December 31 2003

December 31 2003

for the six months ended

Interim ResultsBIDVest

whose core competence is the management of a

An operationally active investment holding company

balance of cash generative and growth businesses

Agenda

Group overview

Financial Results

Divisional Results

Strategy & Outlook

Group OverviewGroup Overview

The BIDVest Business ModelAn operationally active investment holding company of

market-leading service, trading & distribution businesses

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

Strategy

Own the cash flows


A balance of mature & growth assets




Control distribution channels:

Implementation

Businesses actively & successfully managed

Decentralised, focused business units

Market leaders in distribution channels:Critical mass for sourcing & fundingReaching common customers Tying the customer in






Implementation



Market leaders in distribution channels:

Critical mass for sourcing & funding

Reaching common customers Tying the customer in

Strategy

Own the cash flows


A balance of mature & growth assets




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

Proven ability to create value in businesses

Management Focus




Implementation



Market leaders in distribution channels:

Critical mass for sourcing & funding

Reaching common customers Tying the customer in

Strategy

Own the cash flows


A balance of mature & growth businesses




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

Proven ability to create value in businesses

Management Focus

BIDVest Group Structure

61%

39%

Foodservice Products

Combined Foods

Bidvest plcCaterplus

% of op income

Commercial Products

Voltex

Bidoffice

Bidpac

% of op income

74%

26%

Services

Bidfreight

Renfin

Bidcorp plc

Namsov Fishing

Bidserv

% of op income

69%

31%

96%

4%% of op income

Corporate

Group properties

mymarket.com

Investments & other income

I-Fusion

Group performance summary for the half-year to December 2003

HEPS: +2% to 248.0cps; DPS: +5% to 113.4cps

Group operating margins up to 5.1% from 4.6%

Operating income pre-translation losses up 1.4% to R1.14bn

8% organic growth in operating income for domestic operations

Bidvest plc headline earnings up 22% to £17.2m

Organic operating income growth from acquisitions

Note: All figures indexed to 1999

100

150

200

250

300

350

400

1999 2000 2001 2002 2003

Ind

ex

Waltons Rennies 3663

Historic Performance

Operating profit & margins

0

500

1000

1500

2000

2500

2000 2001 2002 2003 2004

Rm

1H 2H

4.6%

5.1%

4.7%

4.4%

4.9%

5.0%

4.9%

4.8%4.8%

Historic Performance Operating profit & margins

0

500

1000

1500

2000

2500

2000 2001 2002 2003 2004

Rm

1H 2H

4.6%

5.1%

4.7%

4.4%

4.9%

5.0%

4.9%4.8%4.8%

Annualised Returns

42 44

5749

3034 32

25

0

10

20

30

40

50

60

2000 2001 2002 2003

%

ROFE ROE


Annualised Returns

42 44

5749

3034 32

25

0

10

20

30

40

50

60

2000 2001 2002 2003

%

ROFE ROE

Historic Performance Operating profit & margins

0

500

1000

1500

2000

2500

2000 2001 2002 2003 2004

Rm

1H 2H

4.6%

5.1%

4.7%

4.4%

4.9%

5.0%

4.9%4.8%4.8%

HEPS

153.6 181.6215.9 243.2 248.0

152.8180.2

220.3235.8

0

100

200

300

400

500

600

2000 2001 2002 2003 2004

cp

s

1H 2H

23% CAGR over 5 years


HEPS

153.6 181.6215.9 243.2 248.0

152.8180.2

220.3235.8

0

100

200

300

400

500

600

