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June 30 2004
for the twelve months ended
Audited ResultsBIDVest
Agenda
Introduction
Financial Results
Divisional Results
Strategy & Outlook
IntroductionIntroduction
Results Summary 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
Group HighlightsGroup HighlightsAttributable 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
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
Historic Performance
HEPS
153.6 181.6215.9 243.2 248.0
152.8180.2
220.3221.3
298.7
0
100
200
300
400
500
600
2000 2001 2002 2003 2004
cps
1H 2H
18% CAGR over 5 years
Annualised Returns
42 44
5749
54
3034 32
25 28
0
10
20
30
40
50
60
2000 2001 2002 2003 2004
%
ROFE ROE
15% CAGR over 5 years
DPS
72.0 81.0 90.0108.0 113.4
78.388.2
100.0112.0
136.8
0
50
100
150
200
250
300
2000 2001 2002 2003 2004
cps
1H 2H
Trading profit & margins
0
500
1000
1500
2000
2500
3000
2000 2001 2002 2003 2004
Rm
1H 2H
4.6%
4.9%
4.7%4.4% 4.9%
5.0%4.9%
4.8%4.8% 5.1%
Financial ResultsFinancial Results
Consolidated Income Statement
R000’s 2004 % ch vs
2003
2003 2004 & ch vs
2003
Revenue 51 262 213 +8.9 47 073 375 55 481 013 +17.9
Constant currency: Avg R/£ 14.29
Actual: Avg R/£ 11.94
Actual: Avg R/£ 14.29Year ended June 30
Foreign businesses
Negative rand translation impact of R4.2bn
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
R000’s 2004 % ch vs
2003
2003 2004 & ch vs
2003
Revenue 51 262 213 +8.9 47 073 375 55 481 013 +17.9
Trading Income 2 555 652 +13.9 2 244 121 2 665 490 +18.8
Trading income before translation gains 2 553 201 +13.0 2 259 197 2 663 039 +18.1
Translation gains (losses) 2 451 (15 076) 2 451
Amortisation of goodwill (77 622) +19.6 (64 887) (77 622) +19.6
Net capital items (40 157) -34.8 (61 548) (40 157) -34.8
Net Operating income 2 437 873 +15.1 2 117 686 2 665 490 +18.8
Constant currency: Avg R/£ 14.29
Actual: Avg R/£ 11.94
Actual: Avg R/£ 14.29Year ended June 30
Gross margins up slightly, but rand value of gross profit on imports declinedNo material AC133 impact
* Offshore margins include a R21.8m loss from Bidcorp plc and a R17.0m loss from Lithotech France
4.8%5.0%Group
Improved operating efficiencies, comparative base affected by McCarthy
6.7%6.6%Local
Bidvest plc margins 3.1% in 2004 vs 2.9% in 2003
2.7%2.7%*Offshore
20032004Trading Margins
Consolidated Income Statement
R000’s 2004 % ch vs
2003
2003 2004 & ch vs
2003
Revenue 51 262 213 +8.9 47 073 375 55 481 013 +17.9
Trading Income 2 555 652 +13.9 2 244 121 2 665 490 +18.8
Trading income before translation gains 2 553 201 +13.0 2 259 197 2 663 039 +18.1
Translation gains (losses) 2 451 (15 076) 2 451
Amortisation of goodwill (77 622) +19.6 (64 887) (77 622) +19.6
Net capital items (40 157) -34.8 (61 548) (40 157) -34.8
Net Operating income 2 437 873 +15.1 2 117 686 2 547 711 +20.3
Constant currency: Avg R/£ 14.29
Actual: Avg R/£ 11.94
Actual: Avg R/£ 14.29Year ended June 30
Translation gains: R100m swing from R102.6m in 2002 to R2.5m in 2004
Consolidated Income Statement
R000’s 2004 % ch vs
2003
2003 2004 & ch vs
2003
Revenue 51 262 213 +8.9 47 073 375 55 481 013 +17.9
Trading Income 2 555 652 +13.9 2 244 121 2 665 490 +18.8
Trading income before translation gains 2 553 201 +13.0 2 259 197 2 663 039 +18.1
Translation gains (losses) 2 451 (15 076) 2 451
Amortisation of goodwill (77 622) +19.6 (64 887) (77 622) +19.6
Net capital items (40 157) -34.8 (61 548) (40 157) -34.8
Net Operating income 2 437 873 +15.1 2 117 686 2 547 711 +20.3
Constant currency: Avg R/£ 14.29
Actual: Avg R/£ 11.94
Actual: Avg R/£ 14.29Year ended June 30
Capital items: includes R38.6m loss on discontinuance of businesses + R1.6m loss on disposal of assets
Consolidated Income Statement
R000’s 2004 % ch vs
2003
2003 2004 & ch vs
