Bidpaper Plus is the South
African market leader in print production and
value-added fulfilment services. Core competence
in business forms manufacture, label production
and personalisation and mail is complemented by
strategic growth into digital and electronic solutions.
The manufacture and distribution of high-quality
stationery augment an extensive range of services.
Bidpaper Plus has a broad national footprint and
exports its products and services to markets in
Africa and beyond.
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Stand-alone
divisional structure created
and new identity established
with internal realignment
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Revenue
growth up 4,7% to top R2,0 billion
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Profitability
rises 13,9% to R181,9 million
►
Contracts
won to supply election materials
to Uganda and the
Democratic Republic of Congo
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New investment
in Silveray Manufacturing
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National
presence created for Lithotech
Afric Mail along with jobs growth
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Strategic
contract success as we win Cape
Town City Council account
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Disposal
of interest in Lithotech France
Neil
Birch Chief
executive
Introduction
The stand-alone business unit, Bidpaper Plus was
created when businesses in the Printing and Paper
Conversion segment of Bidoffice were given separate
divisional status. The inclusion of Kolok Africa
added critical mass.
The disposal of Lithotech France caused no disruption
as there was no operational integration between
the South African division and this European business.
In many respects, the timing of divisional status
and the new identity were opportune. The new name
concentrated industry attention on the “Plus”
activities of the business just as greater marketplace
focus fell on e-billing and value-added services.
Internal structures have been amended to gather
all printing and related activities into cohesive
units covering a range of competencies (personalisation
and mailing, labels, printing and paper conversion,
and sales and distribution). Stationery Distribution
(home of the merged and refocused Silveray stationery
company and Statmark) is a separate entity. So
is Alternative Products, the business unit focused
on e-mail, IT solutions and consultancy support.
Trading conditions were highly challenging. Even
so, a measure of growth was achieved in trading
profit and revenue. The quest for efficiencies
was intense, but without sacrificing jobs. Indeed,
modest jobs growth was achieved within our mailing
operations. The division now employs 4 073 people.
Sales successes were largely a function of organic
growth. One small acquisition was made. The focus
was on new investment to expand the product range
and reinvigorate segments of our brand portfolio.
Lithotech
market leaders in print and print-related products
Macro-economic
factors
A strong rand and international
competition contributed to a deflationary climate
and, in many cases, prevented any internal cost
inflation being passed on to customers. Low levels
of general inflation encouraged customer resistance
to price increases.
High levels of retail spending underpinned strong
demand for quality printing, not only boosting
consumer segments such as magazine titles, but
also having beneficial effects in the area of
business forms manufacture and bill presentation.
During a consumer-led boom, the volume of monthly
accounts rises. Simultaneously, major retailers
and financial service groups demand that these
accounts be generated promptly and accurately,
creating marketing opportunities at Bidpaper Plus
where print-to-post and value-added fulfilment
services are their core competence.
Kolok
Africa
a leading provider of printer
consumables
e-mail
Connection
has positioned itself as the leading
electronic document generation,
delivery and management
company in South Africa
Silveray
Statmark
manufactures and distributes
stationery products
Industry-related
issues
e-billing and electronic
solutions proved themselves in a breakthrough
year – confirming the soundness
of our recent investments in these
competencies. Retailers and financial
service providers are increasingly
pushing for electronic solutions while
more widespread consumer comfort with
e-mail billing is now evident.
Crime (or the threat of it) is also
driving growth in certain areas of
the business. Built-in label security
has become a key specification by
customers who are trying to protect
their brands from piracy. Anti-copying,
verification and track-and-trace features
are increasingly demanded, reinforcing
relationships with retailers and other
customers who are looking for a trusted,
highly professional partner to handle
label production.
Business
risks
An operation focused
on printing and paper conversion is
obviously dependent on paper suppliers.
In South Africa, the buyer of paper
faces a strongly entrenched duopoly
and has little opportunity to negotiate
competitive prices. This creates a
risk that the pricing practices of
the major suppliers will have an impact
on margins and our ability to aggressively
pursue some marketplace opportunities.
