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
HEPS
+26,2% to 686,6cps
(+29% in H1*; + 23% in H2*)
DPS
ROFE
+22,3% to 306,0cps
51% in 2004 vs 55% in 2005
Note: F2005 accounts not prepared i.t.o. IFRS
* H1 includes first time contributions from McCarthy and acquired minorities, whereas
H2 2005 is materially comparable to H2 2004
Financial Results
Consolidated Income Statement
Year ended June 30 2005
R000’s
H1 2005
H2 2005
Total 2005
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
6 573
21 855
28 428
(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
Revenue
Associate Income
Taxation
Segmental Performance
Segment Trading Income
Performance
H1 2005
H2 2005
+7%
+25%
Bidcorp
R25m turnaround
R14m turnaround
Bidserv
+49%
+34%
-9%
-23%
International Foodservices
+12%
+21%
Caterplus
+11%
+11%
Combined Foods
+21%
-4%
-3%
+13%
Bidoffice – Printing & Paper Conversion*
-19%
+16%
Bid Industrial
+25%
+14%
n/a
+21%
Bidfreight SA
Renfin
Bidoffice – Office Products
McCarthy
* Lithotech France: R15,0m loss in H1 vs R4,5m profit in H2
Consolidated Income Statement
Year ended June 30 2005
Actual: Avg
R/£ 11.53
2005
% ch vs
2004
2004
62 811,8
+22,5
51 262,2
Rm’s
Revenue
2005 in constant
currency:
Avg R/£ 11.94
% ch vs
2005
2004
Actual: Avg
R/£ 11.94
63 603,9
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
+24,1
Consolidated Income Statement
Year ended June 30 2005
Actual: Avg
R/£ 11.53
Rm’s
Revenue
Trading income
(margin)
2005 in constant
currency:
Avg R/£ 11.94
% ch vs
2005
2004
Actual: Avg
R/£ 11.94
2005
% ch vs
2004
2004
62 811,8
+22,5
51 262,2
63 603,9
+24,1
3 164,6
(5,0%)
+24,4
2 544,1
(5,0%)
3 188,9
+25,3
Excluding McCarthy, 10% increase in H1 trading income and 15% for full year
Trading
margins
2005
2004
Local
5,8%
6,1%
Excluding McCarthy, group margin improves from 5,1%
to 5,4%
Offshore
3,3%*
2,9%
Return to profitability at Bidcorp; Strong performance
from offshore Foodservice
Group
5,0%
5,0%
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
Consolidated Income Statement
Year ended June 30 2005
Actual: Avg
R/£ 11.53
Rm’s
Revenue
Trading income
(margin)
Capital Items
Actual: Avg
R/£ 11.94
2005 in constant
currency:
Avg R/£ 11.94
% ch vs
2005
2004
2005
% ch vs
2004
2004
62 811,8
+22,5
51 262,2
63 603,9
+24,1
3 164,6
(5,0%)
+24,4
2 544,1
(5,0%)
3 188,9
+25,3
(17,2)
-57,2
(40,2)
(17,2)
n/c
Trading Margins
Offshore
2.7%
Bidvest plc margins 3.1% in 2004 vs 2.9% in
2003
* Offshore margins include a R21.8m loss from Bidcorp plc
and a R17.0m loss from Lithotech France
Consolidated Income Statement
Year ended June 30 2005
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
2005 in constant
currency:
Avg R/£ 11.94
% ch vs
2005
2004
2005
% ch vs
2004
2004
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
Rm’s
Revenue
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
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
2005 in constant
currency:
Avg R/£ 11.94
% ch vs
2005
2004
2005
% ch vs
2004
2004
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
28,4
+19,2
23,8
28,4
0,0
Rm’s
Revenue
Associate Income
Consolidated Income Statement
Year ended June 30 2005
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
2005 in constant
currency:
Avg R/£ 11.94
% ch vs
2005
2004
2005
% ch vs
2004
2004
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
28,4
+19,2
23,8
28,4
0,0
Taxation
(822,5)
+21,9
(674,6)
(820,9)
+22,0
STC
(10,3)
Rm’s
Revenue
Associate Income
(13,6)
Effective
Tax Rates*
2005
2004
Local
28,2%
28,1%
Deferred tax asset write-back offsets 1%
decrease in corporate tax rates
Offshore
28,9%
31,5%
Decline due to tax relief as a consequence of
minority acquisitions of Bidvest plc and
Bidcorp plc as well as reduced losses
Group
28,4%
28,9%
*Excl. STC
Consolidated Income Statement
Year ended June 30 2005
Actual: Avg
R/£ 11.53
Actual: Avg
R/£ 11.94
2005 in constant
currency:
Avg R/£ 11.94
% ch vs
2005
2004
2005
% ch vs
2004
2004
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
28,4
+19,2
23,8
28,4
0,0
(822,5)
+21,9
(674,6)
(820,9)
+22,0
(11,2)
-85,0
(74,8)
(12,0)
-84,7
Rm’s
Revenue
Associate Income
Taxation
Minority interests
Consolidated Income Statement
Year ended June 30 2005
Actual: Avg
R/£ 11.53
Rm’s
Earnings
% ch vs
2005
 Total foreign headline
earnings
=2004
22,7% of
F2004)
Revenue
Trading income
 Dividend
(margin)
2005 in constant
currency:
Avg R/£ 11.94
% ch vs
2004 (21,3% 2005
Group
in
2004
Actual: Avg
R/£ 11.94
62 811,8
+22,5
51 262,2
63 603,9
+24,1
3 164,6
(5,0%)
+24,4
2 544,1
(5,0%)
3 188,9
+25,3
(280,1)
+65,8
Net finance
expense
 16%
enhancement(277,7)
in DPS
Associate Income
 Dividend policy = +/-28,4
2x
+64,4
(168,9)
due to
Dinatla transaction
+19,2
23,8
28,4
0,0