2003
Revenue 51 262 213 +8.9 47 073 375 55 481 013 +17.9
Net Operating income 2 437 873 +15.1 2 117 686 2 547 711 +20.3
Net finance expense (168 902) +52.2 (110 982) (175 126) +57.8
Constant currency: Avg R/£ 14.29
Actual: Avg R/£ 11.94
Actual: Avg R/£ 14.29Year ended June 30
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
R000’s 2004 % ch vs
2003
2003 2004 & ch vs
2003
Revenue 51 262 213 +8.9 47 073 375 55 481 013 +17.9
Net Operating income 2 437 873 +15.1 2 117 686 2 547 711 +20.3
Net finance expense (168 902) +52.2 (110 982) (175 126) +57.8
Income before taxation 2 268 971 +13.1 2 006 704 2 372 585 +18.2
Taxation (678 079) +12.7 (601 658) (723 226) +15.7
Constant currency: Avg R/£ 14.29
Actual: Avg R/£ 11.94
Actual: Avg R/£ 14.29Year ended June 30
27.8%31.5%
Tax rates 20032004
29.5%28.1%Local
29.0%28.9%Group
Note: Rates exclude goodwill amortisation
STC included as a charge in the Income Statement
Offshore Offshore rate to decline slightly due to tax relief as a consequence of
minority acquisitions of Bidvest and Bidcorp plc
Consolidated Income Statement
R000’s 2004 % ch vs
2003
2003 2004 & ch vs
2003
Revenue 51 262 213 +8.9 47 073 375 55 481 013 +17.9
Net Operating income 2 437 873 +15.1 2 117 686 2 547 711 +20.3
Net finance expense (168 902) +52.2 (110 982) (175 126) +57.8
Income before taxation 2 268 971 +13.1 2 006 704 2 372 585 +18.2
Taxation (678 079) +12.7 (601 658) (723 226) +15.7
Income after taxation 1 590 892 +13.2 1 405 046 1 649 359 +19.3
Income from associates 24 691 -18.6 30 328 25 092 -20.5
Outside shareholders’ interest (74 759) -23.5 (97 701) (86 131) -20.5
Income attributable to shareholders 1 540 824 +15.2 1 337 673 1 588 320 +21.7
Constant currency: Avg R/£ 14.29
Actual: Avg R/£ 11.94
Actual: Avg R/£ 14.29Year 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
Consolidated Income Statement
R000’s 2004 % ch vs
2003
2003 2004 & ch vs
2003
Revenue 51 262 213 +8.9 47 073 375 55 481 013 +17.9
Net Operating income 2 437 873 +15.1 2 117 686 2 547 711 +20.3
Net finance expense (168 902) +52.2 (110 982) (175 126) +57.8
Income before taxation 2 268 971 +13.1 2 006 704 2 372 585 +18.2
Taxation (678 079) +12.7 (601 658) (723 226) +15.7
Income after taxation 1 590 892 +13.2 1 405 046 1649 359 +19.3
Income from associates 24 691 -18.6 30 328 25 092 -20.5
Outside shareholders’ interest (74 759) -23.5 (97 701) (86 131) -20.5
Income attributable to shareholders 1 540 824 +15.2 1 337 673 1 588 320 +21.7
Number of shares in issue (weighted 000) 300 643 -2.4 308 116 300 643 -2.4
Headline earnings (Rm) 1 643 526 +14.8 1 431 221 1 706 098 +19.2
HEPS without restatement (cents) 551.2 +15.1 479.0 572.0 +19.4
HEPS (cents) 546.7 +17.7 464.5 567.5 +22.2
DPS (cents) 250.2 +13.7 220.0
Constant currency: Avg R/£ 14.29
Actual: Avg R/£ 11.94
Actual: Avg R/£ 14.29Year 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
Consolidated Balance Sheet
R000’s 2004 2003
Assets
Non-current assets 6 406 635 4 904 544
Current assets 11 542 389 9 666 838
Total assets 17 949 024 14 571 382
Equity & Liabilities
Capital & reserves 6 426 618 6 103 451
Non-current liabilities 1 299 340 1 007 749
Current liabilities 10 223 066 7 460 182
Total equity & Liabilities 17 949 024 14 571 382
Year ended June 30
Consolidated Balance Sheet
R000’s 2004 2003
Assets
Non-current assets 6 406 635 4 904 544
Current assets 11 542 389 9 666 838
Total assets 17 949 024 14 571 382
Equity & Liabilities
Capital & reserves 6 426 618 6 103 451
Non-current liabilities 1 299 340 1 007 749
Current liabilities 10 223 066 7 460 182
Total equity & Liabilities 17 949 024 14 571 382
Year ended June 30
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
. o
f D
ay
s
34 38
27 21
5454
2004 2003
Stock
Debtors
Creditors
