Download - Appendix 1: Divisional Results
Appendix 1:Divisional Results
2Introduction SegmentalsFinancials Group Outlook
Bidfreight
100
150
200
250
300
350
400
H1 2006 H1 2007
5000
6000
7000
8000
9000
10000
11000
12000
Trading profit Revenue
…% Trading margin
2.9%3.3%
Rm RevenueRm Trading Profit
+12%
Appendix 1
ResultsResults
Positive SA fundamentals support top-line
Working capital impacted by changed credit terms in Safcor
Good overall revenue gains but notably reduced agricultural, steel, coal, and forest product export volumes
Profits match budgeted projections
Safcor Panalpina: Record billings, up 29%.
Marine: Profits up 22% on higher container & vehicle traffic. Freightbulk strategy under review
Manica: profits up 26%, with Namibia & Naval excelling. Regional instability a constant challenge.
Volume Vicissitude
3Introduction SegmentalsFinancials Group Outlook
Bidfreight Current contr. to
Group Trading Profit
Appendix 1
13.4%
Terminals:
IVS: profits up 36%; capex will enhance profits.
RDS: customer difficulties resulted in profits declining 12%. Review underway.
Bulk Connections: profits static; reduced coal exports offset by rise in other product exports as benefits of capex spend create multiple product handling capability; Spoornet reliability remains a challenge; Negotiations with NPA for increased lease terms and additional handling rights ongoing.
SABT: profits down 29% on substantially lower agricultural exports; cumulative capex of >R100m yet to yield return.
SACD: profits up 12%; discussions with NPA in Durban to explore potential for extended lease terms & larger facilities.
BPO: profits down 13% due to a substantial decline in steel and forest product exports by major clients. Cost cuts have been completed.
Strategic imperatives & prospects
Majority of one-off cash outflows through the system; management to secure a positive re-alignment of working capital
Cost control is being complemented by the securing of new revenue
Bidfreight confident of achieving real profit growth for the full year
Volume Vicissitude
4Introduction SegmentalsFinancials Group Outlook
Bidserv
150
200
250
300
350
400
H1 2006 H1 2007
1000
1500
2000
2500
3000
Trading Profit Revenue
…% Trading margin
11.8%11.5%
Rm RevenueRm Trading Profit
+17%
Appendix 1
Nurturing the small acorns Results
BidAir profits up 94% (5% of total); integrated aviation offering complemented by the acquisition of 60% of Comair’s ground handling business; ground handling license being sought
Rennies Bank: recovery continues, with profits up 61%
Top Turf profits up 48%, new contract wins
Cleaning: Prestige profits flat, net new business good; TMS profits up 95%.
Laundries: revenue up 13% but profits flat; further volume required but pricing constrained by influence of large customers
Steiner revenue up 19%, profits up 13%
Bid Risk: at break even after strikes; further restructuring required
IPS profits down but above budget; point-of-sale services being re-evaluated
Industrial Products (Janitorial): profits up 25% despite abnormal costs
5Introduction SegmentalsFinancials Group Outlook
Bidserv
Appendix 1
14.7%
Current contr. to Group Trading
Profit
Office Automation (Minolta & Ocè): revenue & profits flat off high base, improvement in next period
Travel: profits up 36%; addressing poor margin divisions, debtors management and technology.
