The Group’s corporate
office, based in Melrose Arch, Johannesburg, provides
strategic direction and services to the Group,
houses investments, adding value through identifying
opportunities and implementing Bidvest’s
decentralised and entrepreneurial business model.
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Revenue
increases by 10,3% to R1,3 billion
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Trading
profit rises to R108,4 million
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Bidvest
Academy entrenches position
as incubator of leadership talent
Bidprop
spends R174,4 million on new
facilities for operational companies
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Controlling
interest taken in Namsea
Brian
Joffe Chief
executive
Bid Corporate
Services
Corporate Services is deliberately lean. It is
a facilitator for our business units, not a bureaucracy.
Business units are responsible for implementation
of Bidvest policy as developed by the board of
directors. Corporate Services monitors policy
adherence and the achievement of key strategic
objectives in areas such as BEE Bidvest’s
reputation as a good neighbour and respecter of
the environment, and the development of the Bidvest
leaders of tomorrow.
Leadership training is fostered through the Bidvest
Academy and is a key focus area.
Other key responsibilities include investor relations
and communications. As a listed company, we pay
close attention to the needs of the investment
community, but all stakeholders have a right to
timely, comprehensive and open communication from
Bidvest.
Marketing and advertising activities are co-ordinated
by Corporate Services as is the “Proudly
Bidvest” initiative. Bidvest’s operational
arms are responsible for the development of individual
brand identities. However, Bidvest’s reputation
and stature as an international group brings an
added dimension to their marketing efforts. Association
with the wider Bidvest brand is emphasised by
the “Proudly Bidvest” signature that
underpins the communication of each individual
business unit.
The “Proudly Bidvest” positioning
has become a unifying component of all Bidvest
communication in South Africa.
Specialist service providers and strategic investments
also form part of Corporate Services, including
Bid Property Holdings (Bidprop), Namsov Fishing
Enterprise (Namsov), Namibian Sea Products (Namsea)
and Ontime Automotive.
Bidvest’s
corporate office based in
Melrose Arch, Johannesburg
Bidprop’s portfolio comprises
close on
100 properties in South Africa
The
Bidvest Academy provides a platform for developing
young executive talent within the
Group
Ontime
Automotive is the UK’s second
largest
automotive business
Bid
Property Holdings
The industrial
property market experienced both buoyant
conditions and sharp increases in
building costs. Constant steel and
fuel price increases and rand weakness
compounded building cost inflation.
Unprecedented demand for land led
to a severe shortage of vacant proclaimed
industrial sites in the main centres.
Land prices soared while demand put
further pressure on local authorities
to supply services to new sites. Disproportionate
increases in the cost of these services
added to the cost of bringing new
land to market.
It took only a short period for rentals
in new developments to climb by more
than 25%.
These factors complicated the task
of Bidprop as we pressed ahead with
an ambitious programme of upgrades,
expansion and relocation for several
Bidvest divisions. In an extremely
active year, Bidprop spent R174,4
million on new facilities for Group
companies.
In Johannesburg, we provided new premises
for Kolok, Bidbake, Crown National
and Safcor. In Durban, our clients
were Kolok, Minolta and Vulcan. For
McCarthy, we created a new showcase
dealership for Mercedes, a new mega
Toyota dealership in Durban and a
new dealership (for Toyota) in Paarl.
Work is in progress on several additional
projects.
The cost challenge may mount
in view of rising interest rates and factors such
as the proposal to include both land and buildings
for rate assessment purposes. This will force
occupiers of industrial property to make better
use of facilities. Bidprop anticipates further
activity as we assist Bidvest businesses to develop
appropriate solutions.
Namsov Fishing
Enterprise
Namsov, in which Bidvest holds
an effective 31,0% stake, recorded highly creditable
results. Revenue grew 41,0% to N$378,4 million
while trading profit rose strongly by 503,1% to
N$75,4 million. Growth was achieved despite pressure
on operating costs attributable to spiralling
fuel prices (which account for 37% of input costs).
Thankfully, the strategic decision was taken some
time ago to convert the fishing fleet to operate
on intermediate heavy fuel oils, which are more
competitively priced than diesel.