2000 2001 2002 2003 2004

cps

1H 2H




0

500

1000

1500

2000

2500

2000 2001 2002 2003 2004

Rm

1H 2H

4.6%

5.1%

4.7%

4.4%

4.9%

5.0%

4.9%4.8%4.8%

Annualised Returns

42 44

5749

3034 32

25

0

10

20

30

40

50

60

2000 2001 2002 2003

%

ROFE ROE



DPS

72.0 81.0 90.0108.0 113.4

78.388.2

100.0

112.0

0

50

100

150

200

250

2000 2001 2002 2003 2004

cps

1H 2H


HEPS

153.6 181.6215.9 243.2 248.0

152.8180.2

220.3235.8

0

100

200

300

400

500

600

2000 2001 2002 2003 2004

cps

1H 2H




0

500

1000

1500

2000

2500

2000 2001 2002 2003 2004

Rm

1H 2H

4.6%

5.1%

4.7%

4.4%

4.9%

5.0%

4.9%4.8%4.8%

Annualised Returns

42 44

5749

3034 32

25

0

10

20

30

40

50

60

2000 2001 2002 2003

%

ROFE ROE

DPS

72.0 81.0 90.0108.0 113.4

78.388.2

100.0

112.0

0

50

100

150

200

250

2000 2001 2002 2003 2004

cps

1H 2H

Financial ResultsFinancial Results

Consolidated Income Statement

Revenue 22 211 643 24 565 364 (9,6) 47 073 375

Negative rand impact (R3bn translation difference for Bidvest plc alone)

Volumes increased, but deflationary pressure on selling prices

Foreign currency-denominated revenues (Safcor Panalpina)

2003 2002

Unaudited % changeUnauditedYear ended

June 30 2003R000s

Half-year ended December 31


2003 2002


June 30 2003R000s

Operating Income 1 132 873 1 128 347 2 244 1210,4

Revenue 22 211 643 24 565 364 (9,6) 47 073 375

Half-year ended December 31

Gross margins up slightly, but rand value of gross profit on imports declined

No material AC133 impact

* Offshore margins include a R19.3m loss from Bidcorp plc and a R10.5m loss from Litho France (Bidvest plc operating margins increased to 3.1% from 2.9%)

4.6%5.1%Group

Improved operating efficiencies, cost containment and limitation of price decreases

6.0%6.7%Local

Improved operating efficiencies & better buying at Bidvest plc, but losses from Bidcorp and Litho France

2.7%2.5%*Offshore

1H20031H2004Operating Margins

Consolidated Income StatementHalf-year ended December 31

Operating Income 1 132 873

1 128 347 2 244 1210,4

Revenue 22 211 643 24 565 364 (9,6) 47 073 375

Operating Income before translation effects 1 140 120 1,41 124 6213 726

2 259 197(15 076)Translation gains (losses) (7 247)

Amortisation of goodwillNet capital items

(35 532) (64 887)(13 924) (877) (61 548)

Translation loss: R7m on conversion of offshore cash balances

(22 449)

2003 2002


June 30 2003R000s

Consolidated Income StatementHalf-year ended December 31

Revenue 22 211 643 24 565 364 (9,6) 47 073 375


1 128 347 2 244 1210,4

Net finance expenses (52 898) (36 865) (110 982)

R644m net cash offshore

43% increase in net interest paid but 29% decrease off 2H 2003

R427m net debt in SA

R1bn funds used for McCarthy acquisition will affect interest paid in 2H 2004

Cash applied where necessary in the group

2003 2002


June 30 2003R000s

Consolidated Income StatementHalf-year ended December 31 2003

Revenue 22 211643 24 565 364 (9,6) 47 073 375


1 128 347 2 244 1210,4

Net finance expense (52 898)

(36 865) (110 982)

Income before taxation 1 030 519

1 068 156 (3,5) 2 006 704

Taxation (299 607)(289 271)

(557 148)

2003 2002


June 30 2003R000s

27%27%Offshore

1H20031H2004

……28%28%Local

27.4%27.3%Group

Note: Rates exclude goodwill amortisation

Edging toward maximum rate

of 30%


(36 865) (110 982)


2 006 7041 068 156 (3,5)

Taxation (557 148)