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
Net Debt Position (R000’s)
2004 2003
Liquid funds 2 305 161 2 360 561
Long term interest-bearing liabilities
923 083 665 583
Short term interest-bearing liabilities
2 056 149 666 105
Net (debt)/cash (674 071) 1 028 873
Consolidated Cash Flow Statement
Strong cash generated by operations: R764m positive swing in working capital
R000’s 2004 % ch 2003
Cash flow from operating activities 2 757 086 +83.0 1 506 715
Year ended June 30
Consolidated Cash Flow Statement
Investments R1bn for McCarthy R1.3bn for minorities in Bidvest plc Capex: R910m in 2004 v s R991m in 2003
R000’s 2004 % ch 2003
Cash flow from operating activities 2 757 086 +83.0 1 506 715
Cash effect of investment activities (2 933 185) +151.2 (1 167 628)
Year ended June 30
Consolidated Cash Flow Statement
R000’s 2004 % ch 2003
Cash flow from operating activities 2 757 086 +83.0 1 506 715
Cash effect of investment activities (2 933 185) +151.2 (1 167 628)
Cash effects of financing activities 152 400 (70 234)
Net cash and cash equivalents 2 100 982 -4.5 2 200 344
Year ended June 30
Divisional ResultsDivisional Results
Services – Bidfreight
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
150
200
250
300
350
400
450
2003 20046000
7000
8000
9000
10000
11000
12000
13000
14000
Trading income Revenue
…% Trading margin
3.4%2.9%
Rm RevenueRm Trading Income
Heavy lifting
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
Current contr. to Group Trading Income
16%
Services – Bidcorp plc
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
Recovery overdue
-1700
-1200
-700
-200
300
800
1H03 2H03 1H04 2H04
0
10
20
30
40
50
60
70
80
Trading income Revenue
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 BidvestHead office closed in July 2004, management changes at Volume
Transport and ShippingProperty transactions to be realisedAutomotive - profitability now improvingShipping - achieving reasonable profit, could improve
Medium term strategy - Automotive:Expanding group automotive activities locally & internationallyExamining synergies between regional automotive operations
Long term strategy - Freight: Expand freight service offering to UKComplexities of UK market are stymieing short term progress
Services – Bidserv
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
020406080
100120140160180200
2003 2004
400
600
800
1000
1200
1400
1600
1800
2000
2200
Trading income Revenue
…% Trading margin
9.5%9.6%
Rm Trading Income Rm Revenue
Soft service successes
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
Services – Renfin
0
50
100
150
2003 2004
400
450
500
550
600
650
Trading income Revenue
…% Trading margin
19.4%
24.3%
Rm Trading Income Rm Revenue
Travel beats Banking
Modest rise in Travel trading income (+6%)
Despite declines in volumes/pricesFavourable economic conditions did
not assist outboundTravel acquisitions assisted profitsIntensified competition and structural
changes in the travel industry
Sharp fall in banking trading income (-59%)
Excessive costsCurrency strengthNarrower dealer marginsSlowdown in tourist encashmentsLower outbound forex
Services - Renfin
5%
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
Current contr. to Group Trading Income
Foodservice Products – International
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
100
150
200
250
300
350
400
450
500
2003 2004
3000
5000
7000
9000
11000
13000
15000
17000
Trading income Revenue
…% Trading margin
3.4%3.0%
Rm Trading Income Rm Revenue
Sterling stuff
Foodservice Products - International
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
40
60
80
100
120
140
2003 2004
2500
3000
3500
4000
4500
5000
5500
Trading income Revenue
…% Trading margin
2.7%
2.7%
Rm Trading Income Rm Revenue
