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Audited Results

Audited Results. 18. For the twelve months ended June 30 2006. Agenda. Introduction Financial Results Segmental Outlook Group Outlook Appendices: Appendix 1: Divisional Results Appendix 2: Historic Performance Appendix 3: Impact of external environment on Bidvest - various outcomes.

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Audited Results

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  1. Audited Results 18 For the twelve months ended June 30 2006

  2. Agenda • Introduction • Financial Results • Segmental Outlook • Group Outlook • Appendices: • Appendix 1: Divisional Results • Appendix 2: Historic Performance • Appendix 3: Impact of external environment on Bidvest - various outcomes

  3. Introduction IntroductionBrian Joffe Group Outlook Segmentals Financials

  4. We are not hostage to our environment; we shape our future Introduction Consistent HEPS increase since listing Bidvest CAGR over the last 15 years: +26% (17% real growth) • Note: • All nominal HEPS numbers are present valued to 2006 money • HEPS Deflator = avg. 15-year inflation rate of 7,5%

  5. We are not hostage to our environment; we shape our future Introduction Since listing, Bidvest’s REAL HEPS has outperformed GDP by an average of more than 5 times Bidvest CAGR over the last 15 years: +26% (17% real growth) • Note: • All nominal HEPS numbers are present valued to 2006 money • HEPS Deflator = avg. 15-year inflation rate of 7,5% • 2006 Tertiary GDP and Total GDP numbers are estimates

  6. F2006 review Introduction

  7. Group reorganisation Introduction • Board changes: • Size reduced from 32 to 24 members • All major business units represented • Strengthened non-executive • Strengthened BEE representation • Appointment of David Cleasby as FD designate • Group reorganised to: • Realise synergies, cross-selling opportunities and economies of scale between product and client categories • Seamless executive succession

  8. Group reorganisation (contd) Bidfood (Caterplus & Combined Foods) Bidvest Australasia Bidserv (incl. Renfin & Konica Minolta) Bidvest Europe Bidfreight Introduction Bid Industrial & Commercial Products Bid Prop Corporate Bid Auto Bidpaper Plus Financials Introduction Group Outlook

  9. BEE update Introduction • Refinancing by Dinatla due by December 2006 • 5m share buyback to partially neutralise the effect of pending 18m options • Partnership entrenched • BEE codes • Lock-ins to be addressed • Companies to get accreditation • Bidvest transformation progressing Outlook Financials Introduction Group

  10. F2006 results summary Introduction Note: IFRS compliant

  11. Segmental performance Introduction Revenue (Rm) Trading Profit (Rm) Due to time delays caused by IFRS changes, segmental comparisons pre-reorganisation will be posted on the Bidvest website

  12. Financials Financial ResultsDavid Cleasby Group Outlook Segmentals Introduction

  13. Financials Consolidated Income Statement Year ended June 30 2006 Avg R/£ 11.43 Avg R/£ 11.53 • Includes 1st time contribution of R5,6bn by Deli XL (9,5 months) • Like-for-like revenue growth of 15% NOTE : Constant currency comparison unnecesary due to immaterial currency movement from F2005 to F2006 (0.8%)

  14. Increased contribution from McCarthy, lower contribution from Bidfood Deli XL’s contribution at lower margins; increased margin from Australasia Financials Consolidated Income Statement Year ended June 30 2006 Avg R/£ 11.43 Avg R/£ 11.53 Trading margins* 2006 2005 Local 5,8% 5,9% Offshore 3,3% 3,2% Group 4,8% 5,0% *Trading profit and margin from continuing businesses NOTE: Foreign businesses = 27,8% (R1016,1m) contribution to Trading Income vs 24,2% (R738,3m) in F2005 NOTE : Constant currency comparison unnecesary due to immaterial currency movement from F2005 to F2006 (0.8%)

  15. Financials Consolidated Income Statement Year ended June 30 2006 Avg R/£ 11.43 Avg R/£ 11.53 • Offshore interest of R76,2m vs local interest of R266,1m • Net debt offshore of R0,1bn vs local net debt of R1,4bn • Largely funding of capex, Deli XL and share buybacks NOTE : Constant currency comparison unnecesary due to immaterial currency movement from F2005 to F2006 (0.8%)

  16. Financials Consolidated Income Statement Year ended June 30 2006 Avg R/£ 11.43 Avg R/£ 11.53 • Associates:Tiger Wheels, Enviroserv, Compu-clearing • Increased profit largely due to Enviroserv and first full year of Tiger Wheels NOTE : Constant currency comparison unnecesary due to immaterial currency movement from F2005 to F2006 (0.8%)

