Business context and trading conditions

Bidvest Rental and Products is a product of this year’s restructuring of Bidvest South Africa. The division forms a leaner business with numerous synergies. The close fit between G. Fox & Company and Steiner was one positive outcome while bringing water, laundry, hygiene and plants under one banner created a variety of opportunities to broaden services to similar customers, offering significant efficiencies to a commercial sector in need of savings and smart solutions.

Our businesses tend to be industry leaders, making reputational risk a key issue. Risk is mitigated by rigorous governance and audit processes and hands-on control by operational managers with significant experience in their industries.

Business conditions were mixed. Overall, the division grew in double digits but performance varied in different sectors.

Retailing faced challenging conditions. In hospitality, trading remained depressed. In response, we diversified our customer base by offering our services to other sectors. For example, we concentrated hotel amenity expansion on the smaller bed-and-breakfast market which has proven more resilient than traditional hotels. Similarly, we shifted some of our laundry business towards healthcare, which is less volatile than tourism.

The economic downturn has highlighted the advantages of our division’s overall diversification. While the mining industry stabilised after a difficult start to the year, volumes in the commercial and industrial sectors improved.

Capital expenditure rose to R159,9 million (2010: R168,6 million). One major initiative involved relocating Puréau’s water purification plant, creating the most modern plant of its kind in South Africa. Another was G. Fox & Company’s investment of R5 million in a new garment manufacturing plant in Swaziland.

Performance

Our businesses put in a pleasing performance. Revenue rose 9,7% to R1,7 billion (2010: R1,6 billion), with trading profit moving 16,3% higher to R325,9 million (2010: R280,2 million). ROFE improved to 54,4% and trading margins rose to 18,8% (2010: 16,7%).

Divisional performance was underpinned by strong results at our two largest businesses, the hygiene solution-providers at Steiner and the industrial supplies company, G. Fox & Company.

In difficult economic conditions, we applied stringent expense management without a cost to our people. Divisional staff numbers increased around 10%, rising from 5 414 (2010) to 5 981 (2011). Headcount increased at G. Fox & Company in particular.

Credit management remained stringent.

Our businesses entrenched their positioning as industry leaders. Steiner’s Western Cape business won a PMR Diamond Award as top performer in hygiene services and Execuflora received recognition at the Next Awards for innovative and creative indoor displays.

Sustainability

Our efforts to reduce our carbon footprint include running some of the division’s vehicles on biodiesel while new software is developing optimum distribution routes to cut emissions and contain fuel costs. Low-energy lighting is being fitted in certain warehouses.

Laundries invested a further R6 million in heat exchangers. These retain the heat from used hot water and transfer it to incoming water, reducing energy input for water heating by at least 12% and lessening consumption of coal. Heat exchangers are now fully operational at all main plants and big laundries.

Together, these initiatives resulted in a 12% reduction in total carbon emissions.

Laundries is planning to install technology to recycle 80% of the water a facility uses, starting with our biggest laundry in Johannesburg. We will report quantities of water saved next year.

All company offices recycle waste paper. Steiner has embarked on a major rental assets refurbishment programme. Items such as plastic soap dispensers and rubbish bins are now extensively refurbished rather than replaced. Costing about R10 million, the initiative has had such an impact that suppliers have commented on our reduced purchases. This year we will also use recycled plastics and instal recycled hand dryers.

Safely disposing of liquid waste is an expensive aspect of our Puréau and laundry operations. We are developing methods to measure and monitor our effluent.

This year’s inclusion of figures from Giant Swaziland largely accounts for the recorded rise in lost-time injury frequency rate.

Training spend increased significantly owing to enhanced training focus at several companies, with particular attention at management level and on uplifting previously disadvantaged individuals.

Our corporate social investment efforts are decentralised and company-specific. Education is a major theme. Every branch in each business sponsors at least two local schools, helping fill skills gaps. The programme now impacts more than 50 schools. These relationships build community involvement in education while creating favourable awareness of our brands.