Chairman and CEO's report

From left to right: Eric Diack (Chairman), Mpumi Madisa (CEO-designate), Lindsay Ralphs (Chief executive)

From left to right: Eric Diack (Chairman), Mpumi Madisa (CEO-designate), Lindsay Ralphs (Chief executive)

Bidvest continued building value through the quality of its diversified model. Our diversification ranges across our chosen operating sectors and also in ensuring a healthy balance between the Group’s services and products. We believe this combination of offering and capability serves us well and positions Bidvest to continue thriving in coming years.

Annuity-type businesses has grown from 47% (2016) to 64%

Trading margins increased by 27 basis points to 9%

Spent R133 million on enterprise and supplier development

Increased Adcock Ingram stake to 50% from 38%

Spent R439 million on skills development

Dividends to shareholders increased 8%

We are proud of the past year’s results. This is despite most markets in which we operate continuing to be affected by weak economic growth and significant business and fiscal uncertainty and volatility.

The benefits of our well-diversified portfolio are evident and clearly demonstrate the Bidvest credo. Where certain divisions delivered pleasing trading profit growth, others were more severely˛affected.

The Group’s business mix is changing, largely due to our intended focus on increasing annuity-based service offerings. In this past year, 39% of Group revenue related to services, while some 61% was from product sales. At the profit level, however, this changes: 68% of trading profit is derived from our various services and 32% from the products we sell. This ultimately enhances margin and return, which is an important imperative for Bidvest’s leadership.

Our strength is our diversification and we are mindful that some sectors in which we operate are undergoing major transformation, driven in the main by technological innovation and changing customer demands. We always aim to maximise our portfolio and we adapt where necessary. We see transformation as an opportunity in terms of our ongoing growth ambition.

Strategically, we will continue increasing income from our annuity-type businesses, the share of which has grown to 64% this year, from 47% in 2016.


While our strategy is being advanced through considered diversification, we are embedding innovation as a core imperative throughout the Group. At the same time, we are transforming our board, leadership and employee profile, while honouring and retaining our recognised entrepreneurial spirit and decentralised management philosophy.

These elements will all contribute to a different Bidvest in future years – albeit a Bidvest that remains diversified, continues to contribute to a better society wherever possible, and delivers superior value to stakeholders.

There are several examples underway within the Group where disruptive technologies and trends – including interconnection, robotics, and artificial intelligence (AI) – are changing the way Bidvest operates and prepares for the future. In essence, we are disrupting ourselves. This includes conducting the Group’s internal audit via an internally developed AI capability, known as ALICE. Within the Office and Print division, most processes are now digital, and the Services division is using drone surveillance for an enhanced security and infrastructure inspection offering. The Electrical and Automotive divisions are, respectively, increasing the renewable energy product portfolio and providing keyless vehicle entry in the rental business.

These innovative developments, among many others, point to the emergence of a future-fit Bidvest. A Group that is adapting and positioning itself for a future that is somewhat different to when Bidvest was founded, over 30 years back.

This repositioning of the Group is accelerating at a rapid pace. Our commitment to investing in South Africa is unwavering and we are focusing many of these investments on digital innovation.

Investing in our future

Bidvest’s foundation in 1988 was at a time of tremendous political and economic instability. We have found that it is during these times that opportunity is often presented, and together with due and careful consideration, possibility becomes reality in our objective of maximising the portfolio. We believe we are at that juncture in South Africa. While Bidvest is ideally positioned to pursue sustainable growth and create value where our roots are embedded, we will do this in support of the nation’s development ambitions.

Bidvest supplies into a multitude of business in the mining and minerals, infrastructural development, agricultural, tourism and many other sectors, which are poised for potential rejuvenation, driving job and wealth creation and eventually enabling a better consumer environment.

We are investing R1 billion in a storage facility that will increase LPG supply by about 50%, which will radically change the dynamics of this component of our energy industry. The project is proceeding as planned with commissioning on track for mid-2020.

The health care industry is another national imperative and we increased our Adcock Ingram stake to 50% from 38%. We had considered selling our interest to create an important, black-owned, pharmaceutical supplier, but the requisite funding in this economic environment proved onerous. We have increased our participation on the Adcock Ingram board and we’re becoming more active shareholders. Its operating and financial performance over recent years has been very pleasing. We believe there is a great opportunity to extract additional value from continuing to serve this industry, which is undergoing significant change.

Similarly, the approximately R3 billion Eqstra acquisition is expected to be an important future contributor. Eqstra, which is a fleet leasing and management solutions business, will enable some exciting synergies between our Financial Services, Automotive (vehicle sales and maintenance) and Services (BidTrack) divisions, amongst other possible opportunities within the Group.

We continue to invest in facilities, product and service lines. We are seeing pockets of opportunity and we are actively assessing numerous possibilities: supplying into renewable energy wind farms that will, collectively, benefit our Freight, Commercial Products and Electrical divisions, is another good example.