  17. Financials Consolidated Income Statement Year ended June 30 2006 Avg R/£ 11.43 Avg R/£ 11.53 • NOTE : • Constant currency comparison unnecesary due to immaterial currency movement from F2005 to F2006 (0.8%) • H1:H2 split available in appendices NOTE : Constant currency comparison unnecesary due to immaterial currency movement from F2005 to F2006 (0.8%)

  18. Financials Consolidated Income Statement Year ended June 30 2006 Avg R/£ 11.43 Avg R/£ 11.53 Improved performance from Namsov NOTE : Constant currency comparison unnecesary due to immaterial currency movement from F2005 to F2006 (0.8%)

  19. Financials Consolidated Income Statement Year ended June 30 2006 Avg R/£ 11.43 Avg R/£ 11.53 Earnings • Total foreign headline earnings = 27% of Group (23% in F2005) NOTE : Constant currency comparison unnecesary due to immaterial currency movement from F2005 to F2006 (0.8%)

  20. Financials Consolidated Income Statement Year ended June 30 2006 Avg R/£ 11.43 Avg R/£ 11.53 HEPS • Share buybacks: 5m shares at avg price of R100,50 ( ’05=7,5m shares at avg price of R70,55) DPS • Distribution policy = +/- 2x covered • NOTE : • Constant currency comparison unnecesary due to immaterial currency movement from F2005 to F2006 (0.8%) • H1:H2 split available in appendices • NOTE : • Constant currency comparison unnecesary due to immaterial currency movement from F2005 to F2006 (0.8%)

  21. Financials Consolidated Cash Flow Statement • Working capital investments consistent with growth rates in McCarthy & Voltex • Positive working capital in Bidvest Europe (especially Deli XL) • Material cashflow events: • €140m paid for the acquisition of Deli XL in September 2005 • £59m received from the sale of Dart Line • Gearing capacity: • Ample room to gear up - current interest cover of 11x (16% gearing) • R1bn from Bidvest options due on 6th December

  22. Segmentals Segmental Outlook:Anthony Dawe Lindsay RalphsFred BarnesMyron BerzackBrand Pretorius Group Outlook Introduction Financials

  23. Bidfreight- sensitivity to anticipated economic variables Segmentals • + effect of reduced, but still strong, GDP growth: • Growing GDP = growing Bidfreight volumes • + effect of relative Rand weakness: • Increased value per unit handled in Clearing & Forwarding • Mild Rand weakness assist export volumes, without a corresponding reduction in import volumes (depending on PCE buoyancy) • + effect of rising interest rates: • Interest earnings in Clearing & Forwarding and Marine • Sharp reduction in PCE growth could hurt • + effect of rising fixed investment: • Volume benefits from fixed investments in SA infrastructure, especially ports and rail OVERALL EFFECT: POSITIVE

  24. Bidserv – sensitivity to anticipated economic variables Segmentals • + effect of GDP: • Rising GDP benefits office automation spend and corporate travel • Bidserv inured to slower GDP due to annuity-nature of income and built-in balance of businesses • - effect of relative Rand weakness: • Impact on corporate SA • + effect of mild inflation: • Easier acceptance of price increases • + effect of rising fixed investment • New office and retail developments Industry specific factors • + effect of labour unrest • - effect of HIV/AIDS • - effect of move to appointing SMME contractors OVERALL EFFECT: MODERATELY POSITIVE

  25. Bidvest Food Interests – sensitivity to anticipated economic variables Segmentals • General influencing factors: • + effect of mild inflation worldwide for food traders (currently occurring across the board) • + effect of low interest rate environment worldwide, despite recent increases • + effect of GDP growth in general • + effect of out-of-home food consumption • Benelux: • Now out of deep recession – very positive outlook • UK: • Mature, benign GDP environment – less volatile, enabling strategic planning and efficiencies • Niches of significant expansionary growth potential • Australasia: • Fuel price and general inflationary increases affects operational costs and consumer spending patterns • Business mix cushions vulnerability to discretionary spend • South Africa: • + effect of mild inflation & uptick ahead of 2010 • Maximising customer spend • Multi-temperature distribution opportunities OVERALL EFFECT: POSITIVE

  26. Bid Industrial – sensitivity to anticipated economic variables Segmentals • Fixed investment spend supports demand for electrical products and furniture • Gautrain, 2010 • Electrical and furniture spend • Office developments, hotels, apartments, hospitals, retail nodes • General infrastructure spend • Golf estates, hotels, shopping centres, prisons • Investment in mining infrastructure • Industrial spend • Effect of relative Rand weakness: • Copper prices are crucial • + effect due to stock holding policy • Negative effect on fixed price contracts • Interest rates • Retail expansion off a low base • Rising inflation is good for most trading businesses • Growth from national energy saving initiatives and the mining industry OVERALL EFFECT: VERY POSITIVE

