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1 Audited Results For twelve months ended June 2008 Infinite possibilities when Bidvest people take on a challenge.

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Presentation on theme: "1 Audited Results For twelve months ended June 2008 Infinite possibilities when Bidvest people take on a challenge."— Presentation transcript:

1 1 Audited Results For twelve months ended June 2008 Infinite possibilities when Bidvest people take on a challenge

2 2 Agenda Introduction Financial Results Group Outlook Appendices: Appendix 1: Geographic and Segmental contributions to Revenue and Trading Profit Appendix 2: Detailed segmental results Appendix 3: Effects of economic drivers by segment Appendix 4: Historic Performance Appendix 5: The Bidvest Business Model

3 3 Introduction and Overview Brian Joffe

4 4 Note : IFRS compliant F2008 results summary Introduction ROFE from 50% in F2007 to 42% in F2008 DPS 11% to 495cps HEPS 10% to 1068cps Revenue earnings 16% to R110,5bn Gross profit 18% to R21,7bn Trading profit 17% to R5,3bn Headline earnings 11% to R3,2bn

5 Taking trading advantage of price inflation Inflation has been turned to profit advantage in foodservice businesses Cost-push inflation in food and energy did not crimp overall margin Strength of Australian dollar assisted translation Commendable performance from the Bidvest team in tough markets Smart trading and instances of market share gains support result Individuals and companies under unrelenting affordability pressure in all markets Increase in business bad debts in H2 5 F2008 – Bidvest people managed their environment Working capital Cash applied lower than in F2007 due to sharp improvement in H2 Working capital absorption, excl. McCarthy, reduced by 60% Inventory up in support of trading strategy - to profit, where feasible, from escalating prices Introduction

6 Revenue (Rm)Trading Profit (Rm) Segment F2007 % ch. F2008 F2007 % ch. F2008 Bidfreight - Strong Bulk result (e.g. agricultural & petro-chemical volumes); weaker consumer imports but evidence of improving exports; bulk- category capex pays off 18 772,4 +17.2 21 992,7585,6 +18.0 690,8 Bidserv – Critical mass in outsourcing, investment in facilities and assertiveness in tackling competitive markets underpins a record result 5 243,2 +22.5 6 424,5660,0 +27.1 838,7 6 Segments at the forefront of performanceIntroduction

7 Revenue (Rm)Trading Profit (Rm) Segment F2007 % ch. F2008 F2007 % ch. F2008 Bidvest Europe - Strong contribution from Deli XL (+31% in Euros); 3663 flat – solid effort given weakening economy; resistance to selling price increases; reorganisation of sales team yielding results 29 962,5 +12.4 33 683,8757,5 +16.1 879,8 Bidvest Asia Pacific - R97m full year trading profit from Angliss (well ahead of expectations); market share gains, Australia up 44%, New Zealand up 33% despite weakening economy & drought 8 863,6 +63.2 14 467,4346,5 +59.1 551,4 7 Segments at the forefront of performanceIntroduction

8 Revenue (Rm)Trading Profit (Rm) Segment F2007 % ch. F2008 F2007 % ch. F2008 Bidfood – Caterplus & Speciality trading profit up 23% despite weakness in chain restaurant market; Bidfood Ingredients trading profit up 47% - management team having an impact & Bakery Ingredients turned around 3 733,2 +18.4 4 418,9273,1 +31.4 358,8 8 Segments at the forefront of performanceIntroduction

9 Revenue (Rm)Trading Profit (Rm) Segment F2007 % ch. F2008 F2007 % ch. F2008 Bid Industrial and Commercial – Voltex up 7% off high F2007 base - good volume growth and benefits from higher copper price and weaker Rand in H2; stronger H2 from Kolok, good performance from Waltons, especially Gauteng 8 369,1 +12.4 9 403,0728,3 +8.5 790,1 Bidpaper Plus – Lack of big export projects; slowdown in traditional paper-based solutions; strong growth in electronic billing; Stationery has grown market share; rising cost pressures 1 823,8 +6.2 1 937,4226,9 -3.0 220,2 9 Segments holding their ownIntroduction

