Chairman's report
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Lorato Phalatse Chairman |
This has been our first full year following the successful unbundling of our foodservices businesses and we transitioned exceptionally well. I am pleased to report we are on course for continued growth and success. Considering the magnitude and complexity of the unbundling, and the depressed market conditions in which we operate in South Africa, Bidvest has performed superbly and made pleasing progress with its strategic ambitions. |
Global political and economic uncertainty remains a feature, driven in part by the Brexit vote outcome, the Trump-leadership era in the United States, which has led to policy uncertainty, the continued slowdown in China and, more recently, North Korea’s concerning and aggressive stance.
In South Africa, political instability and dissatisfaction has become more apparent with open frustration about the country’s leadership increasing, particularly among civil society and South African business leaders. The political climate prevalent over the past 15 years is shifting, with stability worsening over the past two years. Additionally, the drought had a severe effect on food security and we are in an environment of low (rand) commodity prices, higher consumer prices, a greater dependency on debt, and declining economic growth.
As one of the largest employers in South Africa, and a Group that by nature covers virtually all the sectors of the South African business landscape, this is a major concern. South Africans have, however, always been resilient in times of anxiety and change, not allowing these issues to interrupt our ambition for a successful, prosperous and democratic nation.
Bidvest is no different, and nowhere is this more evident than in our pleasing performance over the past year.
Performance
Bidvest has demonstrated the resilience of its business model by delivering a pleasing set of operating and financial results from its seven divisions. Most divisions performed commendably with Group revenues increasing, trading margins being maintained, and expenses well controlled. The end result was a higher trading profit, improved headline earnings and a dividend. Management’s objective of generating excellent returns from operations was again achieved.
Other than Brandcorp, the purchase of which was effected during the year, the Group also made several divisional bolt-on acquisitions as part of its growth strategy and, subsequent to year end, the Noonan acquisition was announced. Noonan is transformational for Bidvest in that it provides an exciting springboard for growth in Europe, both within the Noonan structure and by positioning Bidvest to pursue opportunities in its chosen sectors.
Priorities beyond profit
Despite a decentralised operating model, we have a unified understanding throughout the Group of what needs to be achieved to ensure ongoing success. It is this understanding, which essentially encapsulates shareholder value delivery, that combines with our passion to support, where possible, those South Africans who have become a consequence of the economic and political turmoil and have found themselves unemployed and destitute. At the same time, we acknowledge a duty to share the value we create and, by so doing, meet the responsibilities we have to contribute to economic and social development and give back to our people and our planet.
Unemployment continues to increase and job prospects for our expanding youth population graduating from high school and tertiary institutions remain bleak. Demands to deliver economic benefits are increasingly being levelled at business.
As Bidvest, we contribute meaningfully, often by pushing boundaries, towards the priorities of transformation, education and training, as well as health and sport, remaining committed to social cohesion. Over the past year, we invested R571 million on training and development, initiated 3 900 learnership programmes, and absorbed 373 learners into the Bidvest structure. Many of our larger businesses have invested in technical training academies that operate nationally, serving our own businesses as well as industry at large.
We encourage and support small- to medium-sized business enterprises (SMMEs), specifically through our large supply chain, and build long-term partnerships with a vast variety of organisations and associations directly affected by Bidvest. Bidvest’s scale gives us a unique ability to influence our supply and value chain. This reaches beyond efficient systems and processes to ensure we provide Bidvest clients with the best possible products and services, extending into significant investments, the pursuit of renewable energy and water efficiency, as well as other sustainable innovations. We recognise the need for effective stakeholder engagement and to build lasting and value-enhancing relationships with our large stakeholder universe.
We continue to support and introduce relevant and sustainable support projects. Our Bidvest Village has a special place in the hearts and minds of the Bidvest family. This is an ambitious project, which aims to address the social challenges faced by many South Africans. The village has been established as a community for orphaned children and their foster mothers, and will provide nearby communities with the services and support they need to stimulate local commerce. It will provide essential services such as health, security, education, housing and welfare so the people we support can focus on what really matters – their future.
Bidvest has welcomed the launch of the “#BusinessBelieves in South Africa” campaign. As advocates of the campaign, the Group pledges its support of ethical business practices and reaffirms its commitment to job creation and economic growth through the expansion of its South African operations.
Going forward
Amid economic uncertainty and weakened institutional political capacity, the private sector must forge ahead and remain focused on playing its part in nation building, providing benefit wherever possible. Currency volatility remains, wage negotiations were largely settled without the usual disruptive strike action, and the manufacturing sector is faring better than expected, albeit not showing any signs of major growth. While we have serious concerns about the institutional capability at Eskom, the supply side seems to be intact, largely as a result of lower demand.
We expect continued instability, at least until some clarity becomes evident following the national elections in 2019, and it is forecast that the country will experience muted growth over the next two years.
This will, however, not deter Bidvest. We will continue with the plans already under way to achieve our stated ambitions, whether these are aimed at continued growth and profitability, or a desire to maintain our social licence to operate, a prerequisite for any corporation.
Appreciation
I thank my fellow board members for their commitment, guidance and dedication to the Group. On behalf of the board of directors of Bidvest, I extend our sincere gratitude and appreciation to Brian Joffe, the founder of Bidvest, who built the Group into what it is today. Brian resigned from the Bidvest board in August 2017. His keen insight, knowledge and experience will be missed.
We welcome Nosipho Molope to the board and look forward to her contribution.
My gratitude also to Lindsay Ralphs for his leadership and stewardship, as well as the broader management and all Group employees for their contribution to the ongoing viability of Bidvest.
A last word of congratulations must go to the Bidvest Wits team, which was crowned the Premiership Football League Champions in May this year. This winning spirit is a reflection of the Bidvest culture and we are all immensely proud of the team’s achievement. Its success has given us added confidence to enhance Bidvest’s winning ways as we continue the journey of “Going Beyond” into our next chapter of growth and delivery.
Lorato Phalatse
Chairman