  27. Bid Auto – sensitivity to anticipated economic variables Segmentals General economy • -effect of slower GDP growth: • Business and consumer confidence impacts purchases more than GDP • Annuity financial services income cushions downturns • Replacement cycle pushed out, but service income boosted • - effect of rising interest rates: • Undermines affordability, but exposure to entry level (<R150 000; more than 25% of sales and growing) • Relative attraction of used vs new cars + financial services income • - effect of slower growth in PCE: • Mitigated by entry-level/used car demand – black purchasing power • + effect of rising fixed investment: • Increase in commercial vehicle sales to continue • + effect of relative Rand weakness: • Stimulates automotive exports; export credits assist consumer affordability in turn Positive industry-specific trends • Increased competition • Growth in vehicle population OVERALL EFFECT: POSITIVE Group

  28. Group Outlook Group OutlookBrian Joffe Financials Introduction Group

  29. Outlook for F2007 Group Outlook • Corrective action taken will have recurring benefits: • Problem children now largely dealt with • Bidfood action • Management is happy with the way the group looks now • Focus on organic and acquisitive growth • Within Africa: exploit diverse opportunities • Internationally: food services business expansion • Indian opportunities • Continued judiciousutilisation of balance sheet • Benefits still to come from >R3bn invested in capex over the last 3 years • Renewed energy in Bidvest ; focus on management performance & returns MANAGEMENT IS BUDGETING FOR REAL HEPS GROWTH IN F2007

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  31. Appendix 1:Divisional Results

  32. …% Trading margin Bidfreight Capitalising on capex Results • Pleasing momentum maintained in H2 • Upgrades reinforce competitive advantage – capex R227m • 18% overall increase in profits combined with good cash generation • Seamless executive succession • BEE board representation meets target • Safcor Panalpina: cargo mix reduces margin but billings rise 19%; excellent cash flows; new facilities at Johannesburg Airport attract business enquiries • Marine: Rennies Ships Agency profits up10%; freight rate pressure offset by higher volumes in liner operations and cost control • Manica: profits up 74% in the face of regional instability Rm Trading Profit Rm Revenue +18% 3.4% 3.4% Appendix 1

  33. Bidfreight Capitalising on capex • Terminals: • IVS: profits up 16%; high tank occupancy, margin maintenance, capacity expansion • RDS: profits flat on margin pressure by major customers • Bulk Connections: profits rise 51%; Spoornet reliability a challenge; negotiations with NPA for increased lease terms and additional handling rights; terminal upgraded to world-class norms • SABT: difficult H2 with lower maize exports; profits off slightly • SACD: profits up 20%, with import volumes up but exports down; assisted by new capacity in Durban • BPO: profits up 14%; export volumes weak; stevedoring did well, focusing on bulk cargoes and overhead containment • Strategic imperatives & prospects • Ongoing capex spend in F2007 • Expansion pursued by IVS on increased demand for tankerage • Continuing capacity enhancement to improve profitability 14.5% Current contr. to Group Trading Profit Appendix 1

  34. …% Trading margin Bidserv A shiner Results • Margin pressure, but increased market share • Revenue up 10% and profits up 19% • Noteworthy performances from TMS, Minolco & Ocè, and Bid Travel • Cleaning: Prestige profits up slightly off a high base; TMS comes of age with profits up 5 fold as investments in technology and assets secure market leadership • Laundries profits up 16% • Steiner Hygiene revenue up 12% and profits up 16% - strong rental sales a feature • Bid Risk: integrated into single business; breakeven on impact of security guard strike but Provicon up 25% • IPS orders up • Industrial Products (Janitorial): G Fox acquisition exceeds expectations Rm Trading Profit Rm Revenue +19% 12.1% 11.2 Appendix 1

  35. Bidserv A shiner • Greens: Top Turf disappoints, but good orders going forward • Office Automation (Minolta & Ocè): profits up 36% off an already high base; grasps opportunity provided by digital office demand • Bidair: profits flat, but pleasing, ground handling licence still being sought • Travel: profits up off depressed base; fee-based model from 1 May 2005 results in higher profitability; profitable before overrides; management appointments • Rennies Bank: new MD; retail enjoys better H2 despite stable ZAR; Treasury down on competitive pressures and lower wholesale turnover; debit card products undershoot expectation • Strategic imperatives & prospects • New contracts in Cleaning & Hygiene, IPS & Top Turf orders • Security strike action prompts strategic re-think towards integrated security solutions (electronics, surveillance, etc) • Travel growth to continue; cost containment • Further margin improvement • Asset management and risk management are focal points 15.0% Current contr. to Group Trading Profit Appendix 1

