in F2004) Consolidated Income Statement Year ended June in constant currency: Avg R/£ Actual: Avg R/£ Actual: Avg R/£ 11.94

12 Consolidated Income Statement Year ended June in constant currency: Avg R/£ Actual: Avg R/£ Actual: Avg R/£ Rms 2005 % ch vs % ch vs 2004 Revenue62 811,8+22, , ,9+24,1 Trading income (margin) 3 164,6 (5,0%) +24,42 544,1 (5,0%) 3 188,9+25,3 Net finance expense(277,7)+64,4(168,9)(280,1)+65,8 Associate Income28,4+19,223,828,40,0

13 Consolidated Income Statement Year ended June in constant currency: Avg R/£ Actual: Avg R/£ Actual: Avg R/£ Rms 2005 % ch vs % ch vs 2004 Revenue62 811,8+22, , ,9+24,1 Trading income (margin) 3 164,6 (5,0%) +24,42 544,1 (5,0%) 3 188,9+25,3 Net finance expense(277,7)+64,4(168,9)(280,1)+65,8 Associate Income28,4+19,223,828,40,0 Taxation(822,5)+21,9(674,6)(820,9)+22,0 STC(10,3)(13,6) 28,9%28,4%Group Decline due to tax relief as a consequence of minority acquisitions of Bidvest plc and Bidcorp plc as well as reduced losses 31,5%28,9%Offshore 28,1%28,2%Local *Excl. STC Effective Tax Rates* Deferred tax asset write-back offsets 1% decrease in corporate tax rates

14 Consolidated Income Statement Year ended June in constant currency: Avg R/£ Actual: Avg R/£ Actual: Avg R/£ Rms 2005 % ch vs % ch vs 2004 Revenue62 811,8+22, , ,9+24,1 Trading income (margin) 3 164,6 (5,0%) +24,42 544,1 (5,0%) 3 188,9+25,3 Net finance expense(277,7)+64,4(168,9)(280,1)+65,8 Associate Income28,4+19,223,828,40,0 Taxation(822,5)+21,9(674,6)(820,9)+22,0 Minority interests(11,2)-85,0(74,8)(12,0)-84,7

15 Rms 2005 % ch vs % ch vs 2004 Revenue62 811,8+22, , ,9+24,1 Trading income (margin) 3 164,6 (5,0%) +24,42 544,1 (5,0%) 3 188,9+25,3 Net finance expense(277,7)+64,4(168,9)(280,1)+65,8 Associate Income28,4+19,223,828,40,0 Taxation(822,5)+21,9(674,6)(820,9)+22,0 Minority interests(11,2)-85,0(74,8)(12,0)-84,7 Headline earnings2 078,4+27,11 635,42 095,2+28,1, HEPS (cents)686,6+26,2544,0692,2+27,2 Diluted HEPS (cents)664,2+24,1535,3669,5+25,1 DPS (cents)306,0+22,3250,2306,0+22,3 Consolidated Income Statement Year ended June in constant currency: Avg R/£ Actual: Avg R/£ Actual: Avg R/£ Earnings Total foreign headline earnings = 22,7% of Group (21,3% in F2004) Dividend 16% enhancement in DPS due to Dinatla transaction Dividend policy = +/- 2x

16 Rms Assets Non-current assets8 159,86 478,9 Current assets12 735, ,4 Total assets20 895, ,4 Equity & Liabilities Capital & reserves7 564,46368,4 Non-current liabilities1 765,51 242,8 Current liabilities11 565, ,2 Total equity & Liabilities20 895, ,4 Year ended June 30 Consolidated Balance Sheet 4 8 No. of Days Note: Seasonality always affects H1