In our view, it is only when South Africans lead the way, and the public and private sectors find common ground together to invest and achieve GDP growth, that we might expect foreign investment to follow.

Over the past four years, expenditure on acquisitions has been approximately R11.5 billion, mostly in South Africa (Noonan being the exception), and we invested nearly R6 billion in growth capital expenditure – all in South Africa. Over the same four-year period, dividends paid to shareholders have amounted to R5.7 billion. Operational cash flow for the four years has totalled R15.8 billion.

Year in review

Group trading profit for the year increased by 4% to R6.7 billion despite flat revenue of R77.1 billion. Exceptional cost and capital discipline, together with improved margins, were highlights against a fairly unpredictable trading backdrop.

The trading margin increased by 27 basis points to 8.7%.

Headline earnings per share (HEPS) increased by 10% to 1 352.1 cents compared to last year’s 1 231.6 cents. Normalised HEPS, a key metric we use to assess the underlying business performance, grew by 5%.

The Group gross profit margin improved to 29.8% (28.9%). It is pleasing that we increased both our gross and net margins and, overall, the distribution-type businesses grew margin, despite input cost volatility and fierce competition. The wholesale and distribution businesses’ gross profit margin has improved to 23% this past year from 19.6% in 2016.

Margins are a big focus area for the leadership team, particularly at times like these when the exchange rate fluctuates wildly.

Equally important, is our return on funds employed (ROFE) measurement, which was pleasing this year with notable highlights from the Services, Freight and Office and Print businesses. The Group’s overall ROFE improved to 23%.

The dividend payment policy is intact and remains a key component of returning value to shareholders. We declared a final dividend of 318 cents per share, bringing the total dividend for the year to 600 cents, up 8%.

We are also pioneering in some instances. Additional and better energy options, for example, are paramount for South Africa and we are advanced on a project to transform Liquid Petroleum Gas (LPG) supply in South Africa.

Divisional delivery


The Services division delivered a strong result. There was a 10% increase in revenue, trading profit was up 13% and the management team continued to ensure strict cost control. EBITDA was up 11% at R2.7 billion and cash generation was excellent – ROFE rose to an impressive 87%. The Republic of Ireland-based Noonan, which continues to perform above our original expectations, delivered very good results. The outcomes from South African annuity-type businesses were pleasing, specifically Facilities Management and Protea Coin, which were the stand-out performers. Steiner, BidAir Services, BidAir Lounges, BidTrack and the Allied Services cluster were among the units that performed well. The businesses within the Travel cluster are under pressure, however.


The Freight division delivered a good result on higher bulk and liquid commodity volumes handled through South Africa’s ports. Revenue was up 6% and trading profit was 4% higher: annuity-based business is responsible for some 40% of trading profit. EBITDA was up 1% to R1.6 billion and the ROFE was 41%. The results included good performances from Bidvest Tank Terminals following improved tank rentals and pleasing cost control, and Bidvest Port Operations after higher volumes flowed through the Durban operation. Higher bulk commodity volumes were handled in a newly refurbished terminal at the Durban port, which is achieving 30% to 40% higher efficiencies. Maize volumes were low as South Africa’s equilibrium between imports and exports is currently stable.

Office and Print

Office and Print’s result was pleasing. Revenue was up 1%, trading profit higher by 5% and EBITDA amounted to R863 million, some 3% higher on last year. ROFE was stable at 33%. This is a commendable result considering the significant challenges in this sector and the loss of a major contract last year.

Commercial Products

The Commercial Products division had a challenging year. Revenue was 2% higher, trading profit was 7% lower and EBITDA was down by 11% to R727 million. ROFE reduced to 25%. The consumer-type businesses did well, largely as a result of the quality brands and products supplied, but the industrial cluster took strain, although the niche businesses such as Burncrete and Plumblink did well.


The Automotive division also had a tough year. However, stringent and focused initiatives by the team controlled the situation to some extent. Revenue was down by 5%, but trading profit was 1% higher and EBITDA rose 2% to R832 million, at a stable ROFE of 15%. Bidvest McCarthy sold 5% fewer new vehicles and there were similar challenges in the number of used vehicles sold, while the luxury car market was particularly hard-hit. The past year’s highlight was Bidvest Car Rental’s pleasing performance, delivering a significant turnaround.

Financial Services

Financial Services had a reasonable year but faced the headwinds from fleet contracts rolling off, poor insurance claims and disappointing investment portfolio returns due to the negative impact on JSE equities. Revenue rose 5%, trading profit was 8% lower, and EBITDA declined 4% to R836 million. ROFE was lower at 16%. Bidvest Bank grew trading profit 3%, with business and personal banking showing good signs of potential growth. The core business – fleet leasing and foreign exchange – is commanding significant attention and management time, with some large new contracts recently secured.


