1
The Bidvest Business Model
Market-leading service, trading & distribution businessesImplementation
► 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
► A team of operationally strong, entrepreneurial 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
management of a balance of cash generative and growth businesses
An operationally active investment holding company whose core competence is the
3
Agenda
► Introduction
► Financial Results
► Group Outlook
► Appendices:• Appendix 1: Geographic and Segmental Revenue and Trading Profit
• Appendix 2: Divisional Results
• Appendix 3: Historic Performance
5
Note: IFRS compliant
H1 F2009 results summaryIntroductionIntroduction
* HEPS, excluding non trading costs of R165m (40cps after tax) related to closure and re-organisation of operations
ROFE from 37.6% in H1 F2008 to 32.4% in H1 F2009
DPS 14% to 190cps
HEPS 9% to 454,0cps
Revenue 11% to R60,0bn
Trading profit 6% to R2,6bn
Headline earnings 10% to R1,4bn
EPS 9% to 530,4cps
Cash generated from operations 41% to R0,9bn
Normalised HEPS* 1% to 494,0cps
► The world has changed, and changed forever; we are living in the new normal► Good people matter more than ever - Bidvest has them► Are we fearful of the economic upheaval? Not a bit► Do we see opportunity? You bet – the Group will continue to adapt ► What are our people inspired to do?
• Use their gumption• Be resourceful • Strengthen partnerships • Get back to brass tacks • Be good housekeepers - we haven’t got limitless cash• Be alert to the potential a world of uncertainty and difficulty offers
► Bidvest gains strength from its diversity and shall succeed – wherever in the world the Group trades
CEO’s opening conclusionIntroductionIntroduction
8
H1 F2009 – FD’s perspectives
► Risk aversion prevalent ► Creditworthiness under scrutiny by lenders ► Favourable funding terms less easy to come by
• Overall costs not declining; increased credit spreads with decreasing base rates
► Bidvest has a fiduciary responsibility to stakeholders to husband its resources appropriately for the times
► Optimal funding structures will continue to be investigated► Cash will be conserved ► Working capital will be managed as effectively as we are able ► Internal controls stepped up as increased fraud & criminal activity prevalent
FinancialsFinancials
9
Consolidated Income StatementFinancialsFinancials
► 11% organic growth► 8% growth excluding exchange rate translation ► 17% growth excl. McCarthy in both periods
Half-year ended Dec 31 2008Avg
R/£15.20Avg
R/£ 14.14
H1 2009 in constant currency
R/£ 14.14
Rm’s H1 2009 % ch H1 2008 H1 2009 % ch
Revenue 59 990,9 +11.3 53 884,5 57 974,0 +7.6
10
Consolidated Income StatementFinancialsFinancials
Trading Margins H1 2009 H1 2008 Comment
Local 5.7% 6.0% Materially impacted by Bid Auto
Foreign 3.1% 2.8% Decline in 3663 offset by improvement in Bidvest Namibia
Group 4.4% 4.6%
NoteNote:: 1. All growth in Trading Profit is organic 2. Foreign businesses = 30% contribution to Trading Profit vs 27% in H1 2008
Half-year ended Dec 31 2008 AvgR/£15.20
AvgR/£ 14.14
H1 2009 in constant currency
R/£ 14.14
Rm’s H1 2009 % ch H1 2008 H1 2009 % ch
Revenue 59 990,9 +11.3 53 884,5 57 974,0 +7.6
Trading profit 2 614,7
+6.4 2 458,1 2 572,4 +4.7
11
Consolidated Income StatementFinancialsFinancials
► Increase in finance expense due to increased funding rates, increased utilisation
► Foreign interest of R76,5m vs local interest of R486,4m ► Net debt offshore of R1,4bn vs local net debt of R6,5bn► Finance cost has peaked
• 2nd half:─ More internal working capital management & capex scale-