Upside down under
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
020406080
100120140160180200
2003 2004
300
500
700
900
1100
1300
1500
1700
1900
2100
Trading income Revenue
…% Trading margin
8.7%9.1%
Rm Trading Income Rm Revenue
Foodservice Products – Caterplus (SA):
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
Defeating deflation
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 conceptQuietly leading the market in a new direction
7%
Current contr. to Group Trading Income
40
50
60
70
80
90
100
110
120
130
2003 2004
10020030040050060070080090010001100
Trading income Revenue
…% Trading margin
12.6%
11.0%
Rm Trading Income Rm Revenue
Foodservice Products – Combined Foods (SA)
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
Spiced results
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
100
150
200
250
300
350
400
450
2003 2004
900
1400
1900
2400
2900
3400
3900
4400
4900
5400
Trading income Revenue
…% Trading margin
8.1%8.3%
Commercial Products – Bidoffice
Rm Trading Income Rm Revenue
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)
Stout effort
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
102030405060708090
100110120
2003 2004
100
200
300
400
500
600
700
800
Trading income Revenue
…% Trading margin
14.8%14.1%
Rm Trading Income Rm Revenue
Commercial Products – Bidpac
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
Protecting profitability
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 quarter4%
Current contr. to Group Trading Income
5060708090
100110120130140150
2003 2004
50070090011001300150017001900210023002500
Trading income Revenue
…% Trading margin
6.3%
5.5%
Rm Trading Income Rm Revenue
Commercial Products – Voltex
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
Stronger voltage in H2
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
10
60
110
160
210
260
2004
500
1500
2500
3500
4500
5500
6500
Trading income Revenue
…% Trading margin
3.7%
Rm Trading Income Rm Revenue
McCarthy
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
Magic Motoring
Revenue : R5.9bn
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
10
15
20
25
30
35
40
45
50
55
2003 2004
10
20
30
40
50
60
70
80
90
100
Trading income Revenue
Corporate Services
Rm Trading Income Rm Revenue*
*Revenue = Bidnet & Mymarket.com
(No’s excl Namsov)
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
Strategy & OutlookStrategy & Outlook
BEE update
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
–
49% (incl. other
funders)Bidvest
15%BEE partners, incl Dinatla
DNV
51%
Dinatla
Bidvest Corporate Governance
Large Board a result of Group cultureBidvest built by merger with like-minded entrepreneursClear division of power, accountability and responsibility
Separation of roles of Chairman and Chief ExecutiveCyril Ramaphosa appointed non-executive ChairmanBrian Joffe as Chief Executive ensures continuation of proven
Group strategies
Effective committees
Ongoing evaluation of board composition to ensure efficacy
–
Key growth drivers
Cross-selling between businesses not yet fully exploited
Acceleration of outsourcing trend – eg, benefit to Bidserv & Bidoffice
Organic growth through product extension & geographic spread
Exposure to growth areas of the economy, supplemented by acquisitive growth
Potential impact of World Cup 2010
Bidserv:•Hygiene services•Purified water•Laundry•Janitorial & cleaning products
Renfin:•Forex•Travel agencies
Voltex:Electrical product distribution to stadiums, housing, hotels, bulk infrastructure, etc
McCarthy:•Lease and/or purchase •Hire vehicles (Budget Car Hire)
Food Service Products:Catering supplies & equipment
Bidfoffice: •Stationery•Office automation•Furniture
Bidpac: Fasteners for constructionindustry
Prospects for 2005
