The BIDVest Group Limited Annual Report

The BIDVest Group Limited 2001 Annual Report The BIDVest Group Limited is an investment holding company listed on the JSE Securities Exchange South Africa in the Industrial – Service sector. The strategy of the Group is to be invested in companies operating in the fields of service, distribution and trading, which could encompass light manufacturing. The Group’s objective is to enhance shareholder wealth through real growth in earnings and dividends per share by means of organic growth, selective acquisitions and control of funds employed. The Group’s philosophy for motivating management is based on a decentralised structure with strong incentives to exceed realistic profit goals. THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT C ONTENTS PAGE The history of Bidvest Group financial highlights Financial indicators Objectives Chairman’s review Directorate Divisions of Bidvest Review of operations Economic empowerment and social responsibility Corporate governance Management directory Value added statement Exchanges with governments Financial statements Analysis of shareholders Major shareholders Notice to shareholders Administration Shareholders’ diary Form of proxy 2 4 6 7 8 20 24 26 82 90 94 100 100 101 140 140 141 144 144 Attached PA G E 1 T HE HISTORY OF B IDVEST BIDCorp BIDCorp 1991 Acquisition of Steiner Services – beginning of the hygiene business. 1990 Bidcorp becomes the pyramid holding company of Bidvest. 1989 Real start of Bidvest. Acquistions include Afcom. 1992 Crown Mills acquired and merged with National Spice to form Crown National. 1993 Safcor Freight acquired – the start of Bidfreight. Prestige Cleaning Services acquired and grouped with Steiner to form Bidserv. 1994 Rights offer raises R300 million, 10 for 1 share sub-division. 1997 100% of Waltons Stationery Group acquired, Bidcorp unbundled and Bidvest incorporated into the industrial index. 1996 Empowerment programmes begin with Women Investment Portfolio Holdings and Worldwide African Investment Holdings. 1995 First steps to international expansion taken – 50,1% of Manettas was acquired and renamed Bidvest Australia. 1998 Bidvest plc, incorporating Bidvest Australia, was created with dual listings in Australia and Luxembourg. Local acquisitions include the Rennies Group and Lithotech. 1999 Booker Foodservice was acquired and renamed as 3663 First for Foodservice and incorporated into Bidvest plc. PA G E 2 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT History 1988 Chipkins is the first acquisition followed shortly thereafter by Seaworld, the start of the Caterplus division. 2001 John Lewis Foodservice acquired and incorporated into Bidvest Australia, making them the leading foodservice distributor in Australia. The group-wide network, Bidnet, developed by I-Fusion was rolled-out and mymarket.com, Bidvest’s e-commerce initiative, was launched. The Group was simplified and reclassified for clarity of focus and to set the platform for future growth into three umbrella divisions: The Services Division, The Foodservice Products Division and The Commercial Products Division. The Services Division The Foodservice Products Division 2000 Acquisition of Island View Storage, banking licence granted to Rennies Bank, and 76% of I-Fusion acquired. Bidvest plc enters the New Zealand foodservice market with the acquisition of Crean Foodservice in April 2000. The Commercial Products Division PA G E 3 G ROUP FINANCIAL HIGHLIGHTS Ten year compound growth rates % per annum EXTRACTS FROM FINANCIAL STATEMENTS (R’000) Revenue Operating income Income attributable to shareholders Shareholders’ interest Total assets Wealth created by trading operations SHARE STATISTICS Headline earnings per share (cents)1 Distribution per share (cents) Distribution cover (times)2 Distribution yield (%) Share price (cents) High Low Closing (June 30) Market capitalisation (Rm’s) Volumes traded (000’s) Volumes traded as percentage of weighted number of shares in issue (%) RATIOS AND STATISTICS Return on shareholders’ interest (%) Return on average funds employed (%)3 Operating income margin (%) Current asset ratio Quick asset ratio Number of employees Number of shares in issue (000’s) 33,4 49,2 2 2 2001 2000 1999 53,2 44,8 51,1 29 415 011 1 434 093 1 045 879 4 041 911 9 730 414 5 079 204 26 427 620 1 223 660 894 384 3 199 823 8 109 428 4 515 902 14 646 145 720 496 667 003 3 146 201 7 642 434 2 692 295 30,5 30,8 365,4 169,2 2,1 3,4 310,0 150,3 2,1 3,2 1 105 6 550 3 620 4 680 13 555 104 122 36,1 245,7 127,3 2,1 2,5 1 098 5 400 2 910 5 040 14 435 89 262 32,9 Net tangible asset value per share (cents) 27,4 1 247 5 200 4 075 5 010 14 821 99 096 34,0 32,7 43,1 4,9 1,2 0,9 54 251 295 821 28,4 