Revenue 22 211 643 24 565 364 (9,6) 47 073 375


1 128 347 2 244 1210,4

Income after taxation 1 449 556

Income from associates 30 328

Income attributable to shareholders 1 382 308

Number of shares in issue (weighted 000) 308 116

(97 576)

(299 607)(289 271)741

248768 549

(0.8)

9 308 15 921

(44 218) (52 158)

Headline earnings (Rm)

2003 2002Unaudited % changeUnaudited

Year ended June 30 2003R000s

Half-year ended December 31 2003

Total foreign earnings from Bidvest plc, Bidcorp plc, Litho France & Namsov = 20% of Group (R146m)

Capital items: includes R11.2m loss on disposal and discontinuance of businesses + R2.5m surplus on disposal of assets

Outside Shareholders’ interest

310 402

732 312

(3,6)

706 338

1 475 856

302 085

749 070

(3,5)

754 906



Taxation (557 148)


Revenue 22 236 884 24 565 364 (9,6) 47 073 375


1 128 347 2 244 1210,4

Income after taxation 1 449 556

Income from associates 30 328

Income attributable to shareholders 1 382 308

Number of shares in issue (weighted 000) 308 116

(97 576)

Headline earnings (Rm)

(97 576)

2003 2002


June 30 2003R000s


Outside Shareholders’ interest

1 475 856

HEPS (cents)

Distribution per share (cents)

479.0248.0 243.2 2.0

220.0

(52 898)

(36 865)

1 030 519

1 068 156 (3,5)

(299 607)(289 271)

741 248 768 549

(0.8)

9 308 15 921

(44 218) (52 158)

310 402

732 312

(3,6)

706 338

302 085

749 070

(3,5)

754 906

113.4 5.0108.0

2.7% decrease in weighted average number of shares due to share repurchases

2H HEPS will include McCarthy (pro forma impact: 7% for full year to June 2003)

Bidvest to use its treasury stock in satisfaction of Dinatla transaction options

17% enhancement in dividend due to Dinatla transaction

Dividend cover will remain around 2x

Consolidated Balance Sheet

Non-current assets 5 011 393

4 889 800 4 927 958

Current assets 9 749 338 9 764 886 9 643 424

Total assets

Assets

2003 2002

Unaudited UnauditedYear ended

June 30 2003R000s


Net working capital cycle has increased Numbers influenced by currency fluctuations:

Sales at avg rates; assets at spot rates

50 45

59 57

39 38

1H2004 1H 2003

Debtors' DaysCreditors' DaysStock Days

30 26

No

. o

f D

ay

s

Consolidated Balance Sheet

Non-current assets 5 011 393

4 889 800 4 927 958

Current assets 9 749 338

9 764 886 9 643 424

14 751 731 14 654 686 14 571 382Total assets

Assets

Equity and Liabilities

Non-current liabilities 436 1391 029 179

1 007 749

Current liabilities

Total equity and liabilities

Capital and reserves 6 335 1406 247 422 6 103 451

7 460 182

14 571 382

7 883 4077 475 130

14 654 68614 751 731

Bidvest is not averse to leveraging the balance sheet (target - 40%)

R1bn funds used to purchase McCarthy brings SA gearing to app. 34%

Strong cash generation by underlying businesses Cash generated by operations:

• unchanged before working capital at R1.5bn• R816m applied to fund working capital

2003 2002

Unaudited UnauditedYear ended

June 30 2003R000s


Divisional ResultsDivisional Results

Services - Bidfreight

Rand strength dominant theme - ZAR up by 30% against USD

Terminals produced a strong result - BMA, SA Stevedores, SACD and RCT counteracted weakness in Marine and Manica & FedEx

Safcor Panalpina coped well – volumes increased, profit slightly below budget

Bidlog to be split between Bidserv and Terminals

19%

81%

Contr to Group Op Income

50

70

90

110

130

150

170

190

210

1H2003 1H20042000

3000

4000

5000

6000

7000

Operating income Revenue

…% Operating margin

3.4%

2.8%

Rm RevenueRm Operating Income

Services – Bidcorp plc 0%

100%

-20

-15

-10

-5

0

5

10

1H2003 1H2004

150

350

550

750

950

1150

1350



Tough trading conditions

Heavy costs in Shipping and Ports on expanded sailing schedules and excess capacity