Cost base more efficient
2005 HEPS will benefit from:
inclusion of McCarthy for full year
owning 100% of Bidvest plc for full year
Bidcorp and Lithotech France should contribute to profits
Price inflation would benefit Rand value of margins
Budgets based on prevailing exchange rates but will benefit from any weakening of the Rand
MANAGEMENT IS BUDGETING FOR A GOOD RESULT
AppendicesAppendices
Appendix 1: Financial Statements
Appendix 1: Financial Statements
Consolidated Income StatementFor the year ended June 30
2004 2003 Percentage 2002Audited Change Audited
R000s Audited Restated Restated
Revenue 51,262,213 47,073,375 8.9 41,950,388
Trading income 2,555,652 2,244,121 13.9 2,012,611 Trading income before translation gains 2,553,201 2,259,197 13.0 1,909,966 Translation gains (losses) 2,451 (15,076) 102,645 Amortisation of goodw ill (77,622) (64,887) (52,646) Net capital items (40,157) (61,548) (11,467)
Net operating income 2,437,873 2,117,686 15.1 1,948,498
Net f inance expense (168,902) (110,982) (80,163)
Income before taxation 2,268,971 2,006,704 13.1 1,868,335
Taxation (678,079) (601,908) (525,472)
Income after taxation 1,590,892 1,404,796 13.2 1,342,863
Income from associates 24,691 30,328 17,735 Trading profits 25,092 31,568 27,788 Impairment of and goodw ill in associates (401) (1,240) (10,053)
Outside shareholders' interest (74,759) (97,451) (129,557)
Income attributable to shareholders 1,540,824 1,337,673 15.2 1,231,041
Number of shares in issue (w eighted 000) 300,643 308,116 299,089
Headline earnings per share ( cents ) 546.7 464.5 17.7 432.8
Earnings per share (cents) 512.5 434.1 18.1 411.6
Distribution per share (cents)* 250.2 220.0 13.7 190.0-interim 113.4 108.0 90.0-final 136.8 112.0 100.0
Consolidated Income StatementFor the year ended June 30
HEADLINE EARNINGS
Income attributable to shareholders 1,540,824 1,337,673 1,231,041 Net amortisation of goodwill 75,009 61,449 49,411
Amortisation of goodwill 77,622 64,887 52,646 Outside shareholders' interest (2,613) (3,438) (3,235)
Net loss on disposal and discontinuance of businesses 26,202 11,626 3,913 Loss on disposal and discontinuance of businesses 38,595 36,130 11,797 Tax relief (12,392) (16,017) (4,363) Outside shareholders' interest (1) (8,487) (3,521)
Net loss on disposal of assets 1,090 19,233 104 Loss (surplus) on disposal of assets 1,562 25,418 (330) Tax relief (472) (7,385) - Outside shareholders' interest - 1,200 434
Impairment of and goodwill in associates 401 1,240 10,053
Headline earnings 1,643,526 1,431,221 14.8 1,294,522
Rand / Sterling exchange rates
Opening rate 12.457 15.905 11.338Closing rate 11.285 12.457 15.905Average rate 11.939 14.288 14.544
The following adjustments to income attributable to shareholders were taken into account in the calculation of headline earnings:
The Group has changed its accounting policies in accordance with recently amended statements of Generally Accepted Accounting Practice, with regard to secondary tax on companies and business combinations. Secondary tax on companies in now treated as part of the tax charge in the income statement as opposed to an appropriation in equity; and the Group no longer provides for amortisation of goodwill arising from business combinations subsequent to March 31 2004. These changes have resulted in an additional charge to income, net of outside shareholders interest, of R13m for the year (2003: R43m) ; and a reduction of goodwill amortisation of R13m in the current year. Had these changes not taken place, the headline earnings per share for the year would have been 551,2 cents per share (2003: 479,0 cents per share) , an increase of 15,1%, and earnings per share would have been 512,8 cents per share (2003: 448,6) an increase of 14,3%.
