Chairman's report

This first report back, following my appointment as chairman of Bidvest this year, is being written at a time of uncertainty and sadness. The scourge of COVID-19 continues to affect the entire nation. It has been a tragedy of epic proportions and sadly we continue to receive daily reports of ongoing infections and fatalities.



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Bonang Mohale
Chairman

Our immediate priority and concern during the early days of the pandemic was to ensure appropriate support to protect the lives and livelihoods of the Bidvest Group employees and those in the communities in which we operate.

We initiated numerous programs of assistance and care for our employees, and to many others across the nation. On behalf of the board, our gratitude is extended to the executive teams across the Group, who worked so diligently and with absolute dedication to maintain operational momentum. This ensured the Group companies emerged from the most difficult phase of the pandemic in a relatively stable position, and well placed to return to normal operations when the economy recovers.

We created the Bidvest COVID-19 Fund (Fund) that provided financial assistance to the thousands of Bidvest employees who were unable to work as a result of lockdown restrictions, and the Group's COVID-19 contributions also extended to the most vulnerable in our society. These initiatives took the form of executive salary and board fee sacrifices and other contributions to the Solidarity Fund, food hampers, a national school readiness programme involving the provision of PPE, health and safety supplies and other equipment, as well as collaboration with the SABC on a televised matric learning programme.

Government furlough and other programs provided support for our employees in the UK and Ireland as they were, similarly, unable to work for a period. These well-structured initiatives offered tremendous support to employees, with minimal assistance needed from Bidvest Group companies operating internationally.

Sadly, we lost 35 employees as a result of the pandemic. This has been the most difficult part of the past six months of the year under review, and the board of directors extends its sincere condolences to the families and friends of the colleagues we have lost.

Operating context

Most countries around the world are negotiating the social, political and economic effects brought about by COVID-19, but also by the inequality, corruption, environmental degradation, and many other issues of deep concern. This is prompting citizens to stand firmly behind their respective beliefs and principles.

From an economic and political perspective, the period under review has been a bruising time in South Africa. Policy uncertainty remains a key concern and, together with persistent low economic growth forecasts, the country has seen a series of international credit rating downgrades, with crime and corruption remaining rampant.

The President's leadership during the pandemic has been a difficult task, as this unprecedented event meant we were all learning as we went along. Despite criticisms about the restrictions' government implemented, he and his cabinet members have been firmly focused on protecting the health and safety of our people. The balance between achieving that and ensuring South Africa remains economically viable has been a considerable challenge.

The South African government has, in many respects, risen to the challenge. The national economy was fragile and in a technical recession ahead of the arrival of COVID-19 and the pandemic has compounded the situation with the associated economic and social ramifications now more severe than previously anticipated. However, one of the stand-out features during this crisis has been the collaborative way in which South Africa's social partners have worked together. I have never before seen such a high level of inclusiveness and commitment.

Social partners have identified priority areas for rebuilding the economy, defined immediate actions that will contribute to the recovery and spur business and public confidence, and structural reforms to enable job-rich, sustainable, and inclusive growth. The partners have also agreed on a social compact, which aims to mobilise funding to address Eskom's financial crisis in a sustainable manner - in return for an efficient, productive and fit-for-purpose power utility capable of consistently generating electricity at affordable prices for communities and industries.

The economic recovery action plan identifies the roles and responsibilities of all the social partners - government, community, labour and business - who have declared their commitment to implement the plan. Urgent interventions can rebuild the economy and Bidvest is actively participating in the national workstreams and discussions to achieve this.

Priority focus areas include aggressive infrastructure investment and delivery, improving South Africa's electricity, communications and rail, port and road infrastructure, water security, as well as improving social infrastructure, such as housing, schools and other facilities. All social partners agree that employment-orientated strategic localisation, re-industrialisation and export promotion are also urgent.

Positioned for the economic upswing

Bidvest has delivered areas of excellence in this pandemic-ravaged period. These include outstanding cash generation and asset management, we have maintained our strong balance sheet and overall costs were well controlled. We also concluded the acquisition of the PHS Group in the UK.

While the effects of COVID-19 will persist for some time, we believe some level of recovery will become apparent in the 2021 calendar year, improving into 2022. Bidvest stands ready to participate in this recovery, aided by our scale and diversity. Initiatives to future-fit our businesses are well underway to appropriately capitalise on the new economic environment and deliver reward and growth for all our stakeholders.

At all times we strive to balance the challenging short-term commercial realities with our shared responsibility to the South African economy and all our stakeholders, especially our people. It remains critical that our decisions and actions, albeit sometimes tough, do not impair our ability to grow or impact the health, wellbeing and safety of Bidvest employees.