17 Net Debt Position (Rms) Liquid funds1 707,92 305,2 Long term interest-bearing liabilities (1 471,6)(923,1) Short term interest-bearing liabilities (1 275,3)(2 112,7) Net (debt)/cash(1 039,2)(730,6) Net debt : equity14%12% Net debt : funds employed17%14% Consolidated Balance Sheet Year ended June 30 Net debt up to R2,1bn on payment for Deli XL bringing net debt : funds employed from October 2005 to 35%, Delix XL pre-funded by issue of 18m (R1bn) Dinatla options Deli XL debt is at competitive pre-tax funding rate of 2,5% McCarthy floor plan lease creditors R616m - short term debt of R382m & interest free accounts payable of R234m

18 Rms Cash flow from operating activities2 200,52 294,5 Cash effect of investment activities(2 052,3)(3 136,5) Cash effects of financing activities(797,7)818,2 Net cash and cash equivalents1 497,72 101,0 Consolidated Cash Flow Statement Positive working capital swing in H2: R200m in cash retained from working capital for the year R1,1bn applied to share buybacks over 3 years (avg. price 4959cps) R525m spent on acquisition of Tiger Wheels & Bidcorp plc minorities R1,2 bn Capex (R588m expansion & R612m replacement)

19 Divisional Results

20 Services – Bidfreight Lasting leases Renegotiation & signing of port leases secures tenure for extended periods Higher imports benefit Safcor Panalpina Terminals: 23% drop in BMA volumes as rand and high Spoornet charges deter coal exports Wheat & soya imports boost SABT IVS, largest contributor, held profits steady Good growth at RDS from specialised services Trade volumes good for SACD BPO down on lower exports; Naval poor Strong recovery at Ships Agency Small profits at Manica despite regional instability …% Trading margin 3.6% 3.4% Rm RevenueRm Trading Income +16%

21 Services - Bidfreight Current contr. to Group Trading Income 15% NPA leases renegotiated – rental increases set against security of tenure over an extensive period NPA negotiations to handle wider range of product (BMA) PPP opportunities with NPA & Transnet slow to materialise Confidence to proceed with capex – R1bn budgeted for Terminals over three years Safcor Panalpina air import dominance to be complemented by planned focus on sea freight Marine emphasis on new principals in Liner and strategic alliances in Non-Liner Strategic imperatives & prospects

22 Services – Bidcorp Ships ahoy! …% Trading margin 1.7% Rm Trading IncomeRm Revenue 0.8% Shipping achieved small profit Dunkirk route closed, business right-sized, 2 ships sold (capital items) Automotive in a cut-throat arena Rescue & Recovery and Specialised Transport profitable £1.5m loss from Volume Distribution (UK & France); divesting of unprofitable contracts; potential bankruptcy of competitors

23 Services – Bidcorp Current contr. to Group Trading Income 0.5% Intrinsic net asset value well exceeds book value (ships & property) Shipping strategy and prospects: Zeebrugge/Dartford route performing well Fuel prices a negative New materials handling equipment enhances efficiencies Automotive strategy and prospect: Management committed to restoring profitability in Volume in F2006 Strategic rationale of staying in industry under review Property & Outsource strategy and prospects: Dartford property plans linked to shipping relocation Car parking business reliant on Westminster City Council contract March 2006 – one of two bidders Strategic imperatives & prospects

24 Services – Bidserv Acquisitive achievements 41% growth in trading income (23% organic, 18% acquisitive) Strong results from profit mainstays Cleaning and Hygiene Laundry leadership position & profitability enhanced by timely capex Security more than doubles profits: management actions in Guarding outperformance of IPS in its first full year doubling of profits in Electronics BidAviation flies thanks to EAS Sharp profit increase at Industrial & Janitorial as G Fox acquisition kicks in …% Trading margin 10.0% 9.5% Rm Trading IncomeRm Revenue +41%

25 Current contr. to Group Trading Income Services - Bidserv 9% New Top Turf golf course construction unit – promising potential Laundry world-class plant capability to underpin organic growth Security, third largest profit contributor Guarding on a firmer management and technology footing IPS positioned to deepen presence in banking market Intended Fedex merger with Supaswift (36% BVT stake) creates combined entity with branded domestic courier capability Annuity income reinforced by F2005 initiatives Bolt-on and complementary opportunities continually sought Strategic imperatives & prospects

