audited results
DESCRIPTION
Audited Results. For the twelve months ended June 30 2005. Agenda. Introduction Financial Results Divisional Results Group Matters Outlook. Introduction. Results Summary. Revenue +22,5% to R62,8bn Trading income +24,4% to R 3,2bn Headline earnings +27,1% to R 2,1bn - PowerPoint PPT PresentationTRANSCRIPT
Audited Results
For the twelve months endedJune 30 2005
Agenda
Introduction Financial Results Divisional Results Group Matters Outlook
Introduction
* H1 includes first time contributions from McCarthy and acquired minorities, whereas H2 2005 is materially comparable to H2 2004
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 686,6cps
(+29% in H1*; + 23% in H2*)
DPS +22,3% to 306,0cps
ROFE 51% in 2004 vs 55% in 2005Note: F2005 accounts not prepared i.t.o. IFRS
Financial Results
R000’s H1 2005 H2 2005 Total 2005
Revenue 31 447 147 31 364 629 62 811 776
Trading income (margin)
1 485 552 (4,7%)
1 679 094 (5,4%)
3 164 646 (5,0%)
Net finance expense (127 374) (150 306) 277 680
Associate Income 6 573 21 855 28 428
Taxation (392 890) (429 619) (822 509)
Minority interests (3 482) (7 693) (11 175)
Headline earnings 968 137 1 110 223 2 078 360
HEPS (cents) 319,5 367,1 686,6
DPS (cents) 133,8 172,2 306,0
Consolidated Income Statement
Year ended June 30 2005
Segmental Performance
Segment Trading Income Performance
H1 2005 H2 2005
Bidfreight SA +7% +25%
Bidcorp R25m turnaround R14m turnaround
Bidserv +49% +34%
Renfin -9% -23%
International Foodservices +12% +21%
Caterplus +11% +11%
Combined Foods +21% -4%
Bidoffice – Office Products -3% +13%
Bidoffice – Printing & Paper Conversion* -19% +16%
Bid Industrial +25% +14%
McCarthy n/a +21%
* Lithotech France: R15,0m loss in H1 vs R4,5m profit in H2
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 30 2005 2005 in constant currency:
Avg R/£ 11.94
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
Rm’s 2005% ch vs
2004 2004 2005
% ch vs 2004
Revenue 62 811,8 +22,5 51 262,2 63 603,9 +24,1
Consolidated Income Statement
Year ended June 30 2005 2005 in constant currency:
Avg R/£ 11.94
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
Rm’s 2005% ch vs
2004 2004 2005
% ch vs 2004
Revenue 62 811,8 +22,5 51 262,2 63 603,9 +24,1
Trading income (margin)
3 164,6
(5,0%)
+24,4 2 544,1 (5,0%)
3 188,9 +25,3
20042005Trading margins
5,0%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
* 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 2003
2.7%Offshore
Trading Margins
Consolidated Income Statement
Year ended June 30 2005 2005 in constant currency:
Avg R/£ 11.94
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
Rm’s 2005% ch vs
2004 2004 2005
% ch vs 2004
Revenue 62 811,8 +22,5 51 262,2 63 603,9 +24,1
Trading income (margin)
3 164,6
(5,0%)
+24,4 2 544,1 (5,0%)
3 188,9 +25,3
Capital Items (17,2) -57,2 (40,2) (17,2) n/c
Rm’s 2005% ch vs
2004 2004 2005
% ch vs 2004
Revenue 62 811,8 +22,5 51 262,2 63 603,9 +24,1
Trading income (margin)
3 164,6
(5,0%)
+24,4 2 544,1 (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 30 2005 2005 in constant currency:
Avg R/£ 11.94
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
Consolidated Income Statement
Year ended June 30 2005 2005 in constant currency:
Avg R/£ 11.94
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
Rm’s 2005% ch vs
2004 2004 2005
% ch vs 2004
Revenue 62 811,8 +22,5 51 262,2 63 603,9 +24,1