Hotel Amenities (transferred from BidFood): profits up a very creditable 19% on new contract wins
Mymarket: at break-even, gaining market share
Strategic imperatives & prospects
Mymarket spearheads lucrative group and external client procurement deals, achieving substantial savings
Prestige has a number of promising new contracts in the pipeline and TMS seeking expansion opportunities
BidAir has a particularly exciting future and likely to grow its share of profits
New facilities for G Fox and Commercial Sundries
Legislated wage increases difficult to recover (security/cleaning)
Travel and Rennies Bank have further upside
Nurturing the small acorns
6Introduction SegmentalsFinancials Group Outlook
Bidvest Europe
150
200
250
300
350
H1 2006 H1 2007
5000600070008000900010000110001200013000140001500016000
Trading Profit Revenue
…% Trading margin
2.3%2.8%
Rm RevenueRm Trading Profit
+19%
Appendix 1
Going Dutch
Results
Trading profits (pre-IFRS) up 6.5% at £26.3m
Outstanding cooperation and sharing of best practice between UK and Dutch teams
Deli XL Deli XL: €6.7m (£4.6m) “clean” profit, cash
generated from operations €11m Netherlands: margin of 1.8% versus 1%; real
growth in hospitality but institutional market remains challenging; excellent staff morale
Deli XL Belgium: reorganisation paying off; sales growth good but margins pressured
3663 3663 profits flat at £22m on an 11% rise in
sales to £790m; cash flow sound; MOD revenues & profits being replaced
A new phenomenon is bad debts – may be isolated and non-recurring but management has resolved to insure against this risk
7Introduction SegmentalsFinancials Group Outlook
Bidvest Europe
Appendix 1
Current contr. to Group Trading
Profit
16.4%
Upward pressure on product prices and operating costs.
Lower-margin CD sales up 31% (KFC, Pizza Hut) – higher unit values but higher costs due to volumes.
Multi-temp sales up 4%, profits up 1%; bad debt hurt costs; Compass non-food contract (2 Jan 07) incurred extra costs; ex-MOD depot at Basingstoke converted to multi-temp site.
Frozen, Fresh & Chill sales up 8% but margin still a challenge; bad debts hurt costs; two new sites operational Jan 07; roll-out of major contract.
Barton loss making but profitable at the end of the period.
Systems alignments at Horeca, profits ahead of expectation in large part due to Asian Games orders
Strategic imperatives & prospects
Compass non-food service contract exceeding expectations
3663 on track to meet budget despite recent hiccups
Expansion into institutional market in Northern Belgium being explored
Joint opportunities between 3663 and DeliXL being successfully pursued
Going Dutch
8Introduction SegmentalsFinancials Group Outlook
Bidvest Australasia
50
100
150
200
H1 2006 H1 2007
3000
4000
5000
6000
7000
Trading Profit Revenue
…% Trading margin
3.8%
3.2%
Rm RevenueRm Trading Profit
+44%
Appendix 1
Street cred
Results
Australia (A$)
“Street” trade showing organic growth of 10%, at good margin
Record 3.6% margin - profits up 25% to $21.9m off an 8% rise in sales to $611m (largely organic)
Foodservice: Sydney & Melbourne both profitable and improving; decreased cost of doing business; 25% of sales transacted electronically
Hospitality: profits up 34%; acquisitions in Melbourne and Geelong to assist with national roll-out and critical mass
QSR: profits up 28% on an 11% rise in sales; a key link in the total foodservice supply chain
9Introduction SegmentalsFinancials Group Outlook
New Zealand (NZ$)
Sales up 20% to $158m, profits up 29% to $7.3m; Fresh profits up 163% - taking shape as a national wholesale produce business; Logistics set for annual $30m in sales –national roll-out
Finding suitable staff remains a challenge
Strategic imperatives & prospects
Australia
Expanded branch network unparalleled, broadline national offering
Suitable acquisitions + organic growth to access additional market space – Bidvest market share 20%
Sydney & Melbourne remain below potential
New Zealand
Business tracking well and strategic objectives unfolding
Top three finalist in “Most Improved Business” category of Top 200 Companies
Bidvest Australasia
Appendix 1
7.5%
Current contr. to Group Trading
Profit
Street cred
10Introduction SegmentalsFinancials Group Outlook
Bidfood
020406080
100120140160180200
H1 2006 H1 2007
500
1500
Trading Profit Revenue
…% Trading margin
9.2%
8.1%
Rm RevenueRm Trading Profit
+4%
Appendix 1
Mixed bag
Results
A 37% decline in Bidbake profits masks a good result with tangible underlying improvements
Caterplus: 16% rise in profit off a 23% rise in sales; significant market share gains, broadening of choice; energetic focus on customers needs, with the independent trade a top priority; fresh fruit & vegetables introduced
BidBake: ferocious competition has resulted in a rightsizing of the business in line with realities
Crown: 25% rise in profits off a 19% rise in sales because of astute procurement and equipment sales; installation of a steam steriliser underscores food safety focus for competitive advantage
11Introduction SegmentalsFinancials Group Outlook
Bidfood
Appendix 1
8.0%Current contr. to
Group Trading Profit
Speciality: 25% rise in profits and a 29% rise in sales off an already high base as range and mix optimisation pays off.
