Sustainable development

Bidvest Services is one of the oldest Bidvest divisions. Core Bidvest values are deeply embedded. The proudly Bidvest attitude brings unity and shared purpose to a diversified business.

Economic performance – While Bidvest Services is a level 4 contributor under the DTI Codes, Prestige, with half the division’s employees, achieved a level 2 rating. We focus on empowering historically disadvantaged black citizens in our workforce and the supply chain to improve our qualification for major public and private sector business.

Environment – Bidvest Services is responsible for 36% of the Group’s water consumption and 15% of carbon emissions (largely from coal-fired heating of water) through its laundry services. New initiatives involving heat exchange technology are reducing this environmental impact.

Human resources – Bidvest Services is in negotiations with various unions on the establishment of a national bargaining council for the cleaning sector. No significant strike action affected our businesses or employees. Staff turnover at Prestige is half that of the cleaning industry as a whole. We invest heavily in the training of unskilled recruits, setting the industry standard for excellence.

Health and safety – A strong focus on training helps keep work-related injuries below industry norms. Unfortunately, we suffered one fatality at Magnum Shield Security when an employee died of natural causes during working hours.

Labour disputes – CCMA cases brought against Bidvest Services dropped 41% to 1 189, with 61% of findings in favour of the division. No Department of Labour fines were incurred for non-compliance.

Society – No significant incidents of fraud, corruption or anti-competitive behaviour were recorded. We embarked on an internal awareness campaign.

Future

Recessionary pressures eased toward year-end, suggesting that a return to pre-recession trading patterns is under way. Our businesses put in a strong fourth-quarter performance and are well positioned to maintain momentum.

Some industry consolidation has occurred, but no major groupings have emerged. Over the year, Bidvest Services businesses improved their competitive position relative to their industry peers and will seek further gains in market share.

PRESTIGE CLEANING SERVICES

The team once again produced an excellent set of results, growing sales and trading profit in a difficult market. Margins remained under pressure, largely as a result of resistance to price rises that reflected increased labour costs. Stringent expense management kept the return on funds employed at pleasing levels. NICE Equipment was successfully integrated into the business and after a slow start helped Prestige to maximise the World Cup opportunity.

TMS GROUP INDUSTRIAL SERVICES

TMS had a disappointing year. Some large clients mothballed projects on the run-in to the World Cup, severely impacting the volume of shutdown and maintenance work. Revenue remained flat and trading profit fell significantly. Expansion into Saudi Arabia was unsuccessful. The offshore operation made a loss and has been closed. Further restructuring is under way.

LAUNDRY SERVICES

The laundry operation achieved a small trading profit increase off marginally lower revenue – a highly satisfactory results in view of low hotel occupancies for most of the year. The Garment Rental division continued to perform well, as did Montana Laundries, the specialist provider of on-premise laundries to major clients in the healthcare and mining industries.

STEINER GROUP

The business realised the benefits of a more streamlined management structure and put in a highly commendable performance. Good revenue growth, further improvement in margin management and reduced expenses led to pleasing growth in trading profit. ROFE reached a new high. Steiner is positioned for renewed gains following further improvement in the quality of regional and branch management. The company has disposed of the Steinmed business.

BIDSERV INDUSTRIAL PRODUCTS

A strong fourth quarter lifted overall results, but could not offset the impact of nine months of difficult trading conditions. Recessionary effects were severe in the first half and teams did well to make the most of their opportunities later in the year. The Giant Clothing operation in Malawi was closed and relocated to Swaziland, impacting profitability favourably.

GREEN SERVICES

The overall result was extremely pleasing. Puréau and Execuflora excelled and Hotel Amenities performed well. TopTurf optimised its World Cup opportunity but was impacted by a dramatic scaling back of major contracting work.

AVIATION SERVICES

Depressed conditions in the aviation industry resulted in lower revenue and much lower trading profit. A restructure is under way to significantly reduce costs. Acsa’s appointment of a third ground handler impacted the ramp-handling business and led to depressed pricing and the loss of some contracts. Premier lounges and Express Air Services performed well.

SECURITY GROUP (Magnum and Bidtrack)

Our cluster of security businesses showed continued growth. A more streamlined management structure and several contract gains drove the recovery. Magnum continues to gain market share and enhance its reputation. Provicom Risk Solutions was merged into Magnum.

Bandit – now Bidtrack – continues to perform well.

GLOBAL PAYMENT TECHNOLOGIES

The team performed well and in line with budget, despite pressure early in the year when major clients in the financial services industry scaled back on capital expenditure. However, the business is cyclical and the order book showed significant improvement in the fourth quarter.

OFFICE AUTOMATION

Konica Minolta and Océ had an outstanding year in a recessionary market and recorded strong growth in trading profit. Rationalisation resulted in significant cost savings and took the return on funds employed to a new high. Market share gains were achieved and bizhub entrenched its leadership position. Internationally, Océ was acquired by Canon. However, our distribution agreement was renewed.

BIDTRAVEL

The travel business came under continued pressure as travel remained a key target for businesses looking to curb spending. Trading profit fell, as did revenue. Volume improvements were apparent toward year-end. The flagship Rennies Travel business came under sustained pressure. The mymarket.com travel booking engine (and platform for Group-wide buying synergies) has been integrated into Bidtravel and showed continued growth in volumes.

BANKING SERVICES

Falling interest rates and a strong rand were negative for banking business and both revenue and trading profit fell significantly. In challenging conditions, the Bidvest Bank team continued to innovate, launching new products while growing the national footprint. Transaction volumes were maintained, though transaction values fell. The bank was strongly positioned as “the foreign exchange specialist”.

Deposit-taking activities showed pleasing growth, cash flows were strong and expenses well managed despite accelerating growth. The bank suffered no bad debts and there are no impairment issues to manage.

The acquisition of MFS received Reserve Bank approval and was effective from June 1. This asset-finance business is being integrated into Bidvest Bank. MFS achieved a measure of trading profit growth, a significant improvement in a challenging market.

The bank assumed management responsibility for Master Currency and obtained its first rating, an A3.za/P2.za rating from Moody’s.

Three core pillars now sustain the business: retail travel foreign exchange, corporate foreign exchange and asset-based lending. The previously narrow base of operations has been widened significantly by the MFS acquisition and the opportunity for ongoing lending at acceptable margins.