The Electrical division continues to face the challenges of a severe downturn in the construction industry and lack of infrastructure spend in South Africa. Revenue was impacted – down 6% – and trading profit was a significant 14% lower. EBITDA was some R300 million and ROFE declined to 13%. We have an exceptionally experienced management team in this division, leading industry products, and an order book that is growing. We will exercise patience for the return to spending and development in this country.


Our corporate business is largely a significant property portfolio, valued at about R8 billion, which reported trading profit up 15% on last year. The portfolio is largely occupied by Bidvest Group businesses.

We made a successful offer to acquire all the shares from Bidvest Namibia minorities and the entity has been delisted from the Namibian Stock Exchange.

The disposal of our 6.75% stake in Mumbai International Airport is progressing. This has been valued at USD86 million representing the fair value less cost to sell, as per the signed agreement.

Enviable balance sheet

Another Group imperative is a strong balance sheet. We continue to maintain a conservative approach to gearing and net debt levels are considered acceptable at R7.8 billion (2018: R6.3 billion). This provides ample capacity for further expansion.

Cash generation and asset management remain core, particularly in these challenging times.

We continue to engage financial institutions to provide robust debt structures for our growth ambitions.

A solid balance sheet enables ongoing investment in our chosen sectors, ultimately to generate sustainable profits for the long term.

Steadfast stewardship

We employ 123 841 people and have spent R439 million on skills development. While our diversified strategy, successful operating competence and strong balance sheet are collective components of a sustainable future, the training and development of the Bidvest family is equally critical. There is considerable attention focused on ensuring the appropriate skills base throughout the Group – key skills shortages have been a South Africa-wide threat over recent years. It is pleasing that we are achieving success and are adequately staffed in critical areas of the business to ensure no disruption to operations.

We continue to enhance governance practices, which included a change in the external auditor over the past year. We remain comfortable that our stewardship and governance policies and practices are conducive to the effective, ongoing, performance of the Group.

Operating sustainability also forms part of our day-to-day operational agenda and examples of this include the broadening of our alternative energy product range in Electrical, non-plastic packaging in Office and Print, and water management in the laundry business within Services, among many other initiatives.

One unit

While diversified by sector, service and product, earnings stream and, ever more so, geography, we work expressively and collectively as one unit to unlock new value for all stakeholders.

Our philosophy is to have an unwavering, disciplined approach to the way we run our business. Whether that’s right-sizing, or controlling expenses, whether it’s asset management, or being careful about our due diligence and acquisitions, or even whether we’re cautious about international expansion.


During the past year, Lorato Phalatse stepped down as Chairman and a non-executive director of the Group and Nosipho Molope resigned from the board, while Doug Band retired. On behalf of the board, we express our sincere gratitude and appreciation to the departing board members, especially to Lorato who served the Group as chairman for the past six years.

Bonang Mohale was appointed an independent non-executive director with effect from 1 July 2019.

The board has appointed Mpumi Madisa as Chief Executive-designate and she will assume the leadership role during the 2021 financial year. Mpumi personifies the Bidvest philosophy of developing entrepreneurial leaders from within to take the Group to its next phase. This appointment is consistent with our succession plan, executed over the past several years, to mentor and extend the preparation for her new role. Her exceptional leadership skills and depth of experience will ensure continuity for all Bidvest stakeholders.

While our values unite the Bidvest family of people, it’s the overwhelming commitment and response from our team – year after year – for which we are extremely grateful. Without it, we simply would not be able to provide acceptable returns on a regular basis. Our strong position and the exciting future ahead, is due to the energy and commitment of our management and employee teams.

Bidvest is often the subject of baseless social media rhetoric that relates largely to political positioning. As a Proudly Bidvest family, we will always remain true to our values, our ethics, and our established corporate philosophies, while maintaining a focus on delivering into our strategic pillars.

We are extremely grateful to all the members of the board of directors for the wisdom, perspective and diversity of experience they bring to our business and our governance processes. The Bidvest management team is continually challenged on our strategy and business operations, through to our stewardship and other endeavours and we often emerge with plans that are more robust and relevant to the Group and our stakeholders.

Lastly, we thank our shareholders, our large customer base and all other partners within our operating and divisional units. You are the reason the Bidvest Group exists, and we hope we have been serving you with distinction and reward.

We firmly believe we have the appropriate strategy, an attractive asset portfolio, the core competencies and drivers that are firmly intact, and we have the right team to execute the opportunities ahead that will allow us to continue creating value.

Eric Diack


Lindsay Ralphs

Chief executive

We have also had tremendous success in terms of our broadbased black economic empowerment (B-BBEE) initiatives. The Group spent R133 million on enterprise and supplier development. More than 50% of our businesses are rated B-BBEE level 1 and 2, while 80% of our businesses score level 4 and above. This is a commendable achievement.