For this reason, Bidpaper Plus applauds
recent official scrutiny of the practice
of import parity pricing.
Exchange rate risk is also
apparent. A strong currency increases our vulnerability
to competition from some imports, but we are also
importers and, therefore, this risk is often balanced.
Technology risk is a factor as the printing industry
uses increasingly sophisticated systems. The risk
is managed through our membership of the European
Forms Manufacturers’ Association (Eforma).
Eforma scans the technology horizon for new developments.
When an Eforma member becomes an early adopter
of any new technology, information is shared across
the relevant focus group.
In this way, techno-risk is turned into techno-opportunity.
Bidpaper Plus was aware at an early stage of the
trend to full digital colour printing in response
to demands from direct marketers. Reports from
partner companies identified the market indicators
which have now triggered the entry of Bidpaper
Plus into this market. Costly errors stemming
from premature entry have been avoided.
Technology risk may apply to a greater extent
to competitors who lack our capital resources.
Sophistication drives up the cost of investment
in new systems. The tendency is for smaller players
to fall off the pace and surrender competitive
advantage to the well-resourced company that makes
sustained investment in research and development.
Skills shortages also pose risks. Bidpaper Plus
invests heavily in skills training while supporting
the Printing Industries Federation training college
as a contributing sponsor. We benefit from our
status as one of the industry’s largest
employers and the biggest brand in the fields
of form production and laser printing and mailing.
We tend to retain talent as we can offer skilled
employees proper career development opportunities.
Our size does not leave us vulnerable to inroads
by smaller competitors. Our national footprint
makes us the preferred partner of large organisations
that demand nationwide representation and distribution
capacity.
Sensitivity analysis
The most material risk relates
to technology change and the threat of the paperless
office. In response, the business continues its
strategic programme of diversification into electronic
solutions to meet customer communication needs.
The areas of communication and advertising are
frequently revisited by legislators. Therefore,
public policy risks apply, specifically the privacy
issues raised by some direct mail campaigns. This
risk has been managed by achieving an improved
business balance with greater emphasis on commercial
offerings.
Structures and
growth
In April, a small acquisition
was made in KwaZulu-Natal. The operation has now
been re-branded Lithotech Afric Mail Durban. This
means our laser printing and mailing operations
have a presence in all major metropolitan centres.
Print-to-post activities benefited from high levels
of consumer spending, helping us to achieve modest
jobs growth.
A strong resource-base in different regions is
increasingly important as major customers expect
their partners to have disaster recovery programmes
in place, with back-up at several sites. Furthermore,
speed-to-market is key for big banks and national
retailers. Our ability to split data regionally
and accelerate the distribution of finished material
to local end-users has become a source of competitive
advantage.
These factors help explain the high levels of
contract renewal across Lithotech Afric Mail –
a key feature of the year.
Leveraging maximum benefit from our national stature
will receive even more attention. This process
will be facilitated by our new “family”
structure and easy access to national sales and
distribution capabilities by all contributors.
The Silveray and Statmark merger has bedded in
well.
The inclusion of Kolok Africa within the new division
is logical. This business produces thermal point-of-sale
ribbons, carbon-paper and associated items, thermal
printer ribbons and security foils. This creates
natural synergies with Ozalid-provided printers
and allied consumables.
Printing
and Conversion
provide strong support to personalisation and
mailing activities
Greater understanding of the
Bidvest BEE model is evident. Group level commitments
have tangible end-results, as shown by the sustained
operation of our BEE joint-venture, Phakama Print.
Our BEE credentials came under close scrutiny
when Lithotech Afric Mail Cape tendered for the
contract to laser print and mail the water and
lights accounts of Cape Town City Council. Our
Cape team won the contract, demonstrating the
growing strength of our BEE profile and the potential
for further inroads into public sector business.
New investments
A R25 million investment was
made to enhance the quality of stationery manufacture.
Old equipment is being replaced by state-of-the-art
machinery. The 18-month upgrade programme will
continue into 2007.