Automotive rationalised into two operating divisions - reduce overheads and improve efficiencies

Management focus now on operating efficiencies, increased capacity utilisation and greater turnover

Rm Operating Income Rm Revenue

Services - Bidserv

Real growth in revenue of 5%

Margin pressure ameliorated by strict expense control and high degree of annuity income

Laundry secures significant contract wins in healthcare sector

Security remains profitable in an industry in disarray

Execuflora acquired

8%

92%


50556065707580859095

100

1H2003 1H2004

400

500

600

700

800

900



9.5%

8.5%


Services - Renfin

Travel performed well in flat market conditions

Recent travel acquisitions will boost profits

Banking disappointed due to currency strength, narrower dealer margins, and a slowdown in tourist spending

6%

94%

10

20

30

40

50

60

70

80

90

100

1H2003 1H2004

250

270

290

310



22.9%

28.6%



Foodservice Products – Bidvest plc

UK, Australia, New Zealand exceed budget in sterling

Australian & New Zealand dollars strengthen by 15% against sterling

3663 gaining share in a flat market

Good organic growth in Australia & New Zealand

8 small acquisitions to extend customer service offering

25%

75%

100

150

200

250

300

350

1H2003 1H2004

3000

4000

5000

6000

7000

8000

9000

10000

11000

12000



3.1%2.9%



Food price deflation

Tight trading conditions

Overseas visitors not as free spending

Frozen division maintained volumes

Patleys traded well, despite reduced rand profit on imports

Export orders for Vulcan-Caars

8%

92%

0

20

40

60

80

100

120

1H2003 1H2004

300

400

500

600

700

800

900

1000

1100



9.2%9.4%



Foodservice Products – Caterplus

Competitive challenges met in bakery supplies

Structural changes in spending patterns

Sales to major customer segments up substantially; export sales & non-meat flat

New spice factory on double shift to meet demand

NCP Yeast ahead of budget in tough market

5%

95%

1015202530354045505560

1H2003 1H2004

100

150

200

250

300

350

400

450

500

550



11.7%

10.9%



Foodservice Products – Combined Foods

Margin pressure in stationery due to stronger rand

Acquisition of OCE Printing Systems benefited Automation

Kolok impacted by grey products

Dauphin and Cecil Nurse stars of Furniture

Lithotech strong, exceeded budget

Lithotech France made a loss - poor volumes in a weak economy

17%

83%

100110120130140150160170180190200

1H2003 1H2004

900

1100

1300

1500

1700

1900

2100

2300

2500



8.0%7.7%

Contr to Group Op IncomeCommercial Products– Bidoffice


Margin held despite continuing rand strength

Destocking continued through H1

Falling unit selling prices

Decline in manufacturing volumes – secondary exporters hurt by rand

6%

94%

10

20

30

40

50

60

70

1H2003 1H2004

100

150

200

250

300

350

400

450



15.8%15.8%



Commercial Products– Bidpac

Downward pressure on cable & wire markets

Non-cable products held margins

Berzack & Eastman positive contribution

Large capex projects by private and state sector on hold

National footprint, service capability and breadth of products

4%

96%

10

15

20

25

30

35

40

45

50

1H2003 1H2004

500

600

700

800

900

1000

1100

1200



3.9%4.4%



Commercial Products– Voltex

I-Fusion • to be profitable by year-end• network regarded as state of

the art• Benefit from McCarthy

mymarket.com • Annualised billings R500m• Moving toward profitability

Property rental income from Group companies at arm’s length

4%

96%

10

15

20

25

30

35

40

45

50

55

1H2003 1H2004

10

15

20

25

30

35

40


Contr to Group Op IncomeCorporate Services

Rm Operating Income Rm Revenue*

*Revenue = I-Fusion & MyMarket.com

Strategy & OutlookStrategy & Outlook

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:


