130 877 people employed

Bidvest's 30-year anniversary marks our ongoing commitment to Homegrown Entrepreneurship

Total shareholder dividend for the year increased 13.2% to 556 cents, or R2 billion

Benefits and remuneration to employees exceeded R20 billion, including R602 million for training

Revenue increased by 8.4%

Group trading profit grew 8.2%

80% of our businesses have achieved between level 1 - 4 B-BBEE ratings

While the asset base speaks for itself, the credit for directing this growth is ultimately due to the leadership of this Group, both past and present. It has been this team, together with Bidvest’s more than 130 000 employees, who have been able to navigate through many complex economic and political periods, but who have always ensured the momentum in growth is maintained.

Bidvest’s 30-year anniversary, celebrated this year, marks our ongoing commitment to Homegrown Entrepreneurship. Essentially, the Bidvest model provides investors with an opportunity to take their respective businesses to another level. There are numerous examples of Homegrown Entrepreneurship over the years, some of which are shown in this year’s Annual Integrated Report, where Bidvest has either acquired a company and grew the business further or has combined it with other parts of the Group to extract synergies. The partnerships formed with South African entrepreneurs, as well as other acquisitions we made along the way, have resulted in an exceptionally diverse Group of companies across the entire spectrum of South African business sectors.

This strategy was implemented while practising vigilant stewardship and being able to provide benefit to those in our community, as well as the broader society. In doing so, we have developed these respective entities into large, formidable and market-leading companies that today, collectively, represent a microcosm of South African business.

This philosophy, together with the ability to provide, guide and support the leadership team, fund businesses for growth, and continually invest significant funds for local infrastructural and logistical development, further describes Bidvest’s character. It is a model South Africa should emulate for the benefit of our entire nation. South Africa has the people, skills and technology, the funding and financial ‘machinery’ which is the envy of many, superb infrastructure — albeit in need of much repair in many instances — and we remain blessed with sought-after commodities and enormous tourism and agricultural potential.

We need South Africa’s political leadership to corral all these resources, possibilities and opportunities, while guiding and enabling our nation through these difficult recessionary times. Successfully done, it will position the country for enhanced economic success. An absolute imperative is to retain our exemplary status and example of true democracy.

Bidvest’s leadership, including our well-constituted and independent Board, has consistently invested in the Group’s capacity and capability, while always ensuring operational excellence to support profitability in difficult environments. This has certainly been a feature over the past few years.

People deliver profits

Over the past 30 years, Bidvest has experienced tremendous change — not in our operating model, which has always been to invest in trading, services and distribution companies, but related to South Africa’s political and economic situation. The Group was originally formed during a time of international sanctions and we have witnessed numerous economic highs and lows.

Whatever the economic environment, we have always remained optimistic in everything we do. We have continually adapted and innovated to ensure continued growth and the delivery of returns. This can only be done successfully by a team of people who remain intently focused on agreed and defined objectives. Once these are understood, and an enabling environment is provided, profits are bound to materialise. This past year has again fulfilled this philosophy.

We have had to deal with severe economic pressures and regulatory obstacles but returns to stakeholders – across the board – have been industryleading in many respects. By way of example, the total shareholder dividend for the year increased 13.2% to 556 cents, or R20 billion, our benefits and remuneration to employees exceeded R15 billion, including R602 million for training, while returns to government by way of taxation, duties and other payments have surpassed R27 billion.

The year’s revenue increased by 8.4%, Group trading profit grew 8.2%, and overall headline earnings were higher. As a board, we are comfortable with the conservative approach to gearing and net debt levels are considered acceptable, while cash generation over the past year has been higher than the prior year, and with a cash conversion rate of more than 100%.

Management’s strategy of cautiously expanding into Ireland and the United Kingdom, via Noonan, is meeting expectations. We anticipate exciting future developments with selective offerings from our Services and Commercial Products divisions internationally.

The operating environment

South Africa’s economic, political and social instability continues to impact the country negatively. It is leading to ever-rising unemployment, constraints on consumer spending, a scarcity of foreign investment as well as increasing demands on the state to provide adequate services and facilities for the growing population.

Considering next year’s national election, we are not expecting any short-term change or improvement in economic reform. Similarly, the non-availability of funding for adequate investment and upgrades to infrastructure, including within state-owned entities, will prevent any real improvement or job creation. Investment is desperately needed to kickstart the economy.