Vulcan: 12% rise in profits off a 10% rise in sales; obsolete equipment being replaced to improve product quality; upgraded factory; export focus;
Catering and Frozen have been merged under a single management team
Strategic imperatives & prospects
Strategic initiatives will continue to be reflected in on-the-ground execution
Capex and new facilities to yield efficiencies
BidBake very challenging but change in emphasis will result in an improved performance during F2008
Mixed bag
12Introduction SegmentalsFinancials Group Outlook
Bid Industrial and Commercial Products
100
150
200
250
300
350
H1 2006 H1 2007
3000
4000
5000
6000
Trading Profit Revenue
…% Trading margin
7.7%
5.7%
Rm RevenueRm Trading Profit
+76%
Appendix 1
A bright spark
Results:
Profits up 76% off a 30% rise in revenue
EWD
Versalec Cables (75%) has settled in well, performing strongly
Infrastructure markets strong & growing
Copper price surge has reversed and management has adopted a more conservative stocking policy;
New distributorship of LS products Nov 06
Stationery & furniture:
Profits rise 51% off a 16% rise in revenue
Waltons profits up 18%; Gauteng shows materially improved performance
Kolok: revenue up 14% in a tough market, profits up 58% as gross margins expand
CN Business Furniture: 35% rise in profits off an 18% rise in revenue; strong order books
13Introduction SegmentalsFinancials Group Outlook
Bid Industrial and Commercial Products
Appendix 1
15.4%
Current contr. to Group Trading Profit
Fasteners & Tape
Afcom revenues up 4%, profits up 25%, with better balance between imports and local production achieved
Buffalo: 22% rise in profits off a 9% rise in revenue; launch of new DIY range a success
Strategic imperatives & prospects
Exchange rate variability a challenge
Continuing strong performance off a higher base
Focus on optimising stock levels
A bright spark
14Introduction SegmentalsFinancials Group Outlook
Bidpaper Plus
50
70
90
110
130
150
170
190
H1 2006 H1 2007
400
500
600
700
800
900
1000
Trading Profit Revenue
…% Trading margin
11.8%11.9%
Rm RevenueRm Trading Profit
+11%
Appendix 1
Congo Fever
Results
Profits up 11% off a 12% rise in revenue; Printing & Conversion a notable performer; integration of ex-office business complete.
Silveray Statmark
Improved results in a fiercely competitive market, with sales up 9%
Lithotech
Profits up 15% off an 18% rise in sales, boosted by DRC project (revenues good even without DRC)
15Introduction SegmentalsFinancials Group Outlook
Personalisation & Mail grew revenue 19%, notwithstanding prolonged industrial action
Significant capex assisted printing & conversion
Labels suffered in a tough market
Continued growth from e-solutions
Lufil continues to grow range of paper converted products
Strategic imperatives & prospects
Lithotech to continue to reduce capacity in traditional continuous business forms whilst investing in the new growth areas of label, print to post, stationery and e-billing
Renewed growth focus on label products
Laser & mail to remain a substantial contributor, with increased market presence
Further growth in stationery products and “New Croxley” promotions
Bidpaper Plus
Appendix 1
5.5%
Current contr. to Group Trading Profit
Congo Fever
16Introduction SegmentalsFinancials Group Outlook
Bid Auto
200
250
300
350
400
450
500
H1 2006 H1 2007
4000
5000
6000
7000
8000
9000
10000
Trading Profit Revenue
…% Trading margin
3.7%3.5%
Rm Trading Profit Rm Revenue
+22%
Appendix 1
Fleet of foot
Results
Profits up 22% (Motor Holdings up 18%) on a 16% rise in revenue – ahead of budget. Yamaha revenues up 19% amidst stiff competition. Substantial loss at GAZ negatively impacted result.