10 Revenue (Rm)Trading Profit (Rm) Segment F2007 % ch. F2008 F2007 % ch. F2008 Bid Auto - Like-for-like profit declined 26%; R204m (excl. funding costs) contribution from Viamax in its first full year exceeded expectations; new vehicles volumes down, but some margin recovery in used vehicles in H2; 6 dealerships and 12 Value Servs closed; higher new imposed inventory, used vehicle working capital levels managed down in H2; initial NCA insurance premium impact; consumer spending impact on Yamaha & Budget continues 18 656,3 18 467,5724,5 +2,6 743,0 10 Segments holding their ownIntroduction

11 11 Financial Results David Cleasby

12 Consolidated Income StatementFinancials Organic growth of 13% 13% growth excluding exchange rate translation Full year contributions from Angliss (R3bn) and Viamax (R544m ) 12 Year ended June 30 2008 Avg R/£14.64 Avg R/£ 13.95 F2008 in constant currency R/£13.95 Rms 2008 % ch 2007 2008 % ch Revenue 110 477,6 +16 95 655,5108 132,7 +13

13 Year ended June 30 2008 Avg R/£14.64 Avg R/£ 13.95 F2008 in constant currency R/£13.95 Rms 2008 % ch 2007 2008 % ch Revenue 110 477,6 +16 95 655,5108 132,7 +13 Trading profit 5 334,9 +17 4 546,85 269,4 +16 Consolidated Income StatementFinancials Trading Margins F2008F2007 Local6.2%6.0% Bidserv & Bidfood compensated for Voltex & Bidpaper Plus margins Offshore3.2%3.1% Full year contribution from Angliss (lower inherent margins due to trading nature of the business) vs improvement in Deli XL & Australian margins Group4.8%4.7% Note : 1. EBITDA up 20%: R6,9bn in F2008 vs R5,7bn in F2007 2. 11% organic growth in Trading Profit 3. Foreign businesses = 31% (R1,6bn) contribution to Trading Profit vs 29% (R1,3bn) in F2007 13

14 Consolidated Income StatementFinancials H1 = R445m; H2 = R486m Increase in interest due to funding of increased capex, acquisitions and working capital absorption Offshore interest of R138,2m vs local interest of R792,8m Net debt offshore of R0,7bn vs local net debt of R4,8bn 14 Year ended June 30 2008 Avg R/£14.64 Avg R/£ 13.95 F2008 in constant currency R/£13.95 Rms 2008 % ch 2007 2008 % ch Revenue 110 477,6 +16 95 655,5108 132,7 +13 Trading profit 5 334,9 +17 4 546,85 269,4 +16 Net finance expense (931,0) +64 (566,2)(924,6) +63

15 Consolidated Income StatementFinancials Associates: Tiger Auto (Sold for R212m with effect from March 2008) Enviroserv (To be sold for R569m with effect from Q2 F2009) Comair Full year contribution Other Note: Note: Includes dividends received 15 Year ended June 30 2008 Avg R/£14.64 Avg R/£ 13.95 F2008 in constant currency R/£13.95 Rms 2008 % ch 2007 2008 % ch Revenue 110 477,6 +16 95 655,5108 132,7 +13 Trading profit 5 334,9 +17 4 546,85 269,4 +16 Net finance expense (931,0) +64 (566,2)(924,6) +63 Associate Income 122,0 +78 68,4122,0 +78

16 Year ended June 30 2008 Avg R/£14.64 Avg R/£ 13.95 F2008 in constant currency R/£13.95 Rms 2008 % ch 2007 2008 % ch Revenue 110 477,6 +16 95 655,5108 132,7 +13 Trading profit 5 334,9 +17 4 546,85 269,4 +16 Net finance expense (931,0) +64 (566,2)(924,6) +63 Associate Income 122,0 +78 68,4122,0 +78 Taxation (1 200,0) +16 (1 033,2)(1 184,5) +15 Consolidated Income StatementFinancials Effective tax rates F2008F2007 Local26.5%27.4% Reduction in corporate tax rate to 28%; F2007 benefitted from utilisation of assessed tax losses Offshore26.3%23.6% Corporate rate reductions in UK & Netherlands; Angliss lower sovereign tax rate; no benefit on tax losses in Belgium Group26.5%27.1% Sustainable rate of +/- 27% 16