A major beneficiary of the programme is Silveray
Statmark, the custodian of numerous business stationery
and scholastic stationery brands (Croxley, Sellotape,
Rapid, Penguin, Pelican, Stabilo Boss, Helix,
Esselte and Dymo).
Investment in technology and capacity is ongoing.
Innovations
Our innovative approach to
value-added fulfilment services was highlighted
by new contract successes for our “elections-Africa”
team, part of our export division. Hot on the
heels of their success in supplying materials
in support of November’s referendum in Kenya,
they won the contract to provide a solution for
the Uganda Electoral Commission. The team had
to print 33 million ballot forms to a tight deadline.
They followed up by winning an even larger contract
to provide support material for the DRC elections.
In both instances, we faced international competition.
A key factor in winning the business is our proven
ability to deliver an all-in-one solution no matter
what the requirement.
We supply an election kit in a box, covering printed
material, pens, pencils, calculators, official
attire for observers, ballot booths in a pack;
even emergency lighting. Often, printed matter
is only a minor element in the complete package.
The scale of operations can be breath-taking.
Material in fulfilment of the DRC contract filled
30 Russian Antonov cargo planes.
Our latest product – launched toward year-end
– is a digital pen and paper set, targeted
initially at financial service providers. A built-in
miniature camera enables the electronic pen to
capture pen strokes as they are made. It stores
the information and can transmit the data using
various devices. The pen is used in tandem with
digital paper that uses a pattern of minute dots.
Use of the pen in conjunction with digital paper
enables the fields in a business form to be captured
onto a computer template as the person completing
the form enters details and ticks off preferences.
An order can be taken or confirmed there and then.
Data from the pen can be downloaded into a PC,
laptop or to a central server via 3G cellphone.
Bidpaper Plus has been authorised by the product
developers (Annoto of Sweden) to print the digital
paper. The Annoto connection was facilitated by
Standard Register of the USA, with whom a long-standing
relationship exists.
Challenges
HIV/Aids education and awareness
training have been carried out for many years
at all operations. The effort is complemented
by access to HIV/Aids testing and counselling
services. Training of suitable candidates also
enables business units to lay on counselling from
a peer group adviser within the work situation.
Increasing attention is being given to gathering
information on levels of HIV infection across
business units – while guaranteeing absolute
confidentiality. The intention is to build a fuller
picture of where prevalence is highest. This will
enable support to be targeted most effectively.
Skills development remains a priority. Technical
training increasingly has to be complemented by
sales training. Bidpaper Plus takes a solutions
approach to its business and becomes a consultant
to customers. Cross-selling is another priority
as we “break down the silos” to create
total solutions. Ongoing investment is necessary
to build these skills.
Talent identification and fast-tracking of high-potential
staff members are bearing fruit, creating quality
candidates for further development.
Total external training spend over and above the
statutory training levies topped R400 000 and
5 500 training hours were logged.
Selection for attendance at The Bidvest Academy
is regarded as an honour. All nominees embrace
the opportunity with great enthusiasm. Academy
training covers both business and life skills
and the boost to self-confidence is apparent in
all graduates. Bidpaper Plus has already promoted
a number of graduates to more senior management
positions. Their progress is being closely monitored
and supported.
The challenge of meeting BEE scorecard targets
is being successfully addressed. The business
holds an “A” empowerment rating. New
ratings are being sought with the intention of
moving higher up the “A” category.
Particular attention will be given to improving
our BEE procurement scores and achieving more
recognition for our social investment.
A new CSI strategy is being developed, putting
the accent on smaller, community-based projects
that enable local business units to make a difference
in nearby communities. We will seek partners (for
example, charities and donors) to bring critical
mass to faltering projects and use our skills
in project delivery to speed the implementation
of initiatives that might otherwise stall.
One point of focus is participation in the upgrading
of the Nkosi Haven for Aids Orphans.
Educational support remains at the heart of our
CSI programme. We can make a practical contribution
as a major provider of learning materials and
stationery. We donate stationery to various educational
initiatives in disadvantaged communities.