Financial services profits up 40%, ahead of budget
32 967 new units, up 6% on 31 019, but favourable product mix assists margin; new car pricing remained keen with knock-on effect to used; parts & servicing well up on budget
30 014 used units sold, up 10% on 27 192
Budget performed well, with a sharp rise in rental days; significant increase in fleet size; interest rate hikes, higher insurance costs and higher maintenance costs puts pressure on margins
Seasonal working capital bulge; excess stock and age profile receiving vigorous attention
Fleet Services finance book well ahead of budget; rebalancing mix toward operating leases away from installment sale
17Introduction SegmentalsFinancials Group Outlook
Burchmores delivered improved performance on the back of an increase in bank repossessions and units purchased internally from McCarthy dealers
GAZ restructuring to minimise exposure
Strategic imperatives & prospects
Projections for a growth slowdown, but no outright contraction foreseen
Competition price based but every effort is being made to preserve margin
Chinese product options being energetically pursued
Acquisition of Shell Autoserv to provide a nationwide presence for servicing out-of-warranty cars and Chinese product
Modest rises in new car prices will have a positive impact on used car values
Growing vehicle parq is beneficial for recurring parts and service income
McCarthy Fleet Services seeking meaningful expansion opportunities
A continued good performance is expected with management alert to competitive challenges and executing on identified opportunities
Bid Auto
Appendix 1
17.0%
Current contr. to Group Trading Profit
Fleet of foot
18Introduction SegmentalsFinancials Group Outlook
Corporate Services
0102030405060708090
100110120
H1 2006 H1 2007
100
200
300
400
500
600
700
800
900
1000
Trading Profit Revenue
…% Trading margin
Rm Trading Income Rm Revenue
-27%
Appendix 1
2.1%
Current contr. to Group Trading Profit
Results
Bidprop up 35% to R36m on back of strategic group development
Namibian fishing operations profits decline by 60% to R17m on poor catches and dominance of small fish
Ontime Automotive contributes R1.3m
Appendix 2: Segmental Outlook
Introduction Financials Group Group Outlook
20Introduction SegmentalsFinancials Group Outlook
OVERALL EFFECT: POSITIVEOVERALL EFFECT: POSITIVEOVERALL EFFECT: POSITIVEOVERALL EFFECT: POSITIVE
BidfreightBidfreight- sensitivity to anticipated economic variables
+ effect of rising fixed investment:
Infrastructure investment set to gather momentum, likely to benefit from F2008 onwards. BUT capacity constraints should not be underestimated
+ effect of rising interest rates:Higher interest earnings in Clearing & Forwarding and Marine but this canBe tempered by large customers demanding extended credit termsAlert to easing PCE but recessionary conditions unlikely
+ effect of relative Rand weakness: Trade weighted impact not sufficient to stimulate exports meaningfully Increased unit values in Clearing & Forwarding without substantially
decreased volume (PCE buoyant into F2008 and capital equipment imports set to rise)
+ GDP growth expected to remain robust Trade volumes to grow ahead of GDP but extenuating factors may result in isolated exceptions e.g. agriculture volatility, steel directed to home market
Segmentals Appendix 2
21Introduction SegmentalsFinancials Group Outlook
OVERALL EFFECT: MODERATELY POSITIVEOVERALL EFFECT: MODERATELY POSITIVEOVERALL EFFECT: MODERATELY POSITIVEOVERALL EFFECT: MODERATELY POSITIVE
Industry specific factors- Legislated minimum wages are a negative due to labour intensity of Bidserv- effect of HIV/AIDS, again due to relative labour intensity - Competition from SMME contractors is not proving an insurmountable threat
+ Tertiary and secondary GDP to grow ahead of overall GDP: Growing base of commercial activity, retail/tourism/leisure/non-residential
buildings/travel Stimulates recurring income, business well balanced, but heightened
competition attracted- effect of relative Rand weakness:
No discernable net negative impacts experienced or anticipated + effect of mild inflation:
Mildly positive but competition will restrain pricing power+ effect of rising fixed investment
Multiplier benefits across entire business landscape
BidservBidserv – sensitivity to anticipated economic variables
Segmentals Appendix 2
22Introduction SegmentalsFinancials Group Outlook
Bidvest Food InterestsBidvest Food Interests – sensitivity to anticipated economic variables
Segmentals