back─ H2 much better from a working capital perspective─ Falling interest rate environment
Half-year ended Dec 31 2008 AvgR/£15.20
AvgR/£ 14.14
H1 2009 in constant currency
R/£ 14.14
Rm’s H1 2009 % ch H1 2008 H1 2009 % ch
Revenue 59 990,9 +11.3 53 884,5 57 974,0 +7.6
Trading profit 2 614,7
+6.4 2 458,1 2 572,4 +4.7
Net finance expense (562,9) +26.4 (445,5) (557,4) +25.1
12
Consolidated Income StatementFinancialsFinancials
Associates:
Tiger Auto (Sold for R212m with effect from Feb 2008)
Enviroserv (Sold for R569m with effect from Nov 2008)
Comair
Other Note: Note: Includes dividends received
Half-year ended Dec 31 2008 AvgR/£15.20
AvgR/£ 14.14
H1 2009 in constant currency
R/£ 14.14
Rm’s H1 2009 % ch H1 2008 H1 2009 % ch
Revenue 59 990,9 +11.3 53 884,5 57 974,0 +7.6
Trading profit 2 614,7
+6.4 2 458,1 2 572,4 +4.7
Net finance expense (562,9) +26.4 (445,5) (557,4) +25.1
Associate Income 29,3 -50.4 59,1 29,3 -50.4
Effective tax rates
H1 2009 H1 2008 Comment
Local 25.9% 25.8% No material change
Offshore 27.2% 29.5% Reduction in UK rate by 2%
Group 26.5% 27.0% Sustainable rate of +/- 27%
13
Consolidated Income StatementFinancialsFinancials
Half-year ended Dec 31 2008 AvgR/£15.20
AvgR/£ 14.14
H1 2009 in constant currency
R/£ 14.14
Rm’s H1 2009 % ch H1 2008 H1 2009 % ch
Revenue 59 990,9 +11.3 53 884,5 57 974,0 +7.6
Trading profit 2 614,7
+6.4 2 458,1 2 572,4 +4.7
Net finance expense (562,9) +26.4 (445,5) (557,4) +25.1
Associate Income 29,3 -50.4 59,1 29,3 -50.4
Taxation (477,5) -9.2 (525,6) (469,4) -10.7
14
Consolidated Income StatementFinancialsFinancials
H1 2009 H1 2008
Bidvest Namibia 29,7 -2,2
Other 23,9 21,8
Half-year ended Dec 31 2008 AvgR/£15.20
AvgR/£ 14.14
H1 2009 in constant currency
R/£ 14.14
Rm’s H1 2009 % ch H1 2008 H1 2009 % ch
Revenue 59 990,9 +11.3 53 884,5 57 974,0 +7.6
Trading profit 2 614,7
+6.4 2 458,1 2 572,4 +4.7
Net finance expense (562,9) +26.4 (445,5) (557,4) +25.1
Associate Income 29,3 -50.4 59,1 29,3 -50.4
Taxation (477,5) -9.2 (525,6) (469,4) -10.7
Minority interests (53,6) n/a (19,6) (53,7) n/a
Half-year ended Dec 31 2008 AvgR/£15.20
AvgR/£ 14.14
H1 2009 in constant currency
R/£ 14.14
Rm’s H1 2009 % ch H1 2008 H1 2009 % ch
Revenue 59 990,9 +11.3 53 884,5 57 974,0 +7.6
Trading profit 2 614,7
+6.4 2 458,1 2 572,4 +4.7
Net finance expense (562,9) +26.4 (445,5) (557,4) +25.1
Associate Income 29,3 -50.4 59,1 29,3 -50.4
Taxation (477,5) -9.2 (525,6) (469,4) -10.7
Minority interests (53,6) n/a (19,6) (53,7) n/a
Headline earnings 1 364,3 -9.7 1 510,6 1 565,2 +5.815
Consolidated Income StatementFinancialsFinancials
Decisive remedial actions deliberately taken to put the Group in a stronger position at a time of uncertainty and worldwide economic recession:
► 3663 Barton Meat: perennial loss maker closed + other closures - £10,1m charge► Bid Auto: rationalisation of dealerships – R27m charge
Half-year ended Dec 31 2008 AvgR/£15.20
AvgR/£ 14.14
H1 2009 in constant currency
R/£ 14.14
Rm’s H1 2009 % ch H1 2008 H1 2009 % ch
Revenue 59 990,9 +11.3 53 884,5 57 974,0 +7.6
Trading profit 2 614,7
+6.4 2 458,1 2 572,4 +4.7
Net finance expense (562,9) +26.4 (445,5) (557,4) +25.1
Associate Income 29,3 -50.4 59,1 29,3 -50.4
Taxation (477,5) -9.2 (525,6) (469,4) -10.7
Minority interests (53,6) n/a (19,6) (53,7) n/a
Headline earnings 1 364,3 -9.7 1 510,6 1 565,2 +5.8
HEPS (cps) 454,0 -8.9 498,1 454,1 -9.816
Consolidated Income StatementFinancialsFinancials
HEPS, excluding non trading costs of R165m (40cps after tax) related to closure and re-organisation of operations, would have been 1% down