(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
Taxation
Consolidated Balance Sheet
Year ended June 30
Rm’s
Assets
2005
2004
8 159,8
6 478,9
3412 735,2
Stock
11 542,4
Debtors
18 021,4
Creditors
4
8
30
28
No. of Days
Non-current assets
Current assets
38
Total assets
20 895,0
Equity & Liabilities 64
54
Capital & reserves
7 564,4
6368,4
Non-current liabilities
1 765,5
1 242,8
11 565,1
10 410,2
2005
Current liabilities
2004
Note: Seasonality always affects H1
Total equity & Liabilities
20 895,0
18 021,4
Consolidated Balance Sheet
Year ended June 30
Net Debt Position (Rm’s)
2005
2004
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%
Liquid funds
Consolidated Cash Flow Statement
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
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:
Rm Trading Income
550
Rm Revenue
16000
3.6%
15000
14000
13000
12000
11000
10000
9000
8000
2004
2005
7000
6000
Trading income
Revenue
450
+16%
 23% drop in BMA volumes as rand and high
350
Spoornet charges deter coal exports
 Wheat & soya imports boost SABT
250
 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
150
50
-50
3.4%
…% Trading margin
Services - Bidfreight
Strategic imperatives & prospects
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
15%
Marine emphasis on new principals in Liner
and strategic alliances in Non-Liner
Current contr. to Group Trading Income
Services – Bidcorp
Ships ahoy!
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
Rm Trading Income
15
Rm Revenue
780
10
5
0.8%
0
-5
1H04
2H04
1H05
1.7%
2H05
-10
-15
760
740
720
700
680
660
640
620
600
580
-20
-25
Trading income
Revenue
…% Trading margin
Services – Bidcorp
Strategic imperatives & prospects
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
0.5%
 Car parking business reliant on Westminster City
Council contract March 2006 – one of two bidders
Current contr. to Group Trading Income
Services – Bidserv
Acquisitive 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
Rm Trading Income
Rm Revenue
300
3000
280
260
2500
240
+41%
220
2000
200
180
1500
10.0%
9.5%
160
140
1000
120
100
500
BidAviation flies thanks to EAS
2004
Sharp profit increase at Industrial &
Janitorial as G Fox acquisition kicks in
Trading income
2005
Revenue
…% Trading margin
Services - Bidserv
Strategic imperatives & prospects
New Top Turf golf course construction unit – promising potential
Laundry world-class plant capability to underpin organic growth
Security, third largest profit contributor
Guarding on a firmer management and technology footing
IPS 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
9%
Bolt-on and complementary opportunities
continually sought
Current contr. to Group Trading Income
Services – Renfin
Zero is the new hero
Travel trading income (-27%)
Zero commission 1 May 2005 for
SAA, other carriers phasing in
Dust 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 F2004
Crime hammers insurance costs
Rm Trading Income
Rm Revenue
700
150
19.4%
650
600
550
-15%
100
15.7%
500
450
400
350
300
250
50
0
2004
Trading income
2005
Revenue
…% Trading margin
Services - Renfin
Strategic imperatives & prospects
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
3%
Current contr. to Group Trading Income
Foodservice Products – International (UK)
Britannia way cool
Profits 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
Rm Trading Income
Rm Revenue
600
17000
550
15000
500
+16%
13000
450
400
11000
350
9000
300
250
7000
200
5000
150
3.6%
3.2%
100
3000
2004
2005
Trading income
Revenue
…% Trading margin
Foodservice Products – International (Australasia)
a sweet song from down under
AUSTRALIA:
Trading income up 16% to A$26.5m; up 21%
after disposal of Alice Springs
Rm Trading Income
170
Organic foodservice revenue growth 9.5%
150
Melbourne delivering but losses in Sydney
Hospitality Supply rollout on track
QSR (started October ’03) into profit
Rm Revenue
6500
6000
+20%
5500
130
5000
110
4500
4000
90
3500
New Zealand
Trading income up 75% to NZ$ 10.3m
Organic revenue growth 24%, acquisitions 5%
70
2.7%
2.9%
50
3000
2500
Small acquisitions in fresh and seafoods
2004
Crean housebrand; e-commerce 10% of sales
and growing
Trading income
2005
Revenue
…% Trading margin
Foodservice Products - International
Strategic imperatives & prospects
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
22%
Current contr. to Group Trading Income
Proforma contr. to Group Trading
Income including Deli XL = 24%)
Foodservice Products – Caterplus (SA):
Slender
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
Rm Trading Income
200
180
160
+11%
140
120
100
80
60
40
8.7%
20
0
2004
Trading income
Rm Revenue
2300
2100
1900
1700
1500
1300
1100
900
700
8.7%
500
300
2005
Revenue