17 Year ended June 30 2008 Avg R/£14.64 Avg R/£ 13.95 F2008 in constant currency R/£13.95 Rms 2008 % ch 2007 2008 % ch Revenue 110 477,6 +16 95 655,5108 132,7 +13 Trading profit 5 334,9 +17 4 546,85 269,4 +16 Net finance expense (931,0) +64 (566,2)(924,6) +63 Associate Income 122,0 +78 68,4122,0 +78 Taxation (1 200,0) +16 (1 033,2)(1 184,5) +15 Minority interests (82,0) -6 (87,1)(82,0) -6 Consolidated Income StatementFinancials Bidvest Namibia: Namsov - significantly better H2 Forms part of Bidvest Namibia (mainly comprising Bid Industrial and Manica businesses in Namibia) Versalec: Slightly down BidAuto: Slightly up 17

18 Consolidated Income StatementFinancials 8% organic growth in earnings 18 Year ended June 30 2008 Avg R/£14.64 Avg R/£ 13.95 F2008 in constant currency R/£13.95 Rms 2008 % ch 2007 2008 % ch Revenue 110 477,6 +16 95 655,5108 132,7 +13 Trading profit 5 334,9 +17 4 546,85 269,4 +16 Net finance expense (931,0) +64 (566,2)(924,6) +63 Associate Income 122,0 +78 68,4122,0 +78 Taxation (1 200,0) +16 (1 033,2)(1 184,5) +15 Minority interests (82,0) -6 (87,1)(82,0) -6 Headline earnings 3 237,8 +11 2 912,03 195,1 +10

19 Year ended June 30 2008 Avg R/£14.64 Avg R/£ 13.95 F2008 in constant currency R/£13.95 Rms 2008 % ch 2007 2008 % ch Revenue 110 477,6 +16 95 655,5108 132,7 +13 Trading profit 5 334,9 +17 4 546,85 269,4 +16 Net finance expense (931,0) +64 (566,2)(924,6) +63 Associate Income 122,0 +78 68,4122,0 +78 Taxation (1 200,0) +16 (1 033,2)(1 184,5) +15 Minority interests (82,0) -6 (87,1)(82,0) -6 Headline earnings 3 237,8 +11 2 912,03 195,1 +10 HEPS (cents) 1 068,0 +10 970,01 053,5 +9 Diluted HEPS (cents) 1051,0 +11 947,21 037,1 +9 Consolidated Income StatementFinancials Diluted HEPS – 308,1m diluted weighted avg shares in issue - share buy-back of 5,6m shares from shareholders in May 2008 in lieu of interim distribution 19

20 Year ended June 30 2008 Avg R/£14.64 Avg R/£ 13.95 F2008 in constant currency R/£13.95 Rms 2008 % ch 2007 2008 % ch Revenue 110 477,6 +16 95 655,5108 132,7 +13 Trading profit 5 334,9 +17 4 546,85 269,4 +16 Net finance expense (931,0) +64 (566,2)(924,6) +63 Associate Income 122,0 +78 68,4122,0 +78 Taxation (1 200,0) +16 (1 033,2)(1 184,5) +15 Minority interests (82,0) -6 (87,1)(82,0) -6 Headline earnings 3 237,8 +11 2 912,03 195,1 +10 HEPS (cents) 1 068,0 +10 970,01 053,5 +9 Diluted HEPS (cents) 1051,0 +11 947,21 037,1 +9 Distribution495,0* +11 446,4495,0 +11 Consolidated Income StatementFinancials * Interim distribution effected by pro-rata share buy-back; distribution policy still +/- 2x covered by HEPS 20

21 21 Consolidated Cash Flow Statement – Rms Investment activities of R4bn: R2,7bn in capex vs R1,7bn in F2007, mainly Bidfreight, Bidserv, BidAuto and Bidvest Europe R1,3bn spent on acquisitions, mainly Viamax (R960m) In the 4 years to June 2008: R8,8bn cash generated from operations after working capital, tax and distributions, supported the R11,6bn spent on acquisitions & investments of businesses for medium term growth Full benefits still to manifest Cash generated from ops Working capital utilised Net Finance charges Taxation Distributions Cash effects of investment acts Cash effects of financing acts Year ended June 30 2008 Financials Year ended June 30 2007