Trading income (margin)
3 164,6
(5,0%)
+24,4 2 544,1 (5,0%)
3 188,9 +25,3
Net finance expense (277,7) +64,4 (168,9) (280,1) +65,8
Associate Income 28,4 +19,2 23,8 28,4 0,0
Consolidated Income Statement
Year ended June 30 2005 2005 in constant currency:
Avg R/£ 11.94
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
Rm’s 2005% ch vs
2004 2004 2005
% ch vs 2004
Revenue 62 811,8 +22,5 51 262,2 63 603,9 +24,1
Trading income (margin)
3 164,6
(5,0%)
+24,4 2 544,1 (5,0%)
3 188,9 +25,3
Net finance expense (277,7) +64,4 (168,9) (280,1) +65,8
Associate Income 28,4 +19,2 23,8 28,4 0,0
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
2004 2005Effective Tax Rates*
Deferred tax asset write-back offsets 1% decrease in corporate tax rates
Consolidated Income Statement
Year ended June 30 2005 2005 in constant currency:
Avg R/£ 11.94
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
Rm’s 2005% ch vs
2004 2004 2005
% ch vs 2004
Revenue 62 811,8 +22,5 51 262,2 63 603,9 +24,1
Trading income (margin)
3 164,6
(5,0%)
+24,4 2 544,1 (5,0%)
3 188,9 +25,3
Net finance expense (277,7) +64,4 (168,9) (280,1) +65,8
Associate Income 28,4 +19,2 23,8 28,4 0,0
Taxation (822,5) +21,9 (674,6) (820,9) +22,0
Minority interests (11,2) -85,0 (74,8) (12,0) -84,7
Rm’s 2005% ch vs
2004 2004 2005
% ch vs 2004
Revenue 62 811,8 +22,5 51 262,2 63 603,9 +24,1
Trading income (margin)
3 164,6
(5,0%)
+24,4 2 544,1 (5,0%)
3 188,9 +25,3
Net finance expense (277,7) +64,4 (168,9) (280,1) +65,8
Associate Income 28,4 +19,2 23,8 28,4 0,0
Taxation (822,5) +21,9 (674,6) (820,9) +22,0
Minority interests (11,2) -85,0 (74,8) (12,0) -84,7
Headline earnings 2 078,4 +27,1 1 635,4 2 095,2 +28,1,
HEPS (cents) 686,6 +26,2 544,0 692,2 +27,2
Diluted HEPS (cents) 664,2 +24,1 535,3 669,5 +25,1
DPS (cents) 306,0 +22,3 250,2 306,0 +22,3
Consolidated Income Statement
Year ended June 30 2005 2005 in constant currency:
Avg R/£ 11.94
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94Earnings Total foreign headline earnings = 22,7% of Group (21,3% in
F2004)
Dividend
16% enhancement in DPS due to Dinatla transaction
Dividend policy = +/- 2x
Rm’s 2005 2004
Assets
Non-current assets 8 159,8 6 478,9
Current assets 12 735,2 11 542,4
Total assets 20 895,0 18 021,4
Equity & Liabilities
Capital & reserves 7 564,4 6368,4
Non-current liabilities 1 765,5 1 242,8
Current liabilities 11 565,1 10 410,2
Total equity & Liabilities 20 895,0 18 021,4
Year ended June 30
Consolidated Balance Sheet
4 8
No
. of
Day
s 34
30 28
5464
38
2005 2004
StockDebtorsCreditors
Note: Seasonality always affects H1
Net Debt Position (Rm’s) 2005 2004
Liquid funds 1 707,9 2 305,2
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 : equity 14% 12%
Net debt : funds employed 17% 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
Rm’s 2005 2004
Cash flow from operating activities 2 200,5 2 294,5
Cash effect of investment activities (2 052,3) (3 136,5)
Cash effects of financing activities (797,7) 818,2
Net cash and cash equivalents 1 497,7 2 101,0
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)
Divisional Results
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
-50
50
150
250
350
450
550
2004 2005 6000
7000
8000
9000
10000
11000
12000
13000
14000
15000
16000
Trading income Revenue
…% Trading margin
3.6%3.4%
Rm RevenueRm Trading Income
+16%
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
Services – Bidcorp Ships ahoy!