The challenge of maintaining a safe working environment
has always been taken seriously at Bidpaper Plus.
Quality working practices are rigorously managed.
Prime focus when addressing the environmental
challenge is to ensure that full use is made of
recyclable paper. Unfortunately, it has not been
possible to find a substitute for siliconised
backing sheets, but almost all other materials
processed by our businesses are recyclable. We
avoid or reduce the use of toxic inks and solvents.
Where no alternative exists, we ensure that only
registered disposal agents are used when handling
the waste products.
Our five-year employment equity targets were met
and a new strategy is rolling out. Lithotech Afric
Mail has given an industry lead in the employment
of people with disability, some of whom have since
achieved formal qualification.
The future
Trading conditions will remain
highly competitive. Overseas competition can be
expected to continue, despite some weakening of
the rand; this impacts many of our stationery
lines. However, new investment in modern stationery
manufacturing plant will enable a strong marketing
push by Silveray Statmark. Brand rejuvenation
for well-accepted lines such as Croxley is imminent.
The strategy of reducing our dependence on the
mature business of forms manufacture has proved
successful and will continue.
Growth opportunities will be aggressively pursued
in product categories such as self-adhesive labels.
Short-, medium- and long-term growth potential
is also evident in the field of secure labelling.
Exciting developments have emerged in the realm
of identification tag technology, using miniature
computer chips to authenticate ownership of tickets
and other items. The technology was employed to
keep track of tickets at the 2006 Soccer World
Cup in Germany. We have liaised closely with the
European ticket-makers and, together with foreign
partners, will be able to offer similar ticketing
solutions to the organisers of the 2010 Soccer
World Cup here in South Africa.
Our positioning as the country’s leading
one-stop shop for fulfilment services will be
aggressively exploited. We will leverage our national
sales and distribution capabilities to reinforce
our position with nationally represented clients.
Further growth in electronic solutions is forecast.
The challenge is to create add-on services now
basic e-mail bill presentment has become well
accepted. The potential for online payment services,
digital document depositories and other digital
solutions will be thoroughly explored.
The potential for greater penetration of the public
sector will grow as our BEE profile improves.
This opportunity will not be neglected.
International alliances, notably with Standard
Register of America, create a platform for growth
as more multinationals look to enter high-potential
African markets. Our ability to serve widely dispersed
African jurisdictions is in no doubt, making us
a valuable partner of multinationals looking for
support.
The division intends to seek continued revenue
growth with the goal of achieving a double-digit
increase in operating profit.
PRINTING AND
RELATED
Personalisation
and Mail
Our print-to-post operations
performed exceptionally well and will continue
to grow. Higher interest rates may affect the
economy’s consumer-led growth, but will
simultaneously sharpen the need for prompt bill
presentment by financial service providers and
credit-focused retailers. Personalisation and
Mail is well placed to meet these needs.
Labels
Our label production capacity
has been consolidated and expanded. A team of
dedicated sales staff is in place and will aggressively
seek further growth.
Printing and Conversion
Pleasing volume growth and
efficiency gains have been achieved. These will
be maintained. Printing and Conversion provided
strong support to personalisation and mailing
activities. These synergies will again be a point
of focus. Investment in world-class stationery
manufacturing facilities will provide the platform
for new growth in this highly competitive sector.
Sales and Distribution
The team achieved pleasing
levels of customer retention while demonstrating
the potential for growth by leveraging the national
sales and distribution footprint. Further growth
will be energetically pursued.
STATIONERY DISTRIBUTION
The business unit faced a challenging
year, but the merger has now bedded in and the
team will seek new growth off the back of improved
service to the trade and a reinvigorated brand
line-up.
ALTERNATIVE PRODUCTS
E-Mail Connection and Lithotech
Solutions enjoyed a breakthrough year. They demonstrated
many of the “plus-points” in our Paper
Plus positioning and are poised to continue along
the growth path. The newly launched digital pen
and paper set could become the team’s “signature
product”, providing a channel to greater
penetration of the banking and insurance sectors.
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