Half-year ended Dec 31 2008 AvgR/£15.20
AvgR/£ 14.14
H1 2009 in constant currency
R/£ 14.14
Rm’s H1 2009 % ch H1 2008 H1 2009 % ch
Revenue 59 990,9 +11.3 53 884,5 57 974,0 +7.6
Trading profit 2 614,7
+6.4 2 458,1 2 572,4 +4.7
Net finance expense (562,9) +26.4 (445,5) (557,4) +25.1
Associate Income 29,3 -50.4 59,1 29,3 -50.4
Taxation (477,5) -9.2 (525,6) (469,4) -10.7
Minority interests (53,6) n/a (19,6) (53,7) n/a
Headline earnings 1 594,1 +7.7 1 480,0 1 565,2 +5.8
HEPS (cps) 454,0 -8.9 498,1 454,1 -9.8
Diluted HEPS (cps) 450,3 -7.5 487,0 450,5 -8,517
Consolidated Income StatementFinancialsFinancials
302,9m vs 310,2m diluted weighted avg shares in issue
18
Consolidated Income StatementFinancialsFinancials
Dividend cover of 2,4x
Half-year ended Dec 31 2008 AvgR/£15.20
AvgR/£ 14.14
H1 2009 in constant currency
R/£ 14.14
Rm’s H1 2009 % ch H1 2008 H1 2009 % ch
Revenue 59 990,9 +11.3 53 884,5 57 974,0 +7.6
Trading profit 2 614,7
+6.4 2 458,1 2 572,4 +4.7
Net finance expense (562,9) +26.4 (445,5) (557,4) +25.1
Associate Income 29,3 -50.4 59,1 29,3 -50.4
Taxation (477,5) -9.2 (525,6) (469,4) -10.7
Minority interests (53,6) n/a (19,6) (53,7) n/a
Headline earnings 1 594,1 +7.7 1 480,0 1 565,2 +5.8
HEPS (cps) 454,0 -8.9 498,1 454,1 -9.8
Diluted HEPS (cps) 450,3 -7.5 487,0 450,5 -8,5
Distribution (cps) 190,0 -13,6 220,0 190,0 -13.6
19
Consolidated Cash Flow Statement – Rm’s
Cash generated from ops
Working capital utilised
Net Finance charges
Taxation
Distributions
Cash effects of investment act’s
Cash effects of financing act’s
Half-year ended Dec 31 2008
FinancialsFinancials
Half-year ended Dec 31 2007
►Investment activities:• No material acquisitions• Capex of R1,2bn is similar to H1 2008
►In the 4½ years to Dec 2008: •R9,8bn cash generated from operations after working capital, tax and distributions, supported the R12,5bn spent on acquisitions & investments of businesses for medium term growth•Full benefits still to manifest
20
Debtors days
Stock days
Creditors days
H1 2007 F2007 H1 2008 F2008 H1 2009
59 17 9 Net days
FinancialsFinancials
16
Net Working Capital Days
Some improvement in working capital management:►Inventory - increased strategic buying & longer supply chain
►Debtors - quality of debtors book is sound, but increasing debtor delinquencies►Creditors - impact of importing stock with shorter credit lines
Half-year ended Dec 31 2008
21
H1 2006 H2 2006 H1 2007 H2 2007 H1 2008 H2 2008 H1 2009
FinancialsFinancials
Net working capital flows vs cash generated
► Upward trend in half on half cash generated ► Working capital utilisation typically better in 2nd half
Half-year ended Dec 31 2008
Target interest cover range
22
H1 2007 F2007 H1 2008 F2008 H1 2009
FinancialsFinancials
Gearing
► Clean EBITDA interest cover of 6.1x; Interest cover of 4.7x vs target of 5-6x ► Full year interest cover should be back within target range
Half-year ended Dec 31 2008
► Business cycles are an age-old hardy perennial – this is a necessary corrective phase ► Bidvest remains entrepreneurial ► Management are really energised
► We know our businesses but we don’t pretend to know the future
► We manage for all eventualities, although the following unknowns could have a big effect:
• Interest rates
• Exchange rates
► Deflation will become an issue
► Operating conditions are still challenging
► Difficult times provide opportunity and Bidvest is alert to the potential this offers
CEO’s closing conclusion
Bidvest will, at best, maintain HEPS in F2009
Group OutlookGroup Outlook
25
Group OutlookGroup Outlook