UK: Wealthy, competitive, flexible and relatively fast growing top-tier economy; predictable environmentEver alert to expansion options; trading skills are continuously tested in a demanding & sophisticated market
Australasia: Growth slower but resources boom underpins prospects; excellent macro economic management Breadth, depth and business mix cushions vulnerability to external shocks
South Africa: + Top line prospects remain promising in a growing economy + Expanding discretionary incomeScope for increased sophistication of offering and business practices
OVERALL EFFECT: POSITIVEOVERALL EFFECT: POSITIVEOVERALL EFFECT: POSITIVEOVERALL EFFECT: POSITIVE
General influencing factors: + food price increases + markets served remain strong but competition is cut-throat and pricing power constrained+ Increased wealth and disposable income spurs out-of- home consumption+ Upward pressure on labour & distribution costs
Benelux: Positive outlook, helped by cyclical upswing in Germany & France, lower corporate taxes in Netherlands
Appendix 2
23Introduction SegmentalsFinancials Group Outlook
Modest inflation is good for a trading business but sharp rises in raw material inputs may lead to certain projects being uneconomic
Bid Industrial & Commercial ProductsBid Industrial & Commercial Products – sensitivity to anticipated economic variables
Segmentals
OVERALL EFFECT: BROADLY POSITIVEOVERALL EFFECT: BROADLY POSITIVEOVERALL EFFECT: BROADLY POSITIVEOVERALL EFFECT: BROADLY POSITIVE
Fixed investment set to gain momentum, with emphasis shifting to non-residential
Likely areas identified for capitalising on: public transportation, 2010 facilities, airports, power generation, urbanisation, water, roads, ports & harbours, bulk infrastructure, electrical, telephonic and water reticulation, regional mining, government facilities & socio-economic spend, plus commercial, leisure & residential buildings
Effect of relative Rand weakness: No discernible negative impacts on the whole, if anything stimulatory Accentuates impact of high USD copper prices + stocking levels and trading activities Relief from cheap import competition, division will still selectively import
Interest rates Retail expansion off a low base
Appendix 2
24Introduction SegmentalsFinancials Group Outlook
Industry-specific featuresVigorous competition and choice + manufacturers terms pressuring dealer marginsSA car parq expanding appreciably plus appearance of cheap Chinese vehicles
General economy- effect of slower GDP growth:
Business and consumer confidence of greater relevance, consumer slowdown set to bite H2 of F2007
Annuity financial services income will cushion volume sales slowdown Replacement cycle pushed out, but service/after market revenues boosted
- effect of rising interest rates: Undermines affordability, but volume/entry level exposure a quarter of sales and set to
expand – poor public transport in SA Relative shift in favour of used cars evident Financial services income up
- effect of slower growth in PCE: Rate of growth in new to slow but used takes up slack; PDI buyers +/- 30% of total now
+ effect of rising fixed investment: Commercial vehicle sales have soared and set to remain strong
+ effect of relative Rand weakness: Stimulating automotive exports; export credits assist vehicle affordability, modest price
increases have taken affect January
Bid AutoBid Auto – sensitivity to anticipated economic variables
Group Segmentals
OVERALL EFFECT: NEUTRALOVERALL EFFECT: NEUTRAL
Appendix 2
25Introduction SegmentalsFinancials Group Outlook
A team of operationally strong owner-managers:
Financial disciplines (working capital, managing sustainable returns)
Corporate office frees up businesses to perform
Financial integrity
Proven ability to correct underperformance (incl organic growth record from acquisitions)
Proven ability to create value in businesses
Management Focus
Control distribution channels:
Implementation
Businesses actively & successfully managed
Decentralised, focused business units
Market leaders in distribution channels: Critical mass for sourcing & funding Reaching common customers Tying the customer in
Strategy
Own the cash flows
Control distribution channels
A balance of mature & growth businesses
Funds allocated across asset base according to proven return criteria
Vigorous capital management - cash used from mature businesses to fund growth businesses and acquisitions
Identifying acquisitive value
The BIDVest Business Model
Market-leading service, trading & distribution businesses
Inside back cover