1 / 71

June 30 2004

BID Vest. Audited Results. for the twelve months ended. June 30 2004. Introduction. Financial Results. Divisional Results. Strategy & Outlook. Agenda. Introduction. Results Summary. Revenue +8.9% to R51.3bn Trading income +13.9% to R2.6bn Headline earnings +14.8% to R1.6bn

lynnea
Download Presentation

June 30 2004

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. BIDVest Audited Results for the twelve months ended June 30 2004

  2. Introduction Financial Results Divisional Results Strategy & Outlook Agenda

  3. Introduction

  4. Results Summary • Revenue +8.9% to R51.3bn • Trading income +13.9% to R2.6bn • Headline earnings +14.8% to R1.6bn • HEPS +17.7% to 546.7c • DPS +13.7% to 250.2c

  5. Group Highlights • Attributable income impacted by: • R63m negative exchange rate impact on foreign operations • R13m negative impact of STC accounting changes • R120m (40cps) positive impact from McCarthy in H2 after funding costs • HEPS growth excl. McCarthy: • 6.6% on old accounting basis • Improved last quarter • Separation of Chairman / CE roles • Successful offers for Bidvest plc / Bidcorp plc minorities

  6. Minority offers • Minorities: 19% of Bidvest plc and 41% of Bidcorp plc • Rationale • Buy-out in line with philosophy to “own the cashflows” • 81% holding in Bidvest plc limited free float • Reorganisation of Bidcorp plc and alignment with SA interests best achieved as a private company • Valuation • Minority offer for Bidvest plc equated to an EV/EBITDA multiple of 6.5x and headline P/E ratio 13.7x • Minority offer for loss-making Bidcorp plc valued entire business at £50m, a slight premium to book value

  7. Historic Performance 4.9% 5.0% 4.9% 4.8% 4.6% 5.1% 4.8% 4.7% 4.9% 4.4% 18% CAGR over 5 years 15% CAGR over 5 years

  8. Financial Results

  9. Foreign businesses • Negative rand translation impactofR4.2bn Local businesses • Pressure on foreign currency-denominated revenues (eg. Safcor Panalpina) • Local volumes increased, but deflationary pressure on selling prices (eg. SA Food Service deflation averaged +/-5%) • McCarthy added R5.9bn in H2 Consolidated Income Statement Actual: Avg R/£ 11.94 Actual: Avg R/£ 14.29 Constant currency: Avg R/£ 14.29 Year ended June 30

  10. Gross margins up slightly, but rand value of gross profit on imports declined • No material AC133 impact Trading Margins 2004 2003 Offshore 2.7%* 2.7% Bidvest plc margins 3.1% in 2004 vs 2.9% in 2003 Local 6.6% 6.7% Improved operating efficiencies, comparative base affected by McCarthy Group 5.0% 4.8% * Offshore margins include a R21.8m loss from Bidcorp plc and a R17.0m loss from Lithotech France Consolidated Income Statement Actual: Avg R/£ 11.94 Actual: Avg R/£ 14.29 Constant currency: Avg R/£ 14.29 Year ended June 30

  11. Translation gains: R100m swing from R102.6m in 2002 to R2.5m in 2004 Consolidated Income Statement Actual: Avg R/£ 11.94 Actual: Avg R/£ 14.29 Constant currency: Avg R/£ 14.29 Year ended June 30

  12. Consolidated Income Statement Actual: Avg R/£ 11.94 Actual: Avg R/£ 14.29 Constant currency: Avg R/£ 14.29 Year ended June 30 Capital items: includes R38.6m loss on discontinuance of businesses + R1.6m loss on disposal of assets

  13. Net interest: • R475m net debt offshore • R198m net debt in SA • Low interest earned on cash balances and high interest paid on debt in F2004; higher net debt position intra-month; unable to offset cash in foreign minorities until now • R1bn debt for McCarthy acquisition added R41m to the interest bill • Interest cover = 15x Consolidated Income Statement Actual: Avg R/£ 11.94 Actual: Avg R/£ 14.29 Constant currency: Avg R/£ 14.29 Year ended June 30

  14. Consolidated Income Statement Actual: Avg R/£ 11.94 Actual: Avg R/£ 14.29 Constant currency: Avg R/£ 14.29 Year ended June 30 Tax rates 2004 2003 Offshore 31.5% 27.8% Offshore rate to decline slightly due to tax relief as a consequence of minority acquisitions of Bidvest and Bidcorp plc Local 28.1% 29.5% Group 28.9% 29.0% Note: Rates exclude goodwill amortisation STC included as a charge in the Income Statement

