Audited Financial Results for the year ended 30 June 2020
Agenda 01 Introduction Lindsay Ralphs 02 Financial review Mark Steyn 03 Operational updates Lindsay Ralphs 04 Strategic overview and outlook Lindsay Ralphs 05 Appendices 2 THE BIDVEST GROUP LIMITED THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020 Audited Financial Results for the year ended June 2020
01 Introduction Lindsay Ralphs CE 3 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
INTRODUCTION Highlights for the year Since mid-March 2020 • R9.2 billion cash generated from operations, up 38% • Free cash flow of R3.7 billion , a R1.4 billion increase • Bolstered liquidity by securing extra R4.5 billion general banking • Exceptional asset management during challenging times. ROFE 23% facilities but did not need to access it • Robust balance sheet • Focused on costs and cash generation • Gross margin increased 100bps to 30.6% • Supported employees and stakeholders • Like-for-like costs down 6% through a R400 million Bidvest fund to assist • R6.9 billion trading profit , up 3% , pre COVID-19 R1.6 billion expenses employees not working; Solidarity Fund • Rapid response re liquidity, costs and considerable demand changes donation; national school readiness programme; Woza Matric of 2020 programme; food hampers • Various initiatives rolled out to assist employees and communities • Progressively improved trading results • Concluded PHS acquisition, Bidvest’s biggest ever deal off April trough 4 THE BIDVEST GROUP LIMITED THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020 Audited Financial Results for the year ended June 2020
INTRODUCTION Reflections of the CEO Sequential improvement since April 2020 trough Services* revenue stable and resilient Trading & Distribution** revenue recovered sharply (March 2019 = 100) (March 2019 = 100) March April May June July August March April May June July August FY2019 FY2020 FY2019 FY2020 * Services, Freight, Financial Services divisions and Properties ** Branded Products, Commercial Products, Automotive divisions and Corporate 5 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
INTRODUCTION Reflections of the CEO New normal: opportunities and challenges Cleaning & hygiene 1 revenue contribution significant and growing • Out-of-home hygiene awareness elevated by pandemic • Expect acceleration in development and maturity of this industry 20% › Hygiene now front-of-house 15% › Scope of cleaning services widening 10% • Attractive margin business 5% 0% FY2019 FY2020 Travel & hospitality 2 revenue contribution limited • Closure of national borders hit travel and related activity hard and lockdown decimated the hospitality sector 8% › Divested Bidvest Car Rental, Bidair Services 6% › Extensive restructuring to lower cost of doing business in Travel cluster 4% • Work-from-home and “empty building syndrome” call for business agility and innovation in Services and Branded Products 2% 0% FY2019 FY2020 1 Includes Steiner, Prestige, Noonan and PHS 2 Includes Bidair, Travel cluster, World Currency Card, service contracts with hotel groups as well as Bidvest Car Rental in FY2019 6 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
INTRODUCTION We are Bidvest Diverse portfolio of well-run businesses 3% 6% 23% 7% 28% 38% Services Branded Products Contribution Contribution Freight 4% to revenue to trading profit 21% Commercial Products Financial Services Automotive 15% 22% 8% 25% 7 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
02 Financial review Mark Steyn CFO 8 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
FINANCIAL REVIEW Financial summary (continuing operations) R billion Year ended 30 June 2020 Year ended 30 June 2019 Change Revenue 76.5 76.1 0.6% Gross profit* 30.6% 29.6% ↑ Operating expenses 18.1 16.5 9.6% COVID-19 expenses (included in operating expenses) 1.6 – EBITDA 6.8 8.1 (16.3%) Trading profit (incl. COVID-19 expenses) 5.3 6.7 (19.9%) Trading profit margin (incl. COVID-19 expenses)* 7.0% 8.8% ↓ Normalised HEPS (cents) 1 028.3 1 334.4 (22.9%) HEPS (cents) 553.2 1 366.4 (59.5%) EBITDA interest cover (times) # 8.4x 8.8x ↓ Net debt/EBITDA (times) 2.1x 0.9x ↓ Cash conversion** 135.5% 62.4% ↑ Cash generated from operations 9.2 6.6 ↑ ROFE 23.0% 23.2% ↓ * As % of revenue ** As % of trading profit # Interest adjusted for IFRS 16 9 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