41,2 4,6 1,1 0,8 50 941 289 638 23,5 39,9 4,9 1,2 0,8 50 132 286 418 PA G E 4 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Highlights 1998 1997 1996 1995 1994 1993 1992 1991 7 432 920 501 391 408 176 2 833 451 4 109 085 1 610 681 5 069 948 285 530 220 737 1 780 559 3 253 719 899 879 4 166 682 219 534 168 288 815 154 1 583 217 696 702 3 432 155 168 468 126 480 612 351 1 187 579 524 636 2 560 707 118 070 90 571 506 920 979 385 412 828 775 206 70 515 37 169 435 816 745 887 224 924 595 994 60 054 26 378 138 025 387 273 175 299 411 694 35 377 16 898 107 064 321 639 104 350 174,4 101,3 1,8 2,2 1 147 5 980 3 250 4 525 11 282 64 413 27,5 128,3 70,8 1,9 2,0 781 3 535 2 275 3 500 8 030 26 456 14,2 104,6 56,1 2,6 2,2 445 2 956 1 838 2 590 4 681 13 997 7,8 81,7 43,0 2,8 2,3 349 2 000 1 450 1 875 3 294 8 140 4,7 59,7 30,2 2,9 2,1 296 1 470 780 1 470 2 502 11 061 6,5 40,0 21,0 2,6 2,7 261 780 343 780 1 301 1 186 1,1 29,3 16,4 2,5 4,1 140 400 250 400 391 4 877 5,0 25,6 11,5 2,5 4,1 111 283 180 280 271 1 247 1,8 22,9 37,0 6,7 2,8 2,1 31 420 247 095 1 29,4 53,4 5,6 2,0 1,5 30 001 228 027 30,7 56,2 5,3 1,9 1,5 21 506 183 041 27,9 57,5 4,9 1,9 1,5 14 970 175 701 23,2 48,1 4,6 1,8 1,5 14 117 171 131 31,4 29,0 9,1 2,0 1,5 4 749 166 775 28,5 28,8 10,1 2,5 1,4 4 784 98 552 68,6 37,9 8,6 1,7 1,0 2 226 96 266 Based on weighted average number of shares in issue. Includes interim dividend paid, capitalisation issues at market value, distributions of share premium and final distributions approved after the year-end. Return on average funds employed is calculated using the weighted average of the Group’s operating assets, excluding cash, and operating income before interest and taxation. 2 3 PA G E 5 F INANCIAL INDICATORS Revenue Rbillion 30 25 20 900 1 500 1 200 Operating income Rmillion 1 200 1 000 800 600 600 Attributable income Rmillion 15 10 5 0 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 300 0 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 400 200 0 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 Headline earnings per share cents 400 350 300 250 200 150 100 50 0 Distribution per share cents 200 1 400 Net asset value per share cents 150 1 050 100 700 50 350 0 0 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 Total assets Rbillion 10 9 8 7 6 5 4 3 2 1 0 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 0 500 1 000 1 500 2 000 Cash generated by operations Rmillion 16 14 12 10 8 6 4 2 0 Market capitalisation Rbillion ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 PA G E 6 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT O BJECTIVES w w w w w w w w Bidvest plans to use its South African ‘engine’ to seek acquisitions and organic growth opportunities that fit with the business focus of its three umbrella divisions. Bidvest will continue to make strategically defensive investments in complementary businesses operating in similar fields where such an investment would yield a satisfactory return. Bidvest plans to harness the benefits of being an international, multi-business company through the cross-pollination of ideas and expertise, in its drive to deliver ongoing shareholder value. Through Bidvest plc the Group will expand its foodservice interests in the markets in which it is currently active. Further expansion opportunities will be sought in continental Europe and the United States of America. Bidvest intends to continue its tradition as a learning corporation and, through its divisions, to train and develop its staff in not only the expertise necessary for the job, but also in life and leadership skills. Through mymarket.com Bidvest intends to develop a culture that is ready to embrace technology and adapt to the Group’s business models. This e-commerce initiative is a long-term project from which no profit is expected in the immediate future. Bidvest intends to substantially increase its international shareholder base. Bidvest aims to cautiously increase its debt and would feel comfortable with a debt-to-equity ratio of up to 40%. PA G E 7 C HAIRMAN ’ S REVIEW Brian Joffe Chairman We have simplified the Group for clarity of focus and to set the platform for future growth PA G E 8 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Chairman’s review I NTRODUCTION Bidvest has achieved success through its dedicated people being able to operate internationally in a decentralised, entrepreneurial and incentivised environment with the same culture and spirit as that of a small business. Due to the diversity of our businesses, which are dynamic, complex and perhaps difficult to understand, we have simplified the Group for clarity of focus and to set the platform for future growth. I am proud of our achievements in the face of extremely