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:


C. Current Shareholders Bidvest ords + a 17% dividend enhancement for 3 years

Dinatla Transaction

The transaction:


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

In addition to this equity element:

Bidvest management at all levels committed to transformation

Senior BEE appointments at divisional level

Exec and non-exec BEE representatives appointed to Bidvest board

Process being formalised by Bidvest Board

Assessing alternatives for underlying JV’s

The Bidvest Charter

–

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%

Bidvest Board

Large Board a result of Group culture• Bidvest built by merger with like-minded entrepreneurs

11 non-executives, of which 4 were historically disadvantaged

Effective committees:Executive CommitteeRemuneration CommitteeAudit CommitteeAcquisition CommitteeTransformation CommitteeNomination Committee

Clear division of power, accountability and responsibility through the organisation

–

Strategic ImperativesMICRO STRATEGY

• Each business focuses on achieving excellence in its core competence

• Executive autonomy within each business unit – decentralised philosophy

MACRO STRATEGY• Optimising synergies between businesses

Example:Hotel procurement

Electronic ordering (mymarket)

Catering (Caterplus)

Laundry, Cleaning, Housekeeping, Hygiene, Security, Garments (Bidserv)

Stationery, Mailing, Printing, Office automation, Furniture (Bidoffice)

Travel (Rennies Financial Services)

Strategic ImperativesMICRO STRATEGY

• Each business focuses on achieving excellence in its core competence

• Executive autonomy within each business unit – decentralised philosophy

MACRO STRATEGY• Optimising synergies between businesses• Adding to customer offering (geographically or product range)

down the Bidvest business chain

Multi-temp

Chilled

Frozen

Objective: Service existing and new customers within core markets, with some overlap Service the spectrum of customer needs Tie the customer in Utilise critical mass for sourcing and funding

Example:

Food strategy – maintain the core business but to add ancillary businesses

McCarthy Acquisition McCarthy fits the Bidvest model of market-leadership within a new

distribution channel

R1bn acquisition price at +/- NAV

Transaction, effective January 2004, will be immediately earnings positive

Synergistic benefits will come through in the next 12 months, eg. McCarthy Club

Currently investigating opportunities in complementary areas where McCarthy is not trading, eg.

• Financial leasing

• Van rentals

• Fleet management

• FML

• Private leasing

Organic and acquisitive growth planned for McCarthy

Bidvest – free up McCarthy management to perform

Implied valuation of local operations

0.00.3bnBidcorp plc @ GBP 17.0 pps

0.00.3bnLithotech France (NAV)

Current Bidvest Group @ 5185cps

SA operations derived

Bidvest plc @ AUD 540 cps

10.315.5bn*

8.610.3bn

12.84.6bn

Current market PE

Current market

value (Rbn)

PE’s based on annualisation of interim numbers

* Market capitalisation based on 300m shares excluding treasury shares

Key growth drivers

Cross-selling between businesses not yet fully exploited Electronically monitored Staff motivated by Group performance - share options and

Group remuneration

Acceleration of outsourcing trend – eg, benefit to Bidserv & Bidoffice

Freight: Continued strong growth prospects - international trade growth

trend well ahead of GDP Key privatisation opportunity lies not in ownership, but in

freeing up the system to handle optimum product mix Improved efficiencies after privatisation

Exposure to growth areas of the economy, supplemented by acquisitive growth

Prospects for 2H 2004

At current exchange rates Bidvest should achieve real growth in HEPS for the full year to 30 June 2004, notwithstanding McCarthy

Further major price deflation unlikely

HEPS will benefit from inclusion of McCarthy in 2H 2004 • (pro forma impact as per circular: 7% for year to

June 2003)

December 31 2003

Documents

Transcript of December 31 2003