Business context and trading conditions

The Bidvest South Africa restructuring and the creation of our new Bidvest Office division was welcomed by all teams and introduced a new sense of purpose. Tight focus on areas of traditional expertise is balanced by efforts to maximise growth opportunities in new markets.

We see higher environmental awareness and standards as an opportunity and the Form Chair’s marketplace successes spotlight our commitment in this area. Our partnership with technology leaders such as Konica Minolta and Océ helps keep us at the forefront of international environmental developments.

As representatives of international principals we acknowledge our exposure to currency risk. This is mitigated by the fact that exposure is distributed among a number of currencies. Océ benefited from rand strength versus the euro. In contrast, the strong yen kept pressure on margins at Konica Minolta.

The business environment remained extremely competitive. However, after three years of sweating assets and delayed capital goods replacement there were welcome indications that businesses were again investing in new office equipment, though the uptick is a recent one. Improved demand was not uniform across all sectors and remained sluggish in some parts of the economy.

Technology companies benefited more from reviving demand than the furniture and stationery businesses, which continued to trade in a challenging environment.

Margins stayed under pressure and corporate expense control was stringent.

Performance

Revenue rose only marginally, easing 5,3% higher to R3,7 billion (2010: R3,5 billion). Trading profit rose 9,2% to R215,4 million (2010: R197,3 million).

ROFE was 34,5%. Trading margins stayed thin at 5,8%.

Technology businesses optimised opportunities, while furniture teams were often under pressure to mitigate loss. Unit sales grew in stationery, but sales growth and margins were muted as a result of price erosion.

Sustainability

Steep rises in energy costs drove renewed focus on energy efficiency at all businesses. Last year’s efficiencies have translated into further improvements. Waltons KZN is being centralised and will be moving to a new energy-efficient facility by November.

Konica Minolta leads the industry in energy efficiency and green office equipment through its use of polymerised toner technology. These toners reduce environmental impact, being composed of plant-based substances rather than petrochemicals, leading to significantly lower electricity consumption.

Konica Minolta uses a variety of other green innovations to reuse excess toner, reducing consumption and CO₂ emissions. The company also continues to reclaim and recycle end-of-life electronic equipment.

Bidvest Office launched a new business unit, Konica Minolta Medical South Africa, through the introduction of new digital X-ray products with a flat panel detector system. This development heralds a new wave of innovation in radiology; it enables radiologists to migrate from analogue to digital imaging without total replacement of existing hardware, reducing the ecological impact; X-rays can be taken at higher resolutions using 15 to 20% lower radiation doses and the use of a new lithium ion capacitor rather than a lithium battery reduces the ecological impact of battery disposal.

New radiology hardware exhibited at the SORSA-RSSA show in Durban was well received.

Our furniture businesses have taken great strides towards greening their products. Seating’s Form Chair incorporates 25% recycled materials, 81% local content and is 95% recyclable. The Form Chair was developed in South Africa and is made to strict ergonomic and environmental standards at a plant with ISO 9001, 18001 and 14001 accreditations. The chair sets the benchmark for eco-design and contracts from major players in the banking sector have been secured. It has become the preferred chair of environmentally aware corporates and is the best-selling product in Seating’s range.

Total training spend fell mainly due to restructuring and rationalising. Some training initiatives were put on hold while we focused only on critical skill requirements.

Each Bidvest Office company runs independent corporate social investment programmes. Approximately 52% of our CSI spend supports educational institutions in disadvantaged areas. Community development accounted for a further 19% and 14% was spent on environmental projects.

Our single biggest contribution was to Conquest for Life, an initiative to empower youth through programmes that foster a safe and structured environment in which young people can realise their potential and build life skills.