Directors' report

Nature of business

The company is an investment holding company with subsidiaries operating in the services, trading and distribution industries.

Financial reporting

The directors are required by the Companies Act No 71 of 2008, as amended (the Act), to produce financial statements, which fairly present the state of affairs of the Company and the Group as at the end of the financial year and the profit or loss for that financial year, in conformity with International Financial Reporting Standards (IFRS) and the Act.

The financial statements as set out in this report have been prepared by management in accordance with IFRS and the Act and are based on appropriate accounting policies supported by reasonable and prudent judgements and estimates.

The directors are of the opinion that the financial statements fairly present the financial position of the Company and of the Group as at June 30 2014 and the results of their operations and cash flows for the year then ended.

The directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going-concern basis in preparing the financial statements.

Share capital

During the year the Company issued:

	3 281 838 shares of 5 cents each pursuant to a issue of capitalisation shares from share premium to shareholders on the basis of 1,65 shares for every 100 held; and
	220 452 shares of 5 cents each at a premium of R254,95 per share in settlement of conditional share plan awards.

No shares were issued in the comparative period.

Acquisitions and disposals

The Group acquired the entire issued share capital of Home of Living Brands Holdings Limited (formerly Amalgamated Appliance Holdings Limited) (HoLB) that it did not already own, being 71,7%, for a consideration of R532 million, with effect from July 1 2013; and the entire issued share capital of Mvelaserve Limited (Mvela) that it did not already own, being 65,3%, for a consideration of R847 million, with effect from November 1 2013. Management believes that these acquisitions will enable HoLB and Mvela to continue to service their customers more efficiently, with significantly enhanced offerings. HoLB and Mvela will also benefit from being able to offer their products to the wider customer base of the Group.

A 60% interest in the share capital of Distribuidora E Importadora Irmãos Avelino Limitada in Brazil for a consideration of R$48,6 million (R524 million) was acquired by the Group with effect from January 1 2014. This acquisition forms part of the Group’s strategic expansion plans in the international foodservice industry.

During the year 31,9% of the issued ordinary capital of Adcock Ingram Holdings Limited (Adcock) was acquired by the Group, to add to the 2,3% held at June 30 2013, for a consideration of R3,9 billion. The majority of the shares acquired were acquired in the months of January and February 2014. The Group has accounted for Adcock as an associate with effect from March 1 2014.

The Group also undertook a number of other smaller acquisitions during the year (refer to note 11 of the consolidated financial statements).

Subsequent events

With effect from July 1 2014, the Group has acquired a 60% interest in Gruppo Dac S.p.A., a leading Italian foodservice provider, as well as a significant controlling stake in PCL 24/7 Limited, a specialist in chilled products storage and distribution business operating in the United Kingdom. The aggregate purchase consideration was approximately £95 million (R1 715 million). The Group funded these acquisitions from existing banking resources.

Results of operations

The results of operations are dealt with in the consolidated income statement, segmental analysis and commentary.

Movement in treasury shares

In terms of general authorities granted to the Company to repurchase its ordinary shares, the latest being shareholder authority obtained at the annual general meeting of shareholders held on November 25 2013, a maximum of 65 546 986 ordinary shares may be acquired by the Company of which 32 773 493 may be acquired by its subsidiaries.

A total of 1 858 666 ordinary shares were disposed of at an average price of R175,68 per share in settlement of share options exercised by staff.

Dividends

The directors declared an interim distribution by the way of the issue of fully paid ordinary shares of 5 cents each as a scrip distribution payable to ordinary shareholders recorded in the register on the record date, being Friday, April 11 2014. Ordinary shareholders were entitled, in respect of all or part of their shareholding, to elect to receive a gross cash dividend of 378,0 cents per ordinary share (2013: 324,0 cents per share) in lieu of the scrip distribution to those members registered on the record date, being Friday, April 11 2014.

Subsequent to year-end the board has declared a final distribution for the year ended June 30 2014, by way of the issue of fully paid ordinary shares of 5 cents each as a scrip distribution payable to ordinary shareholders recorded in the register on the record date, being Friday, October 10 2014 (scrip distribution). Ordinary shareholders will be entitled, in respect of all or part of their shareholding, to elect to receive a gross cash dividend of 432,0 cents per ordinary share in lieu of the scrip distribution, which will be paid only to those ordinary shareholders who elect to receive the cash dividend, in respect of all or part of their shareholding, on or before 12:00 on Friday, October 10 2014 (the cash dividend alternative).

The cash dividend alternative will be paid out of income reserves. A net cash dividend of 367,2 cents per ordinary share will apply to shareholders liable for the local 15% dividend withholding tax and 432,0 cents per ordinary share for shareholders exempt from the dividend tax. The new ordinary shares will, pursuant to the scrip distribution, be issued as a capitalisation of part of the share premium account.

The number of new ordinary shares to which ordinary shareholders will become entitled is determined in the ratio of 1,55 shares for every 100 shares held on the record date. This is the equivalent of 436,0 cents per share, based on the closing share price to August 29 2014 of R281,32 per share.