FINANCIAL REVIEW Income statement analysis Revenue Trading profit • Includes COVID-19 charges of R1.6 billion • Revenue flat • Trading profit excluding COVID-19 charges at R6.9 billion, up 3.4% • Impact of trading restrictions during lockdown broadly neutralised • Good overall performance from Services. Resilient performances from Freight, by Adcock consolidation and 2-month contribution from PHS Properties and Adcock within Branded Products • Branded Products, Commercial Products and Automotive bore the brunt of lower demand and trade restrictions Other costs Gross income • Gross margin up 100bps to 30.6% • Acquisition costs of R178 million relate mainly to PHS • Most divisions reported margin improvements • R70 million amortisation of acquired customer contracts. Will increase with PHS charge in FY2021 Expenses Net capital items • Operating expenses increased 9.6%, impacted by material acquisitions, • R1.0 billion impairments IFRS 16 and COVID-19 charges • R247.2 million from closure and disposals • Expenses on a like-for-like basis declined by 6.3% • R485.7 million reduction in fair value of associates • Extra attention was given to cost containment • Insurance compensation for damaged Freight assets 10 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
FINANCIAL REVIEW Income statement analysis Net finance charges Non-controlling interest • 7.4% higher excl IFRS 16 • Predominantly Adcock as a consolidated subsidiary • Additional funding for acquisitions • Average cost of debt 5.7% pre-tax (down 100bps) Associate losses HEPS • Share of Comair losses prior to going into business rescue, • Normalised HEPS from continuing operations -22.9% impairment of SAA settlement claim • Acquisition costs, amortisation of customer contracts, non-cash share • Adcock consolidated (11 months) vs. associate in the prior year of Comair’s SAA claim impairment and COVID-19 charges excluded Taxation Dividend • Effective tax rate 66% (FY2019: 27.1%) • No final dividend • Impacted by non-tax deductible expenses, impairments, losses on disposal • Balancing the interests of all stakeholders as we face enhanced levels of businesses and no deferred tax raised on closed operations of economic and business uncertainty, restructuring processes and funding • Lower statutory rate in offshore operations programmes 11 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
FINANCIAL REVIEW Debt and funding Moderate gearing well within covenants • Net debt of R19.2 billion (FY2019: R7.8 billion) • R11.5 billion PHS bridge facility plan: › R4.0 billion from local banks in the process of being raised • EBITDA interest cover of 8.4 times vs. 8.8 times in 2019 › R2.5 billion offshore cash earmarked • Net debt/EBITDA 2.1 times (FY2019: 0.9 times) › MIAL proceeds (~R1.0 billion) • All bank covenants were met › Free cash flow • R4.5 billion additional liquidity facilities were put in place › Other capital sources being contemplated but remain undrawn Interest cover Debt maturity 20 15 000 15 10 000 8,2 8,8 8,4 8,2 7,6 8,0 10 Cash, net of short-term debt, 5 000 R4.5 billion 5 9,0 6,3 8,9 7,8 10,0 19,2 0 0 1HFY2018 FY2018 1HFY2019 FY2019 1HFY2020 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 Net debt (Rbn) EBITDA interest cover (x) Foreign debt (Rbn) Local debt (Rbn) 12 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
FINANCIAL REVIEW Cash flow Cash generative businesses that are capital light Free cash flow Cash generated vs. working capital (Rbn) (Rbn) 5,5 0,9 (1,8) 8,3 136% 4,4 136% cash 4,1 (1,5) 3,9 3,8 113% conversion 2,8 (1,4) 2,7 2,2 (1,5) 1,8 62% (2,3) 2,0 52% 51% (0,6) Cash generated from ops pre WC Working capital Capex Cash effects of investing activities Net finance charges Taxation Distributions financing activities released Cash effects of (18%) (1,8) (3,1) 1H2018 FY2018 1H2019 FY2019 1H2020 FY2020 Cash generated from ops pre wc Net wc Cash conversion • Cash conversion 136% (FY2019: 62%) › Adoption of IFRS 16 boosted the conversion but like-for-like conversion also improved to above 100% • Working capital release of R0.9 billion (FY2019: R1.3 billion absorption) › Lower trade receivable balances due to lower activity levels and good collections › Provisions notably higher • Free cash flow after leases increased by R1.4 billion to R3.7 billion 13 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
03 Operational updates Lindsay Ralphs CE 14 THE BIDVEST GROUP LIMITED Audited Financial Results for the year ended June 2020
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