  36. …% Trading margin Bidvest Foodservice Europe Delicious Results • Consolidated profits up26% to £56m • Deli XL • Deli XL acquired effective 12/9/05 – combined €8.5m (£5.9m) profit after amortisation of intangibles • Deli XL Netherlands: ROFE 19% (vs 3% at acquisition), strong cash flow, increased sales to caterers and hospitality, institutional margin challenge • Deli XL Belgium: management changes; strong cash flow, profits off marginally but sales up 15% due to Quick, Pizza Hut & Compass • 3663 • 3663 profits up 13% to £51.5m on a 12% rise in sales to £1.45bn – despite a 55% fall in MOD profits to £2.3m (declining fee income) • Cost pressures, but overall UK economy robust Rm Trading Profit Rm Revenue +22% 3.6% 2.9% Appendix 1

  37. Bidvest Foodservice Europe Delicious • Capex £34m (5 depots complete, Edinburgh on schedule) • Lower margin CD sales up 39% (KFC, Pizza Hut) – higher unit values; new Lichfield depot opened in January; focus on operating efficiencies • Multi-temp record high margin; profits up 10% • Frozen, Fresh & Chill profits up 24%; Swithenbank makes solid progress • Barton losses reduced; state-of-the-art Manchester depot attractive for national account customers • Minimal impact from acquisition of 80% stake inHoreca, Dubai (Sep ’05) • Strategic imperatives & prospects • Roll out of Compass non-food service contract January 2007 • MOD contract terminated 30 September 2006 - active measures to make up shortfall should minimise overall impact • 3663 capacity-build boosts efficiency • Joint procurement 3663/Deli XL • Managerial and strategic initiatives at Deli XL • Non commodity wholesale focus at Horeca; systems alignment 17.7% Current contr. to Group Trading Profit Appendix 1

  38. …% Trading margin Bidvest Foodservice Australasia Upping the run rate Results Australia (A$) Record 3% margin - profits up 28% to $33.5m off a 10% rise in sales to $1.1bn (8% organic), Foodservice profits up 25% (margin 3.4%) “Street” focus at higher margin, cost control, housebrand initiatives Foodservice: Gold Coast shines, Melbourne profitable and ahead of budget, Sydneyloss still contained at modest level Hospitality: profits up 63%; national expansion (Darwin, Cairns); Melbourne remains loss-making QSR: profits up 250% - close to optimal profitability; Yum! contract guarantees volumes & a revenue increase formula Rm Trading Profit Rm Revenue +34% 3.4% 2.9% Appendix 1

  39. Bidvest Australasia Upping the run rate New Zealand (NZ$) • Sales up 26% to $273m (organic growth 19%), profits up 13% to $11.7m; Fresh initiative - profits up 225% • Coping well with adverse economic variables • Strategic imperatives & prospects Australia • Upgrade capex in Australia largely complete – enhanced cash generation • Access available market – Bidvest market share only 20% • Growth momentum to continue through F2007 • New Zealand • Growing pains – skills, infrastructure, expenses • E-commerce – now 15% of sales (up 100%) • Fresh acquisitions • Logistics business in Auckland fully operational December 2006 • National distribution infrastructure objective • Double digit growth budget 6.0% Current contr. to Group Trading Profit Appendix 1

  40. …% Trading margin Bidfood Gruel(ing) Results • Profits decline 5%, sales up 13%: margin squeeze continues, aggressive competition • Caterplus: increased market penetration; sales up 12%, high distribution costs; marginal profit improvement • BidBake: poor; yeast imports, relocation costs • Crown: flat profits due to imports, poultry disease challenge • Speciality: 22% rise in profits, opitimising range of brands and mix • Vulcan: reduced exports but market buoyant • Lufil: branded products emphasis, infrastructure being scaled up • Hotel Amenities: new contract wins Rm Trading Profit Rm Revenue -5% 9.7% 8.2% Appendix 1

  41. Bidfood Gruel(ing) • Catering and Frozen have been merged under a single management team • Rising to the challenge of improving market share and pursuing new growth sectors • Overhead cost containment • Launch of BidBros cash and carry concept; national roll-out plan • Purchase of Steri Pic - flow-wrap packaging for fast food outlets • Crown National and BidBake new world-class production facilities to create efficiencies • Increase basket of products to existing customers Strategic imperatives & prospects 8.2% Current contr. to Group Trading Profit Appendix 1