difficult trading conditions in the review period and I am as confident about our future as I was at the time of the creation of the Group in 1988. The fundamental forces that drive Bidvest continue to be valid and our ability to assess and take opportunities combined with our financial strength will ensure that our goals continue to be achieved. Each division in the Group has developed its key value drivers of service, product and geographical diversity, distribution, technology and intellectual capital and we are well positioned for potential market consolidation and for local and international expansion. Regulatory effects The existing regulatory framework needs to be addressed to make the business process in South Africa easier and more user-friendly. The current restrictive Exchange Control legislation has a negative effect on foreign perceptions of South Africa and on our people and corporations. This situation not only shrinks the local economy, but results in an outflow of intellectual and financial capital, which is not easily replaced. This issue needs to be solved as a Gross Domestic Product growth forecasts for South Africa continue to be revised downwards and the current consensus for the 2001 financial year ranges between 2,8% and 3,3%. Additionally, South Africa’s excessively high crime levels have not abated and the negative effects on both the financial and social stability of the country continue to be felt. Until the country finds a solution to this problem, we believe that South Africa’s growth potential will be limited. Business conditions in South Africa were extremely tough although we did see a slight improvement in the third quarter of the review period. M ARKET OVERVIEW priority and we await the time when there will be a free flow of funds into and out of South Africa. In a country with near crisis levels of unemployment, the existing labour legislation, the labour environment, and the costs relating thereto, do not encourage job creation and employment. Employee rights must be upheld, but the legislation should be more flexible and should cater for the rights and interests of employers as well. Economic conditions World economic growth slowed down towards the end of last year, and the South African economy has not and will not be exempt from the negative consequences. Import volumes dropped and weaker international demand negatively impacted on export volumes. However, the depreciating rand helped soften the blow. PA G E 9 Chairman’s review The Group is well positioned for potential market consolidation and for international expansion As an employer of approximately 54 000 people we look forward to the anticipated legislative amendments. South Africa is in a transitional phase and a necessary part of the social miracle is a proactive empowerment strategy, which Bidvest wholly supports. However, we believe the current demands and possible legislation place unrealistic burdens on business and that the existing standards are not a true reflection of empowerment. Enormous wealth has been created for the Group’s known empowerment shareholders some of whom have liquidated their positions. There are yet others who have indicated their intention to sell their shares and as none of these empowerment groups will reflect on the shareholder register, we will not be acknowledged for the wealth created for them. Approximately 90% of the shares of Bidvest are held by institutions and the extent to which these institutions w may be managing or holding these shares for the benefit of economic empowerment groups or the previously disadvantaged, is not known. In order to be classified as an empowerment vehicle, an empowerment shareholding of at least 25% seems to be required. This requirement is impractical in our case as, due to Bidvest’s size, there are not many organisations, which could afford to take such a large stake in the Group, and even if any were able to do so, they always have the right to sell their shares should they so wish. Furthermore, the uncertain empowerment criteria inhibit foreign companies from investing in South Africa and limit the much needed direct foreign investment. Empowerment should not be determined by percentages, but should be measured on the rand value of projects, wealth created, educational initiatives and skills development. PA G E 1 0 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT We have recommended a ‘star rating’ system in which companies are independently and objectively rated according to their achievements in terms of ‘real’ empowerment of previously disadvantaged groups against a predetermined set of standards negotiated by all relevant stakeholders. Under this system companies would submit their empowerment