-25
-20
-15
-10
-5
0
5
10
15
1H04 2H04 1H05 2H05
580
600
620
640
660
680
700
720
740
760
780
Trading income Revenue
…% Trading margin
1.7%
Rm Trading Income Rm 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
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
Services – BidservAcquisitive 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
100120140160180200220240260280300
2004 2005
500
1000
1500
2000
2500
3000
Trading income Revenue
…% Trading margin
10.0%9.5%
Rm Trading Income Rm Revenue
+41%
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 contributorGuarding on a firmer management and technology footingIPS 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
Services – Renfin Zero is the new hero
0
50
100
150
2004 2005
250
300
350
400
450
500
550
600
650
700
Trading income Revenue
…% Trading margin
15.7%
19.4%
Rm Trading Income Rm RevenueTravel trading income (-27%)Zero commission 1 May 2005 for
SAA, other carriers phasing inDust 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 F2004Crime hammers insurance costs
-15%
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
Foodservice Products – International (UK)Britannia way cool
100150200250300350400450500550600
2004 2005
3000
5000
7000
9000
11000
13000
15000
17000
Trading income Revenue
…% Trading margin
3.6%3.2%
Rm Trading Income Rm RevenueProfits 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%
…% Trading margin
50
70
90
110
130
150
170
2004 2005
2500
3000
3500
4000
4500
5000
5500
6000
6500
Trading income Revenue
2.9%2.7%
Rm Trading Income Rm 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%
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
020406080
100120140160180200
2004 2005
3005007009001100130015001700190021002300
Trading income Revenue
…% Trading margin
8.7%8.7%
Rm Trading Income Rm 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
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 businessLeverage 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
Foodservice Products – Combined Foods (SA)
40
50
60
70
80
90
100
110
120
130
2004 2005
100
300
500
700
900
1100
1300
Trading income Revenue
…% Trading margin
12.3%12.6%
Rm Trading Income Rm RevenuePricing 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%
Foodservice Products – Combined Foods (SA)
Current contr. to Group Trading Income
4%
Bidbake: New facility to open up efficiency opportunitiesYeast strategy to be finalisedInternal focus on extracting synergies and efficiencies Leverage customers over scope of product range
Crown well positioned to continue growth
Strategic imperatives & prospects
Bidoffice - Office Products
100
120
140
160
180
200
220
240
260
280
2004 2005
900
1400
1900
2400
2900
3400
3900
Trading income Revenue
…% Trading margin
8.0%9.1%
Rm Trading Income Rm 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
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
Bidoffice - Printing & Paper Conversion
10
30
50
70
90
110
130
150
170
190
2004 2005
100
600
1100
1600
2100
2600
Trading income Revenue
…% Trading margin
8.9%7.6%
Rm Trading Income Rm 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
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
successRefocused Silveray to deliver better F2006 resultsLithotech France
Capacity cut-backs through plants closures in France & UK underscore the expected turnaround
Strategic imperatives & prospects
Bid Industrial ProductsLuminary
50
100
150
200
250
300
2004 2005
500
1000
1500
2000
2500
3000
3500
Trading income Revenue
…% Trading margin
8.0%7.7%
Rm Trading Income Rm 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
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
Automotive - McCarthy
…% Trading margin
Rm Trading Income Rm Revenue
50
100
150
200
250
300
1H04 2H04 1H05 2H05
500
1500
2500
3500
4500
5500
6500
7500
Trading income 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 41 556 Flat used market of 31 047 unitsNew vehicle price standstill (added value
without cost) & deflation in usedMargin 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
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
Corporate Services
10
20
30
40
50
60
70
80
2004 2005
Trading income
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
mymarket.com 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
Group Matters
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
Acquisition of Deli XL
Deli XL fits Bidvest’s 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
Rationale for the acquisition:
Objective: to internationalise Bidvest’s 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 34 000 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
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
3663 OPERATING PERFORMANCE SINCE ACQUISITION
8.0
16.120.0
25.431.9
39.845.7
0.8%
1.7%
2.3% 2.5%2.9%
3.3% 3.5%
0
10
20
30
40
50
60
1999 2000 2001 2002 2003 2004 2005Year to June
0.0
0.0
0.0
0.0
0.0
0.1
0.1
Operating profit (£m) Operating margin (%)
Outlook
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. 3663 initiative
Upswing in infrastructure spend + sporting & tourism events
New vehicle market could double in 5 years
Exposure to emergent consumers
MANAGEMENT IS BUDGETING FOR REAL MANAGEMENT IS BUDGETING FOR REAL HEPS GROWTH IN F2006HEPS GROWTH IN F2006
Our job is to manage our businesses for above-average growth; we’re 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