Huge fluctuations in the supply of Namibian horse
mackerel were mirrored by volatile price fluctuations.
Foreign exchange vigilance was required in view
of the continuing strength of the Namibian dollar
against the US dollar, Namsov’s main trading
currency. The licensing practices of a major competitor
and unusually high volumes of small fish from
north-west Africa caused prices to plummet in
early 2006 but, by the end of the financial year,
prices had recovered.
A continued improvement in Namsov’s results
will be energetically pursued. New methods of
managing the flow of production are being examined
with the aim of creating greater price stability.
Diversification into other sectors of the industry
and into Angolan waters will also be considered.
However, several challenges need to be addressed;
including the implementation of a new Labour Act
and less favourable demarcation of Namsov’s
fishing areas with the pending introduction of
automatic location communicators for all fishing
vessels.
In terms of sensitivity analysis, the principal
risk applies to fish resources and fluctuations
in resource biomass beyond the control of management.
The available resource affects Namsov’s
annual quota allocations and this determines business
volumes, revenue and profit. In the event of a
catastrophic drop in the fish resource, assets
could be redeployed to alternative waters (for
example, off Mauritania and Chile), but the effect
would still be material.
Bidvest holds a controlling
interest in this Walvis Bay fishing operation.
In November 2005 we acquired a 30,0% stake in
Namibian Sea Products Limited (Namsea) and in
March of this year bought a further 35,0%. Namsea,
through its subsidiary United Fishing Enterprises,
owns a fish-processing factory, including buildings
and plant. It is also the owner of a fleet of
four Purse-Seine fishing vessels.
These operations have under-performed for several
years, largely as a result of shrinking pelagic
fish resources. Annual revenue stood at a modest
N$58,4 million and a loss before taxation of N$6,1
million was recorded.
Namsea’s principal activity is fishing for
small pelagic fish species, and the processing
of the catch into canned fish, fishmeal and fish
oil. A subsidiary (Atlantic Harvesters of Namibia)
has a mid-water horse mackerel concession, creating
opportunities for integration with Namsov’s
horse mackerel fishing operations.
Namsea management will strive to stem the pattern
of recurring losses while seeking new opportunities
in Angolan waters to counteract the adverse pelagic
fishing conditions off Namibia. Diversification
into new spheres of activity, such as the development
of Namsea’s seafront property and utilisation
of under-roof storage facilities, will also be
explored.
Namsov
Fishing Enterprise
the largest quotaholder in the midwater fishing
industry in Namibia
Ontime Automotive
This UK business comprises
Ontime Rescue and Recovery (vehicle roadside assistance),
Ontime Parking Solutions (parking enforcement),
Specialist Transport Operations (enclosed vehicle
transport), Prestige Vehicle Distribution (worldwide
vehicle distribution) and Fleet Assistance (national
roadside assistance).
England ’s low unemployment rates affected
the recruitment and retention of quality staff
while substantial increases in fuel prices bedevilled
expense management. The trading environment was
characterised by supplier consolidation within
the automotive industry, car market over-capacity
and the fluctuating financial fortunes of original
equipment manufacturers (OEMs).
A leading competitor became a victim of aggressive
market testing of OEM business while Ontime won
new contracts in a consolidating marketplace and,
by year-end had, emerged as the UK ’s second
largest automotive logistics company.
Long-term prospects of delivering consistent and
acceptable financial returns were enhanced by
the closure of Ontime’s French national
car transport subsidiary, SVTV. This business
failed to make a positive contribution despite
extensive restructuring.
Specialist Transport Operations, Prestige Vehicle
Distribution and Fleet Assistance performed exceptionally
well.
The Group’s sale of Dartline, the cross-Channel
ferry and terminal operator, creates a challenge
as it affected our strategy of carrying out pre-delivery
inspection work for OEM clients at port of entry.
A major contract has been lost. However, management
are focused on replacing this business.
Bidvest’s financial strength, the empowerment
of local management and Ontime’s strategy
of providing quality solutions for fair remuneration
are having an impact. The market remains challenging,
but growth is being achieved and the fortunes
of the business are being restored.
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