Joffe’s take on the businesses
Revenue (Rm) Trading Profit (Rm)
Bidfreight H1 2008 % ch. H1 F2009 H1 2008 % ch. H1 2009
Deterioration in trade volumes as half proceeded, Liquids and Bulk maintained
10 580,9 +1.4 10 729,3 330,9 +10.5 365,5
27
Group OutlookGroup Outlook
Joffe’s take on the businesses
Revenue (Rm) Trading Profit (Rm)
Bidserv H1 2008 % ch. H1 F2009 H1 2008 % ch. H1 2009
Competitive advantages and scale assist as market turns down, Bank and Industrial exceptional
2 955,0 +23.3 3 644,7 384,8 +27.2 489,4
29
Group OutlookGroup Outlook
Joffe’s take on the businesses
Revenue (Rm) Trading Profit (Rm)
Bidvest Europe H1 2008 % ch. H1 2009 H1 2008 % ch. H 12009
3663 profits - 25% in £, cost control strong, major focus on margins; Deli XL Netherlands profits up 16% in € and Belgium up 79% in €; Horeca margin 3.2%
16 007,1 +20.8 19 329,9 410,4 -3.4 396,3
31
Group OutlookGroup Outlook
Joffe’s take on the businesses
Revenue (Rm) Trading Profit (Rm)
Bidvest Asia Pacific H1 2008 % ch. H1 2009 H1 2008 % ch. H 12009
Stress in all markets but staff highly motivated to achieve, Australia up 15%, New Zealand up 12% in spite of four consecutive quarters of GDP decline, Singapore down on overstocked market
6 575,2 +33.7 8 790,2 251,3 +13.7 285,7
32
Group OutlookGroup Outlook
Joffe’s take on the businesses
Bidfreight
Bidserv
Bidvest Europe
Bidvest Asia Pacific
33
Group OutlookGroup Outlook
Joffe’s take on the businesses
Revenue (Rm) Trading Profit (Rm)
Bidfood H1 2008 % ch. H1 2009 H1 2008 % ch. H1 2009
Caterplus tackles a weak market aggressively, highly disciplined working capital management, profits up 16%; Speciality profit up 10%, higher income consumers cutting back sharply; Bidfood Ingredients traded well with profit up 18%, deflationary tendencies evident
2 195,3 +20.7 2 650,8 186,1 +16.9 217,6
34
Group OutlookGroup Outlook
Joffe’s take on the businesses
Bidfreight
Bidserv
Bidvest Europe
Bidvest Asia Pacific
Bidfood
35
Group OutlookGroup Outlook
Joffe’s take on the businesses
Revenue (Rm) Trading Profit (Rm)
Bid Industrial and Commercial
H1 2008 % ch. H1 2009 H1 2008 % ch. H 12009
Voltex down 5%, sharply weaker copper price; Waltons, Kolok, Afcom, Buffalo, and Vulcan showed good growth; Furniture notably weak
4 594,1 +8.2 4 969,1 329,5 -1.4 324,9
36
Group OutlookGroup Outlook
Joffe’s take on the businesses
Bidfreight
Bidserv
Bidvest Europe
Bidvest Asia Pacific
Bidfood
Bid Industrial and Commercial
37
Group OutlookGroup Outlook
Joffe’s take on the businesses
Revenue (Rm) Trading Profit (Rm)
Bidpaper Plus H1 2008 % ch. H1 2009 H1 2008 % ch. H 12009
Strong results from Silveray and Labels, selected gains in market share, cost pressure, pricing sensitivity as markets weaken, vigorous asset management
1 020,4 +14.4 1 167,6 126,6 +2.9 130,3
38
Group OutlookGroup Outlook
Joffe’s take on the businesses
Bidfreight
Bidserv
Bidvest Europe
Bidvest Asia Pacific
Bidfood
Bid Industrial and Commercial
Bidpaper Plus
39
Group OutlookGroup Outlook
Joffe’s take on the businesses
Revenue (Rm) Trading Profit (Rm)
Bid Auto H1 2008 % ch. H1 2009 H1 2008 % ch. H1 2009
Motor retail profits down 92%; import & distribution declined sharply but limited by previous diversification; new car sales down 24%, used up 12%; 7 Value Centres and 16 Value Serve outlets rationalised; working capital prioritised, cash retained
9 989,5 -11.7 8 822,5 353,6 -39.4 214,4
40
Group OutlookGroup Outlook
Joffe’s take on the businesses
Bidfreight
Bidserv
Bidvest Europe
Bidvest Asia Pacific
Bidfood
Bid Industrial and Commercial
Bidpaper Plus
Bid Auto