Consolidated cash flow statementFor the year ended June 30
2004 2003 2002Audited Audited Audited
R000s
Cash flow from operating activities 2,798,728 1,506,715 1,967,371 Operating income net of capital items 2,515,495 2,182,573 2,001,144 Depreciation and other non-cash items 742,849 746,026 543,348 Changes in working capital 502,505 (261,904) 207,183 Cash generated by operations 3,760,849 2,666,695 2,751,675 Net finance expense (102,907) (110,982) (80,163) Taxation paid (645,451) (521,617) (395,737) Dividends paid - Company (168,608) (475,284) (267,763) - subsidiaries (45,155) (52,097) (40,641)
Cash effects of investment activities (3,136,445) (1,167,628) (1,596,063) Net additions to fixed assets (909,602) (991,232) (695,118) Net additions to intangible assets (14,817) (8,442) (18,759) Net acquisition of subsidiaries, businesses, associates and investments (2,212,026) (167,954) (882,186)
Cash effects of financing activities 314,018 (70,234) 525,622 Proceeds from shares issued - Company 83,702 31,710 596,462 - subsidiaries 1,009 7,670 506 Purchase of treasury shares (115,417) (401,333) (26,756) Distribution of share premium to shareholders (528,163) (168,797) (159,743) Net borrowings raised 872,887 460,516 115,153
Net increase (decrease) in cash and cash equivalents (23,699) 268,853 896,930
Net cash and cash equivalents at the beginning of the year 2,220,344 2,202,331 1,058,213 Currency adjustments (95,663) (250,840) 247,188
Net cash and cash equivalents at the end of the year 2,100,982 2,220,344 2,202,331
- - - - Net cash equivalents are made up as follows
Cash on hand and in the bank 2,305,161 2,360,561 2,745,492 Bank overdrafts shown as current portion of interest bearing debt (204,179) (140,217) (543,161)
2,100,982 2,220,344 2,202,331
Consolidated Balance SheetAt June 30
2004 2003 2002Audited Audited Audited
R000s
ASSETS
Non-current assets 6,406,635 4,904,544 5,089,552 Fixed assets 3,663,846 3,493,246 3,602,498 Intangible assets 1,959,223 689,218 681,903 Deferred tax 262,727 219,340 262,747 Investments and advances 498,853 384,072 378,997 Banking and other advances 21,986 118,668 163,407
Current assets 11,542,389 9,666,838 10,027,552 Other current assets 9,237,228 7,306,277 7,282,060 Liquid funds 2,305,161 2,360,561 2,745,492
Total assets 17,949,024 14,571,382 15,117,104
EQUITY AND LIABILITIES
Capital and reserves 6,426,618 6,103,451 6,370,033 Shareholders' interest 6,056,612 5,412,659 5,563,617 Outside shareholders' interest 370,006 690,792 806,416
Non- current liabilities 1,242,783 972,050 588,136 Deferred taxation 89,554 115,824 252,048 Post-retirement obligations 225,040 190,179 200,250 Life assurance fund 5,106 - - Long-term portion of interest bearing borrowings 923,083 665,583 135,838 Long- term portion of banking liabilities - 464 -
Current liabilities 10,279,623 7,495,881 8,158,935 Other current liabilities 8,166,917 6,794,077 6,887,622 Current portion of interest bearing borrowings 2,112,706 701,804 1,271,313
Total equity and liabilities 17,949,024 14,571,382 15,117,104
- - - Number of shares in issue 302,169 302,679 311,217
Net tangible asset value per share (cents) 1356 1561 1569
Statement of changes in shareholders’ interestFor the year ended June 30
2004 2003 2002Restated Restated
Audited Audited AuditedR000s
Shareholders' interest at the beginning of the year 5,412,659 5,563,617 3,860,494
Share capital issued (26) (427) 770 - capitalisation issue - - 107 - cash issue - - 623 - in terms of the share incentive scheme 127 62 71 - repurchase of shares by subsidiary (153) (489) (31)
Share premium arising on shares issued (559,852) (537,993) 409,300 - in terms of the share incentive scheme 83,617 31,780 40,067 - cash issue - - 557,377 - refund of share premium to shareholders (528,163) (168,797) (159,743) - repurchase of shares by subsidiary (115,264) (400,844) (26,725) - share issue costs (42) (132) (1,676)
Movement in non-distributable reserves (172,579) (474,927) 329,882 - foreign currency translation reserve (169,698) (474,927) 329,882 - on acquisition of business 1,313 - - - transferred to distributable reserves (4,194) - -