initiatives to an independent body for objective evaluation and would be rated on a scale as a one to five star empowerment company. Tenders and government spending would be awarded on the basis of this rating. level from the end of 1999 to the end of 2000. A strong rally in share prices in December 2000 carried through into 2001 and pushed the All Share Index to a record high in February 2001, falling in July and August 2001. Within the Industrial – Service sector, Bidvest is by far the largest organisation with a market capitalisation of R14,8 billion, which is substantially higher than its closest rival. Bidvest carries the JSE’s highest liquidity rating and is the third largest Industrial company by market capitalisation on the JSE. Bidvest shares are currently held by 91 unit trusts. The Morgan Stanley Capital International Emerging At this point in time the proposed Capital Gains Tax is yet another hindrance to business in South Africa. For a dynamic group such as Bidvest, which changes and evolves as circumstances require, the bureaucracy involved severely limits the ability to quickly adapt to changing market conditions. Capital Gains Tax has enormous administrative and adverse financial implications and will restrict growth as acquisitions, disposals and ongoing restructuring become more difficult and unduly costly. In order for an economy to succeed there needs to be a mix of both big and small business. Whilst we support the current small business development initiatives, we believe that big business should not be neglected as these businesses are major employers, provide much of the country’s infrastructure and need to be allowed to grow to enable them to compete on an equal footing with the large multinationals in the rest of the world. Furthermore, they are able to operate in offshore financial markets, are responsible for a large percentage of the country’s exports and provide the fertile ground upon which smaller businesses can grow and flourish. JSE Securities Exchange South Africa (“JSE”) Share prices fluctuated extensively on the JSE, but on a net basis there was no gain in the overall share price Market Index was recently recalculated and could result in portfolio reweightings both for South African equity investments and Bidvest, as due to our substantial free-float, Bidvest’s weighting in the index should be increased. The move to the adjusted indices will take place in a phased fashion with 50% of the changes taking place in November 2001 and the balance in May 2002. The Company officially transferred to the STRATE system of electronic settlement on the JSE on Monday, August 20 2001 (the dematerialisation date), with electronic trading commencing on Monday, September 3 2001 for settlement on Monday, September 10 2001. F INANCIAL REVIEW Bidvest has reported earnings at the lower end of analysts’ expectations, but we believe we have done well given the current trading environment. I-Fusion performance has been disappointing and had a negative effect on Bidvest’s earnings during the period under review and reduced our earnings per share by approximately 2,8 cents. The I-Fusion business is in the process of being downsized to focus on a narrow band of activities. PA G E 11 Chairman’s review We believe we have done well given the current trading environment BIDVest w The Services Division The Foodservice Products Division The Commercial Products Division Headline earnings increased by 19,1% to R1,065 billion (2000: R894,4 million), exceeding a billion rand for the first time, whilst headline earnings per share increased by 17,9% to 365,4 cents (2000: 310,0 cents), which largely reflects organic growth. A compound growth rate in earnings per share over the past ten years of 30,5% has been achieved. Bidvest plc, the Group’s 78,4% held offshore subsidiary, contributed 18,8% (2000: 15,6%) to the Group’s operating income and 14,6% (2000: 11,2%) to headline earnings. Revenue grew by 11,3% to R29,4 billion (2000: R26,4 billion) and the operating margin improved to 4,9% (2000: 4,6%). Income attributable to shareholders increased by 16,9% to R1,046 billion (2000: R894,4 million). The cash flow generated by operating activities increased by 49,4% to R1,127 billion (2000: R754,6 million) resulting in the Group having R1,058 billion (2000: R536,3 million) available to finance future activities. Net capital expenditure on fixed assets increased by 8,3% to R496,0 million (2000: R457,8 million) for the period under review. Capital items amounting to R19,5 million (2000: Nil), have been written off. The amortisation of goodwill (R12,4 million) and associate companies share of goodwill costs (R4,1 million) have been written off as a result of changes in the basis