26 Services – Renfin Zero is the new hero …% Trading margin 15.7% 19.4% Rm Trading IncomeRm Revenue Travel trading income (-27%) Zero commission 1 May 2005 for SAA, other carriers phasing in Dust yet to settle - yields have improved but knee jerk price cutting and direct bookings are initial consequences Milestone – travel now profitable pre-overrides, which fell 34% Banking trading income (+22%) Low exchange rate volatility kept dealing margins on par with F2004 Crime hammers insurance costs -15%

27 Current contr. to Group Trading Income Services - Renfin 3% Rennies a strong advocate of zero commission - positioning to take advantage of fee for service model Industry turmoil will create opportunities for consolidation Focus on collections, risk management, elimination of duplication Budgeting for recovery through F2006 in Travel Bank to retain focus on growing value add products such as cards, corporate FX and trade services Strategic imperatives & prospects

28 Foodservice Products – International (UK) Britannia way cool …% Trading margin 3.6% 3.2% Rm Trading IncomeRm Revenue Profits up 14% to £45.7m; record 3.6% margin despite moderating GDP growth and tougher trading Multi-temp: scale economies, cost control FFC: gross margins up sharply Swithenbank losses almost eliminated; benefits of MOD contract CD: strong result, with benefits from KFC effective March; cost pressures from fuel and driver wages MOD: ahead of budget but down on F2004 due to downscaling of activity in Kuwait Barton Meat loss increases to £2,1m Ongoing depot infrastructure programme +16%

29 …% Trading margin 2.9% 2.7% Rm Trading IncomeRm Revenue Foodservice Products – International (Australasia) a sweet song from down under AUSTRALIA: Trading income up 16% to A$26.5m; up 21% after disposal of Alice Springs Organic foodservice revenue growth 9.5% Melbourne delivering but losses in Sydney Hospitality Supply rollout on track QSR (started October 03) into profit New Zealand Trading income up 75% to NZ$ 10.3m Organic revenue growth 24%, acquisitions 5% Small acquisitions in fresh and seafoods Crean housebrand; e-commerce 10% of sales and growing +20%

30 Current contr. to Group Trading Income Foodservice Products - International 22% Proforma contr. to Group Trading Income including Deli XL = 24%) 3663 Terrorist threat to UK Improved volumes ameliorate cost pressures KFC £150m p.a; contract extension with Compass to 2011 Substantial improvement in Barton Meat budgeted Australia Opportunities to expand into WA (Perth) Improved performance in Sydney, fresh management Independent research – foodservice development lags USA by 20 years – Bidvest +/- 15% market share, huge growth feasible Crean (New Zealand) Range extensions and geographic spread Strategic imperatives & prospects

31 …% Trading margin 8.7% Rm Trading IncomeRm Revenue Foodservice Products – Caterplus (SA): 11% revenue growth Strong consumer spending not translating into margin Catering Supplies: Improved H2 Frozen 14% down: Contract logistics shed; successes in street trade 3663 multi-temp business: internal focus on integration slows progress Acquisition of Lufil Packaging Vulcan-Caars up 33%; slower exports H2 +11% Slender

32 Foodservice Products – Caterplus (SA) Current contr. to Group Trading Income 6% Adaptation to deflation largely achieved Emergent middle class – increasing leisure spend Continued adaptation of focus: Frozen move to more independent business Leverage benefits of multi temperature concept (3663) New management with new focus Benefits of new contracts (i.e. Compass), expanded product range (Lufil) and customer branded food expansions (Vulcan) to be felt in 2006 Strategic imperatives & prospects