Movement in retained income 1,376,410 862,389 963,171 - income attributable to shareholders 1,540,824 1,337,673 1,231,041 - dividends and capitalisation issues (168,608) (475,284) (267,870) - transfer from non-distributable reserves 4,194 -
Shareholders' interest at the end of the year 6,056,612 5,412,659 5,563,617
Segmental analysisFor the year ended June 30
2004 2003 Percentage 2002R000s Change
REVENUE
The Services Division 16,675,368 18,292,281 (8.8) 16,424,403 Bidfreight 12,105,642 13,676,421 (11.5) 12,984,127 Bidcorp plc 1,463,166 1,956,688 (25.2) 1,078,403 Namsov fishing 282,827 282,107 0.3 320,993 Bidserv 2,165,517 1,735,005 24.8 1,505,982 Renfin 658,216 642,060 2.5 534,898
The Foodservice Product Division 22,266,741 22,557,416 (1.3) 21,121,321 Bidvest United Kingdom 14,161,750 15,348,018 (7.7) 14,556,975 Bidvest Australasia 5,176,737 4,385,736 18.0 4,184,514 Caterplus 1,967,570 1,970,925 (0.2) 1,653,732 Combined Foods 960,684 852,737 12.7 726,100
The Commercial Products Division 7,777,656 7,584,909 2.5 5,500,712 Bidoffice 4,766,335 4,743,195 0.5 3,512,837 Bidpac 748,224 730,579 2.4 625,537 Voltex 2,263,097 2,111,135 7.2 1,362,338
The Automotive Producta DivisionMcCarthy 5,904,843 - - -
Corporate Services 58,206 93,920 (38.0) 159,387 Bidvest Network Solutions 50,298 90,665 (44.5) 159,225 MyMarket.com 7,908 3,255 142.9 162
Inter Group eliminations (1,420,601) (1,455,151) - (1,255,435)
51,262,213 47,073,375 8.9 41,950,388
Segmental analysisFor the year ended June 30
TRADING INCOME
The Services Division 763,685 750,502 1.8 718,570 Bidfreight 417,273 395,400 5.5 355,971 Bidcorp plc (21,833) 834 14,034 Namsov fishing 35,201 31,497 11.8 104,509 Bidserv 205,600 166,713 23.3 134,317 Renfin 127,444 156,058 (18.3) 109,739
The Foodservice Product Division 889,581 843,449 5.5 672,927 Bidvest United Kingdom 459,948 449,611 2.3 376,150 Bidvest Australasia 137,954 119,823 15.1 84,725 Caterplus 170,343 179,817 (5.3) 132,493 Combined Foods 121,336 94,198 28.8 79,559
The Commercial Products Division 636,944 613,342 3.8 487,675 Bidoffice 383,910 393,845 (2.5) 313,715 Bidpac 110,878 103,069 7.6 84,142 Voltex 142,156 116,428 22.1 89,818
The Automotive Producta DivisionMcCarthy 217,606
Corporate Services 47,836 36,828 29.9 133,439 Bidvest Netw ork Solutions 578 (5,042) (9,096) MyMarket.com (7,709) (7,242) (2,172) Investment and other income 10,346 8,317 24.4 108,904 Bid Properties 44,621 40,795 9.4 35,803
2,555,652 2,244,121 13.9 2,012,611
Appendix 2: Corporate
Appendix 2: Corporate
Corporate Services
(38.3)(65.0)Other costs
(15.1)2.5Translation (Losses)/Gains on cash
9.97.9Div from associates
51.864.9Share dealing profits
20032004Investment income
Appendix 3:
Dinatla transaction & BEE
Appendix 3:
Dinatla transaction & BEE
Dinatla Transaction
The transaction:
Dinatla consortium owns 15% of Bidvest
A. Dinatla Ownership vested
Price between R42-R60 in Oct 2006
Right of early settlement
Board representation
Unfettered voting rights
No hurdle price – the closer to R42 the better for Dinatla
Dinatla Transaction
The transaction:
Dinatla consortium owns 15% of Bidvest
B. Bidvest No financial impact
Positive BEE equity scorecard impact (BEE equity ownership increased to approximately 35%)
Retain existing business
New business opportunities
Dinatla Transaction
The transaction:
Dinatla consortium owns 15% of Bidvest
C. Current Shareholders Bidvest ords + a 17% dividend enhancement for 3 years
Dinatla Transaction
The transaction:
Dinatla consortium owns 15% of Bidvest
D. Shareholders affected by the transaction sold 15% of their shares to Dinatla.
For every 100 shares:
85 ordinary Bidvest shares with a 17% dividend enhancement 15 BidBEE loan notes with no dividend
• subject to a minimum of R42 and a maximum of R60 per share
• at recommendation of BidBEE board with 1 year extension option (75% vote by loan note holders)
6 Bidvest call options at a R60 strike price
BEE at Bidvest -
–
BEE Scorecard Credits Bidvest progress Equity ownership 20% √ Management & executive positions 10% √ Employment equity 10% √ Skills development 20% √ Procurement 20% √ Enterprise development 10% √ Residual 10% reserved for sector specific issues
******** Good = > 65%
Satisfactory = 40% - 64.9% Limited = < 40%