  15. Consolidated Income Statement Actual: Avg R/£ 11.94 Actual: Avg R/£ 14.29 Constant currency: Avg R/£ 14.29 Year ended June 30 • Minority interests declined due to the buy-out of Bidvest plc minorities effective April 2004 • This will impact the full F2005 year

  16. Consolidated Income Statement Actual: Avg R/£ 11.94 Actual: Avg R/£ 14.29 Constant currency: Avg R/£ 14.29 Year ended June 30 Earnings • Total foreign earnings from Bidvest plc, Bidcorp plc, Lithotech France & Namsov = 20% of Group (R329m) • 21.8% increase in HEPS to 565.9c if McCarthy, Bidvest plc & Bidcorp plc were wholly owned for F2004 • 21.8% increase in HEPS on constant currency basis Dividend • 17% enhancement in DPS due to Dinatla transaction • Dividend cover will remain around 2x

  17. Consolidated Balance Sheet Year ended June 30

  18. Working capital cycle influenced by the inclusion of McCarthy • Numbers influenced by currency fluctuations: • Sales at avg rates; assets at spot rates 8 5 No. of Days Consolidated Balance Sheet Year ended June 30

  19. Consolidated Balance Sheet • Bidvest is not averse to leveraging the balance sheet • Gearing = 10% at balance sheet date, but higher intra-month (includes R624m McCarthy floorplan lease creditors) • Maximum gearing = 40% • £103m (R1.3bn) debt used to acquire Bidvest plc minorities • £25m facility agreed for Bidcorp plc minority takeout • Competitive funding rates achieved

  20. Consolidated Cash Flow Statement Year ended June 30 Strong cash generated by operations: • R764m positive swing in working capital

  21. Consolidated Cash Flow Statement Year ended June 30 Investments • R1bn for McCarthy • R1.3bn for minorities in Bidvest plc • Capex: R910m in 2004 v s R991m in 2003

  22. Consolidated Cash Flow Statement Year ended June 30

  23. Divisional Results

  24. …% Trading margin Services – Bidfreight Heavy lifting • Exchange rate impact on trading patterns • Terminals up strongly • RDS & SACD performed ahead of budget • IVS showed real growth • BMA & SABT flat due to derived price pressure from customers and operational difficulties • Strong Rand negatively impacted Safcor Panalpina, Marine & Manica Rm Trading Income Rm Revenue 3.4% 2.9%

  25. Services - Bidfreight STRATEGIC IMPERATIVES and PROSPECTS • NPA negotiations in process • PPP opportunities with NPA & Transnet • Exploiting synergistic opportunities between businesses (eg. Marine & Terminals on bulk products) • Acquisitive opportunities (eg. terminals, agencies) • R1 change in R/$ exchange rate affects operating income by R40m (avg rate for F2004: $6.88) • International trade growth well ahead of GDP 16% Current contr. to Group Trading Income

  26. Services – Bidcorp plc Recovery overdue Trading loss of £1.8m vs. £58 000 profit in 2003 Tough trading conditions but almost breakeven in 2H2004 Main problem: heavy costs in Shipping on excess capacity Automotive rationalised into one brand “Ontime” Volume: decreased margins & unbalanced loads Specialist: contracts retained France: making recovery Property: no deals in period £ 000’s Trading Income £m Revenue

  27. Services – Bidcorp plc STRATEGIC IMPERATIVES and PROSPECTS • Realisable net asset value well exceeds book value (ships & property) • Short term strategy: • 3 autonomous business units reporting to Bidvest • Head office closed in July 2004, management changes at Volume Transport and Shipping • Property transactions to be realised • Automotive - profitability now improving • Shipping - achieving reasonable profit, could improve • Medium term strategy - Automotive: • Expanding group automotive activities locally & internationally • Examining synergies between regional automotive operations • Long term strategy - Freight: • Expand freight service offering to UK • Complexities of UK market are stymieing short term progress

  28. …% Trading margin Services – Bidserv Soft service successes 6% real organic growth in revenue – at the expense of competitors Move to tenders creating margin pressure – countered by expense control and annuity income Laundry: strongest performer; secured additional market share; benefits of timely capex; market leader Security, whilst profitable, was a disappointment (industry in disarray) Service expansion through acquisitions (Greens) BidAviation created to leverage off Fedex / EAS / AHS and extract synergies Rm Trading Income Rm Revenue 9.6% 9.5%

