Directors' report
The directors have pleasure in presenting their report for the year ended 30 June 2022.
Nature of business
The company is an investment holding company, listed on the JSE Limited, with subsidiaries operating in the services, trading and distribution industries.
Financial results
The directors are of the opinion that the financial statements set out on pages 18 to 101 fairly present the financial position of the Group as at 30 June 2022 and the results of its 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.
Acquisitions and disposals
On 25 May 2022, Personnel Hygiene Services Limited UK and Karmarton Limited ROI, wholly-owned Bidvest Group subsidiaries, acquired 100% of the share capital and voting rights in the Mayflower Group of companies for £19.7 million. The acquisition is a “bolt-on” to the Group’s existing United Kingdom and European hygiene and cleaning operations and will extend the Group’s customer base in these regions and result in logistical, procurement and workforce synergies.
The fair value of the assets and liabilities acquired have been determined provisionally for the Mayflower Group (refer note 9.2. acquisition of business, subsidiaries and associates) and resulted in the identification of definite life Customer Relationship intangible assets in the amount of R24 million (£1.2 million). The Multi-Period Excess Earnings Method (MPEEM) using cash flows attributable to the customer related intangible asset was used to value Customer Relationships, which were estimated to have a Remaining Useful Life (RUL) of 12 years. An existing customer attrition rate of 10% was applied to forecasted existing customer revenues. A Weighted Average Cost of Capital (WACC) of 9.9% (6.9% base rate plus 3% premium due to the non-contractual nature of the business) was used in valuation. The residual Goodwill is supported by the identified trained and assembled workforce.
Effective 8 April 2022, the Group re-acquired 100% of the share capital and voting rights in Renfreight Proprietary Limited (Renfreight) from Makana Investment Corporation (MIC). In FY2019 the Group sold its entire interest in Renfreight to MIC for R110 million. The transaction was completed as part of a Broad-Based Black Economic Empowerment deal, which provided MIC an 11% share of the Bidvest International Logistics (BIL) partnership, a leading South African end-to-end supply chain solutions company. MIC used R72 million of the proceeds to settle an outstanding debt owing to the Group (refer disposals note). BIL is currently pursuing an alternative empowerment deal.
The Group also made a number of less significant acquisitions and disposals during the year. These acquisitions were funded from existing cash resources.
On 31 March 2022, the Group disposed of 100% of the share capital and voting rights in Bidvest Namibia United Properties Proprietary Limited (United Properties) for R231 million. The property owned by United Properties was no longer suitable to the Group’s requirements in Namibia.
The Group’s entire holding and voting rights in Cannon Asset Managers Proprietary Limited (Cannon) was disposed of effective 31 August 2021 for R1, following the Group’s decision to exit the asset management market.
Share capital
17 000 000 unissued ordinary shares, 5% of the issued share capital of the company, were placed under the control of the directors at the Annual General Meeting (AGM) held on 26 November 2021. The Company did not issue any shares during the year to settle share replacement and appreciation rights. Further details of the authorised and issued share capital appear in note 13 of the annual financial statements.
Movement in treasury shares
A total of 997 801 ordinary shares were disposed of at an average price of R212,25 per share in settlement of share appreciation rights exercised by staff (2021: 723 803).
Special resolutions
Special resolutions were passed at the AGM held on 26 November 2021 in regard to approval of non-executive directors’ remuneration for 2021/2022, a general resolution to provide direct or indirect financial assistance to all related and inter-related entities in terms of section 44 and 45 of the Companies Act.
Special resolutions were passed by certain subsidiaries to accommodate the acquisition and disposal of various businesses, for the issue and allotment of shares, general authority to provide financial assistance to related or inter-related companies and corporations in terms of section 44 and 45 of the Companies Act and to approve the remuneration of their non-executive directors. A number of subsidiaries further passed resolutions for amendments to their MOIs.
Dividends
The directors declared an interim gross cash dividend of 380 cents (304 cents net of dividend withholding tax, where applicable) per ordinary share paid to ordinary shareholders recorded in the register on the record date, being Friday, 25 March 2022. The dividend was declared from income reserves.
Subsequent to the year-end, the board has declared a final gross cash dividend of 364 cents (291.20 cents net of dividend withholding tax, where applicable) per ordinary share for the year ended 30 June 2022 to those shareholders recorded in the register on the record date, being Friday, 30 September 2022. The salient dates are:
| Declaration date | Monday, 5 September 2022 |
| Last day to trade cum dividend | Tuesday, 27 September 2022 |
| First day to trade ex-dividend | Wednesday, 28 September 2022 |
| Record date | Friday, 30 September 2022 |
| Payment date | Monday, 3 October 2022 |
The dividend will be paid out of income reserves. A dividend withholding tax of 20% will be applicable to all shareholders who are not exempt.
Subsequent event
Bidvest Services International via The Bidvest Group Australia acquired 100% of the ordinary share capital and voting rights of B.I.C Services Proprietary Limited (BIC), effective 7 July 2022. The acquisition price was AUD163 million and funded from the Group’s international bond proceeds raised in September 2021. BIC is a leading provider of niche integrated facilities management services across office, commercial and education sites in Australia. This acquisition is firmly aligned to Bidvest’s stated strategic intent of expanding its international presence in facilities management and hygiene services.
Directorate
The names of the directors who were in office during the period 4 September 2021 to 2 September 2022 are as follows:
| Mpumi Madisa (CEO) | Mark Steyn | |
| Bonang Mohale (Chairman) | Lulama Boyce | |
| Faith Khanyile | appointed 3 January 2022 | Bongi Masinga |
| Sindi Mabaso-Koyana | Renosi Mokate | |
| Gillian McMahon | Zukie Siyotula | |
| Koko Khumalo | appointed 3 January 2022 | Norman Thomson |
Directors’ interest
The aggregate interest of the directors in the share capital of the Company at 30 June 2022 were:
| 2022 R'000 |
2021
R'000 |
|||
| Beneficial | 76 814 | 23 740 | ||
|---|---|---|---|---|
| Non-beneficial | – | 480 040 | ||
| Held in terms of The Bidvest Incentive Scheme: | ||||
| Replacement rights | 57 500 | 57 500 | ||
| Appreciation rights | 80 000 | 80 000 |
Directors’ shareholding
Beneficial
The individual beneficial interests declared by the current directors and officers in the Company’s share capital at 30 June 2022, held directly or indirectly, was:
| 2022 Number of shares |
2021 Number of shares |
|||||
| Director | Direct | Indirect | Direct | Indirect | ||
| NT Madisa | 36 514 | – | 15 532 | – | ||
|---|---|---|---|---|---|---|
| GC McMahon | 23 019 | – | 8 208 | – | ||
| M Steyn | 17 281 | – | – | – | ||
| 76 814 | – | 23 740 | – | |||
The interests of the directors remained unchanged from the end of the financial year to date of this report.
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(h) of the JSE Listings Requirements, the board evaluated Ms Nonqaba Katamzi, the Company Secretary during the 2022 financial year, and was satisfied that she was competent, suitably qualified and experienced. Furthermore, since she was not a director, nor was she related to or connected to any of the directors, thereby negating a potential conflict of interest, it was agreed that she maintained 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.