…% Trading margin
Foodservice Products – Caterplus (SA)
Strategic imperatives & prospects
Adaptation to deflation largely achieved
Emergent middle class – increasing leisure spend
Continued adaptation of focus:
Frozen move to more independent business
Leverage 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
6%
Current contr. to Group Trading Income
Foodservice Products – Combined Foods (SA)
Kneading some dough
Pricing 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
Rm Trading Income
130
+8%
120
Rm Revenue
1300
1100
110
100
90
80
900
12.6%
12.3%
70
60
50
40
700
500
300
100
2004
Trading income
2005
Revenue
…% Trading margin
Foodservice Products – Combined Foods (SA)
Strategic imperatives & prospects
Bidbake:
 New facility to open up efficiency opportunities
Yeast strategy to be finalised
Internal focus on extracting synergies and efficiencies
 Leverage customers over scope of product range
Crown well positioned to continue growth
4%
Current contr. to Group Trading Income
Bidoffice - Office Products
Mighty Minolco
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
Rm Trading Income
280
+5%
260
Rm Revenue
3900
3400
240
220
2900
200
180
160
140
120
100
2400
1900
9.1%
8.0%
1400
900
2004
Trading income
2005
Revenue
…% Trading margin
Bidoffice - Office Products
Strategic imperatives & prospects
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
9%
Current contr. to Group Trading Income
Bidoffice - Printing & Paper Conversion
Sacré bleu
Lithotech France returns to profitability:
F2004:
-R16,9m
H1 2005: -R15,0m
Rm Trading Income
190
-4%
170
H2 2005: + R4,5m
150
130
Capacity mismatch successfully
addressed, but requires intense focus
110
90
Lithotech SA moving up the value chain
to offset ex-growth products (R40m
capex in F2004 supports growth)
70
50
30
10
Statmark satisfactory
Silveray down 35% - margins sacrificed
to maintain market share; reorganisation
Rm Revenue
2600
2100
1600
8.9%
7.6%
1100
600
100
2004
Trading income
2005
Revenue
…% Trading margin
Bidoffice - Printing & Paper Conversion
Strategic imperatives & prospects
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
success
Refocused Silveray to deliver better F2006 results
Lithotech France
 Capacity cut-backs through plants closures in
France & UK underscore the expected turnaround
5%
Current contr. to Group Trading Income
Bid Industrial Products
Luminary
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
Rm Trading Income
300
Rm Revenue
3500
3000
250
2500
+18%
200
2000
150
100
1500
7.7%
8.0%
1000
500
50
2004
Trading income
2005
Revenue
…% Trading margin
Bid Industrial Products
Strategic imperatives & prospects
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
8%
Current contr. to Group Trading Income
Automotive - McCarthy
Awesome automotive
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 units
New vehicle price standstill (added value
without cost) & deflation in used
Margin pressure in new and used
Strong consumer economy benefits
Yamaha – full range
McCarthy/WesBank JV book R3.7bn
GAZ taxi partnership with SANTACO
Rm Trading Income
300
Rm Revenue
7500
6500
250
5500
200
4500
150
3500
100
50
3.9%
3.7%
1H04
1500
3.4%
3.3%
2500
500
2H04
1H05
Trading income
2H05
Revenue
…% Trading margin
Automotive - McCarthy
Strategic imperatives & prospects
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
16%
 Yamaha – full range offering
 GAZ taxi market potential promising
 Re-launched McCarthy Fleet Services
 Bidvest group synergies already unfolding
Current contr. to Group Trading Income
Corporate Services
80
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
Rm Trading Income
70
-3%
60
50
40
30
20
10
2004
2005
Trading income
2%
Current contr. to Group Trading Income
Group Matters
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
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
Acquisition of Deli XL
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-ofthe-art infrastructure
Renegotiation of unprofitable
contracts; optimisation of client
mix
Rationalisation & optimisation of
product range
3663 OPERATING PERFORMANCE SINCE
ACQUISITION
Benefits of focused purchasing
to both Deli XL and 3663
45.7
50
39.8
40
25.4
16.1
20
0
8.0
20.0
2.3%
3.3%
0.1
0.0
31.9
30
10
Implementation of Bidvest
philosophy – support,
expectations & accountability
0.1
60
3.5%
2.9%
2.5%
1.7%
0.8%
0.0
0.0
0.0
0.0
1999 2000 2001 2002 2003 2004 2005
to June
Operating profitYear
(£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
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
MANAGEMENT IS BUDGETING FOR REAL
HEPS GROWTH IN F2006
Our job is to manage our businesses for above-average growth;
we’re leaving the detailed financial forecasts to the analysts