33 Foodservice Products – Combined Foods (SA) …% Trading margin 12.3% 12.6% Rm Trading IncomeRm Revenue Pricing pressure due to strong Rand, i.e. yeast imports Crown trading income up 25%, despite deflation and export sales 26% down Spice ingredient volumes 23% up Continental Spice / Tari product ranges positively impact results IBI-Trimark & Conti Spice strengthen bakery & spice offering Bidbake H2 results disappoint Crown/Bidbake synergies yet to materialise Kneading some dough +8%

34 Foodservice Products – Combined Foods (SA) Current contr. to Group Trading Income 4% Bidbake: New facility to open up efficiency opportunities Yeast strategy to be finalised Internal focus on extracting synergies and efficiencies Leverage customers over scope of product range Crown well positioned to continue growth Strategic imperatives & prospects

35 Bidoffice - Office Products …% Trading margin 8.0% 9.1% Rm Trading IncomeRm Revenue Mighty Minolco +5% 38% profit increase at Automation Minolco: securing annuity income streams & new contracts Pressure from deflation in Stationery; undercutting by competitors Stationery: Waltons sales up 5% and profits flat; Southern Gauteng underperformance being closely monitored, Northern Gauteng trading well Kolok maintains market share, unit volumes up 23% profits down 21% Office furniture: flat overall

36 Bidoffice - Office Products 9% Current contr. to Group Trading Income Stationery and related improving mix & margin though complementary promotional gifts and computer peripherals Improvement in Waltons Southern Gauteng New site for Kolok to capitalise on anticipated growth Minolta large contract wins in a strong trading environment Strategic imperatives & prospects

37 Bidoffice - Printing & Paper Conversion …% Trading margin 8.9% 7.6% Rm Trading IncomeRm Revenue -4% Lithotech France returns to profitability: F2004: -R16,9m H1 2005: -R15,0m H2 2005: + R4,5m Capacity mismatch successfully addressed, but requires intense focus Lithotech SA moving up the value chain to offset ex-growth products (R40m capex in F2004 supports growth) Statmark satisfactory Silveray down 35% - margins sacrificed to maintain market share; reorganisation Sacré bleu

38 Bidoffice - Printing & Paper Conversion 5% Current contr. to Group Trading Income Lithotech SA Dynamic business model adapts to changing technologies and customer preferences Investment in labels to grow market share Laser, mailing and electronic bill presentment enjoy significant success Refocused Silveray to deliver better F2006 results Lithotech France Capacity cut-backs through plants closures in France & UK underscore the expected turnaround Strategic imperatives & prospects

39 Bid Industrial Products Luminary …% Trading margin 8.0% 7.7% Rm Trading IncomeRm Revenue +18% Voltex 24% increase in trading income on a 15% rise in sales; margin 6,7% (6,3%) Stock building for strategic reasons Energy efficient luminaries for Eskom a positive impact Afcom Trading income up 10%; 3% rise in sales Deflation, import penetration Maintaining flexibility by selectively importing whilst maintaining manufacturing capability Buffalo Executape Trading income up 14%; 13% rise in sales

40 Bid Industrial Products 8% Current contr. to Group Trading Income Significant new contracts for electrical wholesale Operational objectives on track Building automation gathers momentum Eskom Demand Side Management in tandem with national energy saving programme a plus Infrastructure pipeline substantial Packaging Closures businesses optimistic Focus on the commercial market Strategic imperatives & prospects

41 Automotive - McCarthy …% Trading margin Rm Trading IncomeRm Revenue 3.9% 3.4% 3.7% 3.3% 14% rise in revenue to R13.6bn, profits up 22% to R500m on like for like basis Slight easing in dealership profits countered by stellar Yamaha and Financial Services result Automotive dealerships: 19% growth in new units to Flat used market of units New vehicle price standstill (added value without cost) & deflation in used Margin pressure in new and used Strong consumer economy benefits Yamaha – full range McCarthy/WesBank JV book R3.7bn GAZ taxi partnership with SANTACO Awesome automotive