of accounting in line with South African Generally Accepted Accounting Practice. In prior years goodwill was written off directly against distributable reserves. The net tangible asset value per share increased by 12,9% to 1 247 cents (2000: 1 105 cents) and distributions to shareholders were increased by 12,6% to 169,2 cents per share (2000: 150,3 cents per share). PA G E 12 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT VALUE STRATEGY – S ERVICE , F OODSERVICE P RODUCTS AND C OMMERCIAL P RODUCTS Bidvest’s value strategy has always been to be invested in companies operating in the fields of service, distribution and trading. The strategy began with the acquisition of Chipkins Catering Supplies in 1988. The focus since then has been to create an ‘engine’ driving the growth of the underlying businesses by harnessing cash flows, using the benefits of critical mass to make acquisitions, to grow and to deliver shareholder value. It is time to position the underlying divisions within their own focused industry sectors to build further critical mass to succeed nationally and internationally as stand alone entities, and to develop the engines that will generate their own long-term sustainable growth and increased shareholder value. In order to create a better understanding of the Group, we have reclassified the Group’s activities into three umbrella divisions: Services, Foodservice Products and Commercial Products, without changing in any way the management focus of the underlying businesses or divisions and without any intention to unbundle the operations. These divisions will continue to use the South African engine to seek acquisitions and organic growth opportunities that fit within their business focus. To give an indication of the scale of these operations, they have an operating income, including income from associates, of R611,8 million (Services), R446,5 million (Foodservice Products) and R311,4 million (Commercial Products). The spirit of entrepreneurship, decentralisation and opportunism continues. We believe that an incentivised management should be encouraged to retain its entrepreneurial spirit and a decentralised structure will continue to breed greater responsibility and accountability and ultimately, greater business success. These values put a small business heart into a big business organisation and creates an environment in which management can proactively turn opportunities into positive results. Bidvest demands excellence and strives to keep itself free from bureaucracy and the restrictions of ‘red tape’. By vigorously supporting a decentralised model, we ensure that despite our size, we remain an agile organisation ready to assess and take opportunities as they present themselves. We have worked hard to remove the obstacles to innovative business practices. By creating and harnessing a free flow of ideas across geographic boundaries we have made the whole stronger than the sum of its parts. Those closest to the businesses best understand the market, the opportunities and the risks, and thus we encourage them to take responsibility and share their ideas. Bidvest is a South African company, dedicated to its roots and committed to continue growing its activities in South Africa. There are still significant growth and acquisition opportunities locally, notwithstanding the inhibitions of the competition legislation. We believe that foreign listings are suitable for foreign activities and that it is not appropriate to list primarily local assets offshore. Consequently, we will maintain our JSE listing. A CQUISITIONS AND DISPOSALS John Lewis Foodservice was acquired by Bidvest plc with effect from June 4 2001 for approximately A$69 million. John Lewis Foodservice is a major player in the Australian foodservice market with annual sales of approximately A$310 million through its twelve branches nationwide. Its incorporation into Bidvest Australia greatly enhances our position as Australia’s leading national foodservice distributor and whilst PA G E 13 Chairman’s review The service we provide our customer is our raison d’être there was no contribution to earnings in the period under review, John Lewis Foodservice is expected to contribute significantly to the results in the year ahead. The Group is traditionally not a holder of minority stakes in listed entities. However, in the review period the opportunity to make strategically defensive investments in various complementary businesses operating in similar fields was taken. Overall, these investments, have yielded a satisfactory return. w decentralisation, each of the subdivisions is responsible for training and developing its staff in not only the expertise necessary for the job, but also in life and