22 22 Some lengthening in working capital cycle, although H2 was proportionately better Inventory – increased strategic buying & imposed stock Debtors - quality of debtors book is sound Creditors - impact of importing stock with shorter credit lines Banking assets are up R219m (increased lending achieved) vs banking liabilities up R153m Net Working Capital Days Debtors days Stock days Creditors days H1 2006F2006H1 2007F2007H1 2008F2008 9-32814 Net days Financials 10

23 23 Working capital movements 60% reduction in working capital, excl. McCarthy where imposed new vehicle over-stocking occurred Additional working capital invested in Chinese vehicles (R310m) Financials RmsF2008 % ch F2007 Group working capital 730 47% 1 367 McCarthy working capital (338) 14% (392) Group working capital movement, excl. McCarthy 39260%975

24 24 Net working capital flows vs cash generated - Rbn Upward trend in cash generated – cash positive international businesses Net working capital typically better in 2 nd half H1 2006H2 2006H1 2007H2 2007H1 2008H2 2008Financials Year ended June 30 2008

25 Target interest cover range 25 Gearing H1 2006F2006H1 2007F2007H1 2008F2008 Interest cover of 5.7x vs target of 5-6x; EBITDA interest cover of 7.3x R1,8bn increase in debt vs F2007: Acquisition R1,3bn Net capex of R2,8bn Net working capital of R0,7bn Financials

26 26 Group Outlook Brian Joffe

27 27 Bidfreight Substantial prior capex will continue to pay dividends, particularly in Bulk Organic growth is immediate focus together with tighter debtor and cash management Agricultural volume potential (maize exports vs wheat imports) Liquid bulk upgrades on hold until agreement can be reached with Ports authorities Port services demand buoyant Higher pricing necessary to compensate for capacity shortage Bidserv Airports Company super license a step-change for BidAir TMS Continued strong profit performance together with foreign expansion potential Bidvest Bank – new foreign exchange products Critical mass in soft services plus market reach will enable Bidserv to once again grow profits – particularly in tourism, aviation and mining Operational Prospects – F2009 Group Outlook

28 28 Operational Prospects – F2009Foodservice Asian potential barely exploited - excellent local trading skills and facilities positions Bidvest strongly; expansion remains on the agenda Cost pressures in Australia, New Zealand and SA could impinge on margin but management actions/market strength will ensure growth continues Contract wins, bolt-ons, and tighter cost control will benefit Deli Netherlands & Belgium; focus on cost controls and improved efficiencies 3663 is strongly positioned to weather competitive stresses and will benefit from industry consolidation but short term customer price resistance should not be underestimated and profit growth will be difficult to achieve Group Outlook

29 29 Operational Prospects – F2009 Bid Industrial & Commercial Products Electrical Wholesaling: Challenge: declining residential/commercial market Opportunity: civil engineering investment on a broad front, energy efficiency initiatives, accommodation investments ahead of World Cup 2010, political imperative of low-cost housing Kolok: upward momentum in H2 continues into H1 F2009 Waltons: Improving earnings to continue, led by Gauteng market and promotional gifts Vulcan to capitalise on modernized facilities and new products Bidpaper Plus Newer technology e-business opportunities are being vigorously exploited, supported by cash generated from traditional ex-growth activities Retail exposure to remain tough Group Outlook

30 30 Operational Prospects – F2009 Group Outlook Bid Auto Management is striving to maintain profitability in what is the most difficult vehicle market for five years New vehicle volumes to fall further Rationalisation where necessary, selective additions (e.g. Suzuki) Positive used market volume momentum to continue Parts and service revenues will grow Focus on Chery profitability through Value Centres and independents Viamax provides good profitability and return, with renewals augmenting contract run-outs Addition of Viamax provides scale economies and synergy savings for newly named McCarthy Fleet Solutions Yellow metal distribution orientated toward price conscious/owner operated market

31 31 Group Prospects – F2009Group Bidvest has a diversity of drivers to profit from good times and bad Management and staff well incentivised to stretch the performance envelope Competitor weaknesses will be exploited Scanning for keenly priced acquisitions: vendor aspirations are more realistic Equity is now more attractive relative to the servicing cost of debt; Bidvest will continue to re-assess the most attractive means of optimising its WACC and funding Difficult times bring opportunity for a group with an opportunistic culture Bidvest will not disappoint in F2009 Group Outlook

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