42 Automotive - McCarthy 16% Current contr. to Group Trading Income Socio-economic factors favour strongest automotive market in 25 years Possibility of market doubling over 5 years Mood of confidence; nominal interest rates at a quarter century low; increased affordability Previously disadvantaged individuals now commanding a 25% (and growing) share of new vehicle sales, often bypassing used market Vehicle ownership ratios in SA low – in line with world average Group Initiatives: Mega dealerships for new cars & Renault marque added McCarthy Pre-owned – 12 outlets, extra 8 planned; strategic priority Budget strongly positioned – new van rental Yamaha – full range offering GAZ taxi market potential promising Re-launched McCarthy Fleet Services Bidvest group synergies already unfolding Strategic imperatives & prospects

43 Corporate Services Rm Trading Income 2% Current contr. to Group Trading Income -3% BNS a loss of R6m – conditional sale Leases with fixed determinable escalation clauses now expensed on a straight line basis thru Investment & Other Income line annual transaction R6bn; breakeven on a cash basis Property rental income up 10% Quality catches but Namsov profits sharply down on strong currency and fuel prices

44 Group Matters

45 BEE update Bidvest share price increase assists funding prospects Relationship with Dinatla continues to develop and evolve Negation of dilution from 18m options issued at the time of the Dinatla deal through share repurchases Group capital will increase by R1bn in December 2006 due to issue of 18m shares, i.e. Deli XL acquisition pre-funded through share repurchases Ongoing process of refocusing: Board restructuring Succession planning at Bidoffice IFRS impacts – unlikely to be material (see appendix 1) Acquisitions: Tiger Wheels Deli XL Group Matters

46 Acquisition of Deli XL Deli XL fits Bidvests stated model of: Market-leadership within a new geographic distribution channel Extracting synergies between businesses Purchase price: Є140m (R1,1bn) in debt, including Є57m (R450m) in goodwill Tangible NAV reduced by +/- R450m, but total NAV rises by an annualised +/- R25m retained income Extremely cost effective funding at 0,50% over Eurobor (1,75% post-tax) Historic PE of 17x (EBITDA of 7,2x) paid for for an underperforming business can reduce sharply to around a 6-7 PE in the medium term due to: Bidvest assuming only current employees social obligations Procurement improvements quickly reflected in margins Likely to impact for 9 months of F2006 Earnings accretive in F2006 after funding costs

47 Rationale for the acquisition: Objective: to internationalise Bidvests foodservice interests Deli XL delivers: Geographic diversification into Continental Europe Market shares : 13% of overall Dutch market segment but 46% of Institutional segment 4% of overall Belgium market but 10% of Institutional & Catering segment Good basis for organic and acquisitive European expansion Access to volume (extra customers) Deli XL background: Є819m turnover, but trading margins currently less than 1% Sub-optimal business structure Benefits of recent restructuring available to Bidvest Acquisition of Deli XL

48 Deli XL turnaround strategy (improve margins from 1% to 2-3% in 3 years): Optimisation of existing state-of- the-art infrastructure Renegotiation of unprofitable contracts; optimisation of client mix Rationalisation & optimisation of product range Implementation of Bidvest philosophy – support, expectations & accountability Benefits of focused purchasing to both Deli XL and 3663 Acquisition of Deli XL

49 Outlook

50 Key growth drivers Internationally: Increased efficiencies, market share gains, product expansion and profit-enhancing new territories in International Foodservice South Africa: Freight services aligned with trade growth ahead of GDP Continuation of trend to outsourcing Cost base adapting to prevailing low inflation environment SA Foodservice market far from exhausted – e.g initiative Upswing in infrastructure spend + sporting & tourism events New vehicle market could double in 5 years Exposure to emergent consumers

51 MANAGEMENT IS BUDGETING FOR REAL HEPS GROWTH IN F2006 Our job is to manage our businesses for above-average growth; were leaving the detailed financial forecasts to the analysts Prospects for F2006 Positive impact of Deli XL Benefits derived from recent capex Reduction in deflationary price pressure Correction of underperformers Ample capacity for further gearing


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