Divisional reviewsBusiness servicesServices International

The creation of this division enables management to provide greater focus on the fledgling international portfolio, which is focused on the hygiene and facilities management sectors, while further expanding Bidvest’s footprint through the acceleration of the international growth strategy.

Trading profit is almost equally split between hygiene and facilities management. The offshore businesses delivered strong results, with contributions from the bolt-on acquisitions concluded towards the end of the previous year and benefits of scale materialising, leading to new business being secured. Since Bidvest’s acquisition of Noonan, the bolt-on acquisitions which have expanded its UK footprint and broadened its service offering, together with strong organic growth, resulted in trading profit and return tripling since 2017.

The SA businesses’ performance was solid. The market has started normalising after the significant demand for wellness and hygiene products and services during and immediately after the pandemic period.

The division’s cash generation and cash conversion has been exceptionally good, while the focus on maintaining margins through active pricing is progressing well. There has been an enhanced focus on efficiencies and operating methodologies, specifically adopting technology-led innovations within most businesses. This product and service innovation, underpinned by technology and sustainability, will be a key enabler for continued efficiency enhancement.

The post-year-end acquisition of BIC is important in that it provides the platform from which to grow niche offerings in that region and adds geographic diversity. BIC has developed a vertically focused, client-centric business model, which is supported by a web-based reporting system that can be integrated into client systems and an interactive customer experience platform.

Facilities management services delivered excellent results, particularly in Ireland and SA on the back of strong new business wins. Focus on particular segments continue to yield benefit. The demise of pandemic spending resulted in a muted performance from cleaning activities but new business secured has created good momentum into the new financial year.

PHS and Steiner are the hygiene services businesses. The end of COVID-19 related work impacted the business particularly in the last quarter. The energy crisis in Europe has also been detrimental while supply chain issues remain a challenge to deal with. The underlying hygiene pool grew and Steiner finished the year stronger.

Looking forward

Hygiene services remain in demand. Steiner’s focus on growing existing, smaller accounts is gaining momentum, while a focus has also been placed on pricing strategies. PHS’ new business development has been successful with consumables being an exciting new focus area. The non-repeat of pandemic-related work is expected to be broadly neutralised by higher office occupancies, scale opportunities, growth in focus segments and efficiencies.

The facilities management business is building strong expertise in telecommunications, which will remain a focus sector in SA moving forward. Office occupancies are normalising in the UK and Ireland, as well as in SA albeit at a much slower pace, but remain significantly below pre-Covid-19 levels. Noonan has a clear strategy to deliver additional services into the client base and secure new customers given its wider geographic reach.

Contributions will also emerge from recent bolt-on acquisitions, including Mayflower, a hygiene consumable business in the UK, and Service Royale, a hygiene company that expands the regional base in SA’s KwaZulu-Natal Province. The acquisition of BIC by Bidvest will combine experience, knowledge and global best practice to strengthen the offering to BIC’s current and new clients in Australia.

Across the division synergies identified will be pursued and expenses and margin optimised on contracts. Management is very focused on pricing across its very large customer base.