  29. Services - Bidserv STRATEGIC IMPERATIVES and PROSPECTS • Development of the newly acquired Greens businesses into national foot print • New contract wins will benefit Laundry and Security businesses • Annuity income • Benefits of R55m acquisition of SA operation of IPS (effective 1 April 2004) for full year in 2005 • Benefits of transferred-in businesses (Fedex & Express Air Services) for full year in 2005 • Ability to add on similar businesses 8% Current contr. to Group Trading Income

  30. …% Trading margin Services – Renfin Travel beats Banking • Modest rise in Travel trading income (+6%) • Despite declines in volumes/prices • Favourable economic conditions did not assist outbound • Travel acquisitions assisted profits • Intensified competition and structural changes in the travel industry • Sharp fall in banking trading income (-59%) • Excessive costs • Currency strength • Narrower dealer margins • Slowdown in tourist encashments • Lower outbound forex Rm Trading Income Rm Revenue 24.3% 19.4%

  31. Services - Renfin STRATEGIC IMPERATIVES and PROSPECTS • Management proactive in preparing for change to agency remuneration • Bank to : • Focus on reducing cost base • Growing asset book, corporate FX, trade services • Regaining lost business in retail operations • Benefits to be derived from investments in banking systems, infrastructure and training • IT infrastructure upgrades enable Rennies Bank to expand activities 5% Current contr. to Group Trading Income

  32. …% Trading margin Foodservice Products – International Sterling stuff UNITED KINGDOM: • Trading income up 25% to £40m • 3663 gained market share, increased margins and profitability in all businesses • Economy more robust with low inflation • Strong performance from Multi-temp, Frozen, MOD (Kuwait) • £28m capex spent • Depot renewal & alleviation of inefficiencies • Acquisitions which extended customer service offering: • Barton Meat (51%) • Wilson Watson Rm Trading Income Rm Revenue 3.4% 3.0%

  33. …% Trading margin Foodservice Products - International Upside down under AUSTRALASIA: • Trading income up 37.8% to £11.5m • AUS EBIT up 19% in AUD • NZ EBIT up 48% in NZD • Australian & New Zealand dollars strengthen by approximately 10% against sterling • 5 small acquisitions • Oceanic Foods, R&S, Coolfoods, Macmont, RWA • 2 new divisions (hospitality supplies & quick service restaurants) • Sale of the retail focused Alice Springs Rm Trading Income Rm Revenue 2.7% 2.7%

  34. Foodservice Products - International STRATEGIC IMPERATIVES and PROSPECTS • 3663 • Extension of product range to Fresh & Chilled • Financial turnaround at Swithenbank & Barton Meat • Increasing capacity • Australia • Filling in the gaps on the Eastern Seaboard • Enhanced performance from Melbourne • Improved purchasing • Crean (New Zealand) • Benefits from customer gains & infrastructure investment 23% Current contr. to Group Trading Income

  35. …% Trading margin Foodservice Products – Caterplus (SA): Defeating deflation Rm Trading Income Rm Revenue Food price deflation only tempered in H2 Overseas visitors not as free spending Catering Supplies: tough market Frozen division priced aggressively, maintaining profitability & volumes Patleys increased margins despite reduced rand profit on imports Vulcan-Caars assisted by exports in H2 9.1% 8.7%

  36. Foodservice Products – Caterplus (SA) STRATEGIC IMPERATIVES and PROSPECTS • Adapted to deflationary environment • Well positioned to take up buoyancy in the market • Inflation good for businesses • Key: selling customers expanded basket of products • Adaptation of focus: • Move to multi temperature concept • Quietly leading the market in a new direction 7% Current contr. to Group Trading Income

  37. …% Trading margin Foodservice Products – Combined Foods (SA) Spiced results Competitive challenges met in Bidbake, enabling improved results Crown sales to major customer segments up substantially; export sales & non-meat flat New spice factory enabled production rationalisation / double shift to meet demand Rm Trading Income Rm Revenue 12.6% 11.0%

  38. Foodservice Products – Combined Foods (SA) STRATEGIC IMPERATIVES and PROSPECTS • Bidbake to : • Offer new products to enhance service offering • Leverage customers over scope of product range • Crown well poised to continue growth; new products 5% Current contr. to Group Trading Income