The management team's recent focus has been to ensure we are ready to contribute to rebuilding the nation and to ensure a sustainable future for the Group, its employees and stakeholders.

Ensuring sustainable business principles

As the Bidvest board, we stand ready to do the hard work required to guide the Group and the Bidvest family safely to the other side of this crisis and to contribute to a rapid economic recovery. We have no doubt we will emerge stronger and more resilient in the long term.

This can only be achieved through careful planning and consideration. The detailed economic recovery strategies ready for roll-out must be recognised and endorsed, where relevant, by respective corporate plans. These should already be in place, or be implemented, to align with South Africa's resurgence. This includes transformation in the workplace and while progress has been made in terms of workplace transformation at Bidvest, there is still has a long road ahead.

The appointment of Nompumelelo (Mpumi) Madisa as chief executive of the Bidvest Group on 1 October 2020 is significant in contributing to the change needed in the country. While strategies and corporate plans are viewed traditionally through a profitability lens, we must also accelerate cultural and gender diversity across the broader business landscape in South Africa.

The board and leadership of Bidvest is certainly proud of the selection and appointment of Mpumi. She has all the right attributes to lead Bidvest forward at a time of great uncertainty, and unprecedented challenges for the company, the nation, and the world. After an 18-month chief executive immersion process, she has demonstrated beyond any shadow of doubt her aptitude and maturity of a world-class CEO. She is authentic, forward-looking, courageous, informed and with a genuinely strategic perspective of her business, her country and the rest of the world. Most notable has been the maturity and insight which she has brought to a number of very difficult issues. Personally, I am confident that Bidvest will benefit from the kind of leadership, agility and full cultural alignment which we believe she is able to practice across the entire organisation.

Value-creation for our stakeholders means we also contribute meaningfully towards South Africa's transformation, education and training, as well as health and sport, while remaining committed to social cohesion. Despite the impact from the pandemic, we invested R360 million to advance the training and development of many people both within and outside the Group. We initiated 9 675 learnership programs and introduced 586 learners into the Bidvest structure.

We extended our notable track record in support of small businesses and enterprise development. We see it as our duty to encourage and support small- to medium-sized business enterprises, considering the scale and depth of our Group-wide supply chain. Over the years, we have built long-term partnerships with a range of organisations and associations directly affected by Bidvest, and we nurture these relationships and continually look for ways to enhance the partnership.

Accepting our place in the larger economic ecosystem of stakeholders, we direct our corporate citizenry efforts in many different ways. We acknowledge these might only return a benefit in future years to come, but these actions are aligned to ensure that Bidvest is able to help address socio-economic challenges in South Africa and that, as social partners, we focus on ensuring shared prosperity to address the pressing challenges of poverty, inequality and unemployment.

Appreciation

We recognise and understand the depth of fear and anxiety in South Africa, specifically as we face a daunting and uncertain future. But, if history has taught us one thing, it is that fear also brings hope. Our hope is that COVID-19 brings the nation together to achieve sustained growth - working together through the economic and social compact to ensure a collaborative approach between business, government, labour and civil society. Wherever possible, all South Africans should work collectively and inclusively to steer us into an exciting and rewarding future.

The board remains confident of Bidvest's ongoing performance and its planned strategic intent, which is expected to deliver enhanced benefit to the business and its stakeholders over time. The Group's ongoing growth momentum and management's focus on ever-improving returns will ensure an expansion of requisite funding sources, ultimately reducing our cost of capital and improving profitability.

My sincere gratitude is extended to Lindsay Ralphs, the outgoing chief executive. Lindsay has been a dedicated Bidvest leader over the years and will be remembered for the significant part he played in the growth of the Group. His 28 years of Bidvest service have been devoted to always delivering the best for the Group and leading from the front in all material respects. This included ensuring benefits are distributed to the Bidvest stakeholder universe, whether client, partner, employee, shareholder, government, or community. His role in mentoring and preparing Mpumi over the 18 months of her tenure as chief executive-designate, has been exemplary and will serve the greater Group for many years to come.

I thank my fellow board members for their guidance, specifically during the time when I assumed the chairmanship. The unstinting giving of your time and advice has been invaluable and will not be forgotten.

To the executive management teams across the Group and to the greater Bidvest family, I thank you for your efforts and continued focus during this unsettling and disruptive year. Your contributions are noted. Your efforts will ensure we are capable of #EmergingStronger, together.

Bonang Mohale
Chairman