Payments to shareholders

Approval was obtained at the last annual general meeting (AGM) for the company to make payments which would reduce its share capital, share premium, and/or reserves in terms of the Act.

Special resolutions

Special resolutions were passed at the AGM of shareholders held on Monday, November 25 2013 in regard to a general authority to enable the Company to acquire its own shares and approval of non-executive directors’ remuneration for the 2014 financial year.

Special resolutions were passed by certain subsidiaries to accommodate the acquisition of various businesses, to change their names and the general authority to provide financial assistance to related or inter-related companies and corporations in terms of sections 44 and 45 of the Act. A number of subsidiaries passed a special resolution for the adoption of a new MoI.

Directorate

Mr Stephen Koseff did not make himself available for re-election at the AGM and therefore retired from the board. As previously announced, Mr Matamela Cyril Ramaphosa (Cyril) resigned from the board effective from the date of the AGM. The board and management of Bidvest wish to thank Stephen and Cyril for their valued dedication and contribution to the development of Bidvest over many years.

In addition, Mr Lebogang Joseph Mokoena resigned as alternate director to Mr Alfred da Costa. The board also wishes to thank Lebogang for his contribution.

The following directors were also appointed in the period:

Mrs Nompumelelo Thembekile Madisa (Mpumi) as an executive director; Mrs Sibongile Masinga (Bongi); and Mrs Florah Nolwandle Mantashe (Nolwandle) as independent non-executive directors. The board welcomes Mpumi, Bongi and Nolwandle to Bidvest.

In terms of the Company’s Memorandum of Incorporation (MoI), the directors who retire by rotation at the forthcoming AGM are Mr Douglas Denoon Balharrie Band, Mr David Edward Cleasby, Mr Anthony William Dawe, Mr Donald Masson, Mr Lindsay Peter Ralphs and Ms Tania Slabbert. All retiring directors are eligible and have made themselves available for re-election.

Attendance

The names of the directors who were in office during the period August 26 2013 to August 29 2014 and the details of board meetings attended by each of the directors are as follows:

Directors’ interests

The aggregate interests of the directors in the share capital of the Company at June 30 2014 were:

Directors’ shareholdings

Beneficial

The individual beneficial interests declared by the current directors and officers in the Company’s share capital at June 30 2014, held directly or indirectly, were:

Held in terms of The Bidvest Incentive Scheme

The Bidvest Incentive Scheme grants loans to staff and executive directors for the acquisition of shares in the Company. The number of shares and carrying values of the loans issued to directors and officers as at June 30 2014 were:

Non-beneficial

In addition to the aforementioned holdings:

	B Joffe is a trustee and potential beneficiary of a discretionary trust holding 1 009 960 (2013: 1 886 764) shares.
	DE Cleasby and CA Brighten (company secretary) are trustees of the Group’s retirement funds which hold 621 157 (2013: 858 310) shares.
	T Slabbert is also a director of WDB Investment Holdings (WDB) and has no beneficial interest in WDB’s shares. WDB holds 3 887 797 (2013: 3 887 797) Bidvest shares.

The interests of the directors remained unchanged from the end of the financial year to the date of this report.

Directors’ remuneration

The remuneration paid to executive directors while in office of the Company during the year ended June 30 2014 can be analysed as follows:

For comparative purposes the remuneration paid to executive directors while in office of the Company during the year ended June 30 2013 can be analysed as follows:

Certain executive directors serve as non-executive directors of companies outside of the Group. Directors’ fees in this regard are paid to the Group.

The remuneration paid to non-executive directors while in office of the Company during the year ended June 30 2014 can be analysed as follows:

Prescribed officers

Due to the nature and structure of the Group and the number of executive directors on the board of the Company, the directors have concluded that there are no prescribed officers of the Company.

Directors’ long-term incentives

Details of the directors’ and officers’ outstanding share options are as follows:

These options are exercisable over the period July 1 2013 to April 30 2015. A detailed register of options outstanding by tranche is available for inspection at the Company’s registered office.

Share-based payment expense

Details of directors’ and officers’ outstanding conditional share plan (CSP)

A conditional award is a conditional right to a share, which is awarded subject to performance and vesting conditions.

During 2014, the shares were awarded at R255,00 per share.

Summary of executive directors’ long-term incentives (LTI)

Directors’ service contracts

Directors do not have fixed-term contracts.

Directors’ and officers’ disclosure of interest in contracts

During the financial year no contracts were entered into in which directors and officers of the Company had an interest and which significantly affected the business of the Group. The directors had no interest in any third party or company responsible for managing any of the business activities of the Group.

Secretary

During the year under review, and in compliance with paragraph 3.84(i) and (j) of the JSE Listings Requirements, the board evaluated Mr CA Brighten, the company secretary, and is satisfied that he is competent, suitably qualified and experienced. Furthermore, since he is not a director, nor is he related to or connected to any of the directors, thereby negating a potential conflict of interest, it was agreed that he maintains an arm’s-length relationship with the board.

The business and postal addresses of the secretary, which are also the registered addresses of the Company, are Bidvest House, 18 Crescent Drive, Melrose Arch, Melrose, Johannesburg, 2196 and PO Box 87274, Houghton, 2041, respectively.