  39. …% Trading margin Commercial Products – Bidoffice Stout effort Margin pressure in stationery due to currency effect on imported product & pressure on paper prices, but volumes up Acquisition of OCE Printing Systems benefited Automation Minolta produced strong result, particularly 4th Qtr Kolok impacted by grey products but results acceptable Cecil Nurse star of Furniture Lithotech strong, exceeded budget Lithotech France - poor result but volumes improving (profitable for last 2 months) Rm Trading Income Rm Revenue 8.3% 8.1%

  40. Commercial Products - Bidoffice STRATEGIC IMPERATIVES and PROSPECTS • Weakening currency will benefit businesses • Waltons Gauteng restructured for more focus • Minolta to enhance brand to leverage growth • Kolok seeking enhanced product offering • Continued migration to value add services for Lithotech • Lithotech France to seek critical mass (improve factory throughput and efficiencies) 15% Current contr. to Group Trading Income

  41. …% Trading margin Commercial Products – Bidpac Protecting profitability Rm Trading Income Rm Revenue Margin maintained despite customers destocking, rand strength & manufacturing recession Market share grew despite decline in manufacturing volumes – secondary exporters hurt by rand Buffalo achieved forward momentum by product differentiation New African markets for exports 14.8% 14.1%

  42. Commercial Products – Bidpac STRATEGIC IMPERATIVES and PROSPECTS • Continued strengthening of demand across all products and more favourable trading environment • Substantial capex to enhance product range and quality • African exports will gather pace in year ahead • Benefits of partnership with Esselte will in F2005 • Strong last quarter 4% Current contr. to Group Trading Income

  43. …% Trading margin Commercial Products – Voltex Stronger voltage in H2 Rm Trading Income Rm Revenue Trading conditions improved in 2nd half Focus on commercial work yielded substantial success Copper price gyrations affected stocking Non-cable products held margins Lower dependence on large capex projects 6.3% 5.5%

  44. Commercial Products - Voltex STRATEGIC IMPERATIVES and PROSPECTS • National footprint, service capability and breadth of products • Voltex to accredit itself as “specifiers” – reducing reliance on contractors • Upgrading skills set to add value • Growth prospects through organic expansion and market gains • Change of focus to commercial customers will continue to provide benefits 6% Current contr. to Group Trading Income

  45. …% Trading margin McCarthy Magic Motoring R1bn acquisition price at +/- NAV - effective January 2004 Healthy contribution Yamaha benefiting strongly from Rand strength & increased disposable income Automotive industry buoyant New and used car margins under pressure Financial services achieved significant growth Pro forma attributable earnings for the full year to June 2004: R191m after funding cost Rm Trading Income Rm Revenue Revenue : R5.9bn 3.7%

  46. McCarthy STRATEGIC IMPERATIVES and PROSPECTS • Synergistic benefits in the next 12 months, eg. McCarthy Club • Opportunities in complementary areas, eg. • Financial leasing • Van rentals • Fleet management • FML • Private leasing • Organic and acquisitive growth planned for McCarthy • Product extensions • Dealerships • Distributorships • Sustainable growth supported by lower interest rates and > 10 year average age of the SA car parq • Benefits of twelve months earnings in 2005 9% Current contr. to Group Trading Income

  47. Corporate Services • Namsov adversely impacted by Rand but grew trading profit by 11.8% • Investment income: mainly share dealing profits • Bidvest Network Services (I-Fusion) • Profitable for the year • State of the art network • Positioned for growth • mymarket.com • Annualised billings R850m • Further growth anticipated • Property rental income from Group companies at arm’s length Rm Trading Income Rm Revenue* *Revenue = Bidnet & Mymarket.com (No’s excl Namsov)

  48. Strategy & Outlook

  49. BEE update 49% (incl. other funders) 15% 51% Bidvest Dinatla DNV BEE partners, incl Dinatla • Dinatla acquisition of 15% of Bidvest completed • Dinatla partnership has : • 4 board seats; assisted in appointment of 7 new HD commercial directors • Assisted with the Bidvest Charter • Facilitated in creating linkages for BEE procurement • Underlying JV’s addressed • Dinatla New Ventures formed to pursue large investment opportunities –

  50. Bidvest Corporate Governance • Large Board a result of Group culture • Bidvest built by merger with like-minded entrepreneurs • Clear division of power, accountability and responsibility • Separation of roles of Chairman and Chief Executive • Cyril Ramaphosa appointed non-executive Chairman • Brian Joffe as Chief Executive ensures continuation of proven Group strategies • Effective committees • Ongoing evaluation of board composition to ensure efficacy –

More Related