  42. …% Trading margin Bid Industrial & Commercial Products Copper Tone Results: Profits rise 26% off an 19% rise in revenue – electrical wholesale (EWD) profits up 67% EWD • Versalec Cables acquired 1 March ’06 – earnings enhancing • Infrastructure market strong • Smart buying of copper, surging prices • Project & tender focus reaps rewards Stationery & furniture: • Profits rise 19% off an 11% rise in revenue • Waltons profits up 18% - regions did well overall • Kolok: price war unabated, but good volume growth Afcom GE Hudson • Profits fall 23% - focus on optimising local production with a mix of selective imports • Buffalo: Profits off 13%, move into DIY market gains acceptance Rm Trading Profit Rm Revenue +26% 7.2% 6.8% Appendix 1

  43. Bid Industrial & Commercial Products Copper Tone • Continuing growth off a high base • Infrastructure momentum favours electrical wholesaling • Refreshing of stationery store formats • Waltons Transnet stationery tender – BEE credentials accepted • Good management of gross margin in a deflationary/low inflation economy • Good growth in furniture to continue • Acquisition opportunity for Afcom; re-balancing benefits Strategic imperatives & prospects 13.1% Current contr. to Group Trading Profit Appendix 1

  44. …% Trading margin Bidpaper Plus Pushing the envelope Rm Trading Profit Rm Revenue Results Profits up a commendable 14%, led by Lithotech Silveray Statmark Pushing up the quality curve; exciting product initiatives Lithotech Decline in traditional business forms strongly offset by laser and mail offering E-solutions contributed positively Lithotech France Exit strategy: sold to consortium, including management +14% 13.3% 11.6% Appendix 1

  45. Bidpaper Plus Pushing the envelope • Lithotech capex focused on envelope, filing, label, print to post, stationery and e-billing • Silveray Statmark re-establishing itself as the superior alternative in the retail stationery market • Re-launch of Croxley – new and redesigned product ranges Strategic imperatives & prospects 5.5% Current contr. to Group Trading Profit Appendix 1

  46. …% Trading margin Bid Auto Ama good good Results Profits up 31% on a 19% rise in revenue – entirely organic Financial services profits up 42%; 50 000 accounts Best new vehicle market ever – volumes compensates for ongoing low dealer new car margins Record 49 679 new units, up 20% on 41 556 (10.7% share of dealer market) Record 34 714 used units sold, up 12% on 31 047 6 new dealerships (replacements) Working capital and facilities investment on strong demand – 500 new jobs, active recruitment Floor plan funded thru Bidvest – 1% rate saving Fleet Services growing rapidly; HP debtors book Yamaha diversifies portfolio, stiff competition Budget significant growth; Van Rental launched GAZ taxi sales 414 from 66 in F2005 Rm Trading Profit Rm Revenue +31% 3.8% 3.5% Appendix 1

  47. Bid Auto Ama good good Strategic imperatives & prospects • Market likely to slow from 20%+ to high single digits with McCarthy aiming for 13% growth - affordable, entry level cars driving sales – total sales target 98 000 (60/40 new used) • Anticipated upturn in used vehicle market • First time buyers will continue to support growth • 3-5% price increases expected over the next year • Growing universe of vehicles provides recurring parts and service income – 800 000 units targeted for servicing in F’07 (vs 700 000 in F’06) • Market density does not support unfettered growth in dealerships • New dealership strategy – McCarthy Value Centres (Auto China, Value Serv, Call-A Car direct) • McCarthy On-Line name change to Eliance reflects growth outside of group • Used car market presence to be strengthened • Additional McCarthy/Bidvest synergies for Burchmore’s Car Auctions • 2x Renault dealers 1 July 2006; Mahindra H2 ‘07; Ford Mazda Pretoria H2 ’07 • New SEAT offering through McCarthy VW (Durban); launch of VW trucks • Stand-alone Lexus dealerships • McCarthy Fleet Services actively pursuing expansion opportunities 16.9% Current contr. to Group Trading Profit Appendix 1

  48. …% Trading margin Corporate Services Results • Bidprop up 18% • Namsov profit up from R12.5m to R75.9m • Ontime Automotive now profitable (R7.3m) • Significantly lower investment income Rm Trading Income Rm Revenue +18% 3.1% Current contr. to Group Trading Profit Appendix 1

  49. Appendix 2: Historic Performance

  50. Historic performance 5.2% 4.9% 4.9% 4.8% 4.8% 4.7% 4.5% 4.9% 4.4% 4.4% 17% CAGR over 5 years 17% CAGR over 5 years Appendix 3

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