Failing this, and indicative of the cautions from rating agencies, the country could ultimately see further downgrades to its sovereign risk rating.

Post-election, we are optimistic a recovery will materialise, in some form. Bidvest remains exceptionally wellpositioned to take advantage of, and react appropriately to, any positive change to South Africa’s economic circumstance.

We have a continued faith in the future of South Africa and the Group is actively spending capital on various projects, specifically within the Freight division, and we are also continuing our strategy of bolt-on acquisitions. We believe that government alone cannot deliver the requisite and much-needed upgrades to infrastructure to move the country forward, and all entities should contribute wherever, and as best possible.

Essential stewardship

South Africa’s economic position has placed strain on funds for education and training, health care, safety and many other constitutional rights. We see it as our duty to assist wherever we are able, and we continue to commit vast resources in support of many different initiatives, both within and outside the Group. Over the past year, our Group corporate social spend amounted to R117 million. This is a part of the business that is directed from the corporate office and headed by an executive director on our board. We have a defined strategy for supporting those in need and we ensure that all areas of the strategic plan are successfully achieved.

One of the key areas of the plan is that of transformation. Indicative of its success is the fact that 80% of our businesses have achieved between level 1 – 4 in terms of South Africa’s required B-BBEE ratings.

This is an important achievement, and one we continue to work hard at to ensure all Group companies participate meaningfully in South African society.

Another defined objective in our plan is the support of small- to medium-sized business enterprises (SMMEs). Our significant scale continues to provide tremendous opportunity across the Group, and we are able to work closely together with numerous SMMEs, and other organisations.

Many of the partnerships formed over the years remain firmly intact and we work harder each year to find additional opportunities for new partners to join our supply chain.

Effective stakeholder engagement will always remain a critical component of the Bidvest Group. It is a normal part of the day-to-day business across all companies.

We have, in certain areas, appointed people with the skills to enhance this imperative and we have increased the level of stakeholder engagement.

We are acutely aware of our responsibilities towards all our stakeholders. Each division has quarterly audit committee meetings, chaired by an independent chairman, risk, social & ethics meetings as well as an operational board meeting. Senior internal audit and external audit representatives attend these. Feedback from these meetings is tabled and discussed at the relevant Bidvest Group committee meetings.

We continue to strengthen various corporate governance processes, taking into account new recommendations and post an introspection following the various public and private sector revelations.

Appreciation

I wish to extend my thanks and gratitude to my fellow board members. My job is made easier because of the significant expertise, skill and commitment that you all bring to the deliberations at board and board committee meetings. Your guidance and support is appreciated.

I wish to express my sincere appreciation and convey my deepest, personal gratitude to Doug Band who will retire from the board this year. For many years Doug served as the lead independent board member and played a critical role in the growth, development and good governance of the operations of the Group. I wish to thank him for his continued wise counsel, his unstinting commitment of time and his sharing and mentorship to all members. Bidvest will deeply miss his input and direction.

Our thanks also to Peter Meijer who retired this past year as Group financial director. Peter stepped into the role following the Bidcorp unbundling and provided the necessary skill and capacity needed for this critical role at a crucial time in the Group’s history. We will forever be indebted to Peter for his significant contribution.

During the year we welcomed Renosi Mokate and Norman Thomson to our board as non-executive directors, while Mark Steyn was appointed Chief financial officer effective 1 March 2018 and joined the board as an executive director. We look forward to your respective contributions and wise counsel.

Lastly, my gratitude to Lindsay Ralphs and his leadership team for the incredible contribution made to the success of Bidvest. Lindsay, and most of his divisional CEOs, have led this Group through much of its 30-year existence. They have ensured we are well positioned to shape our future with the impressive talent we have throughout our 130 000-strong Proudly Bidvest family.

The support given to Bidvest by all stakeholders over its short history must be acknowledged and we thank you all for sharing this journey with the Bidvest team. A special expression of gratitude is extended to our large and diverse customer base. Without you this journey would not have been possible, and we sincerely hope it has been equally rewarding for you.

While we can all look back and be proud of our accomplishments, what matters most is what we do together going forward. The remarkable entrepreneurial capacity we have in South Africa will always remain a feature of our growth. We will continue seeking opportunities and partnerships to ensure our ongoing success, specifically by being able to deliver benefits to as many people in our society as possible.

Here’s to another 30 years.

Lorato Phalatse
Chairman