leadership skills. The cross-pollination of ideas and the sharing of expertise has seen the international application of skills and personnel. An example is the adaptation of 3663’s ‘First for Service’ quality programme and its introduction into Caterplus. In today’s world, the quality of one’s people is more important than ever before and providing a structure in which new ideas and best practices can freely emerge is essential. P EOPLE Bidvest has a number of incentivisation programmes in place at all levels of the organisation and the ability to achieve set targets in the face of tough trading conditions and strong competition demonstrates the calibre of Bidvest’s management. Bidvest is proud of its tradition as a learning corporation. In keeping with its philosophy of O PERATIONAL REVIEW The service we provide our customer is our raison d’être. The Group is a service, trading and distribution business and a total focus on addressing customer PA G E 14 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT needs is our differentiator. Within the various market segments all the businesses have allocated time and resources to improve their understanding of the future requirements of their customers. The product and service packages that have been put in place can already be seen to be adding value to clients’ businesses. The Services Division The service industry is increasingly characterised by outsourcing as companies divest themselves of noncore operations in an effort to streamline, create focus and reduce overheads. Privatisation is another key influence on the service market and although no real benefits have yet been felt, government continues to commit itself to the principle of privatisation and all service businesses are expected to be positively affected in the long-term. Bidfreight is engaged in discussions with both Spoornet and Portnet to explore win-win business opportunities. Bidfreight, Bidserv and Rennies Financial Services all produced pleasing results and increased their market share. The investments in Compu-Clearing, EnviroServ and Servest are viewed as part of The Services Division. Compu-Clearing’s ability to handle the documentation relating to Bidfreight’s clearing and forwarding makes it a strategic investment to be retained. Whilst EnviroServ is a complementary business and we are able to include their services as part of Bidvest’s integrated offering, there is no intention to increase the stake beyond current levels. The Foodservice Products Division Caterplus, including Bidvest plc, and Combined Foods make up The Foodservice Products Division, a supplier of a range of mainly food and food-related products to the catering, hospitality and foodservice industry. Bidvest is one of the top two foodservice products distributors in the United Kingdom and the largest operator in South Africa, Australia and New Zealand. The strategy of building and using a South African engine to drive international expansion has proved to be successful and this formula will be used to develop long-term shareholder value in the other divisions. The foodservice products distribution business is dependent on the underlying foodservice industry. The industry achieved strong growth in South Africa in the mid- to late-1990’s. Current growth has slowed, but is expected to increase in the medium-term, despite the present spending on cellphones and gambling, as a result of key demographic influences, which include the urbanisation of rural communities, the increasing affluence of the black middle class and the expected improvement in international tourism. The international foodservice industry is generally highly fragmented and remains set for consolidation, which to date has only taken place in certain countries. There are a handful of players operating in these countries on a national basis and only a few operating on an international basis. Growth through acquisition has given the larger players better economies of scale, access to international skills and expertise and improved buying power. Furthermore, international foodservice products distributors are able to service the growing number of global foodservice operators. Both the South African and international foodservice industries are expected to show growth as a result of lifestyle changes and the trend towards dual income and single parent households. PA G E 15 Chairman’s review Bidvest believes it has identified a unique opportunity in electronic marketplace trading The Commercial Products Division The Commercial Products Division, comprising Bidoffice and Bidpac, is engaged in the manufacture and distribution of commercial office products and the marketing and distribution of leading, branded, commercial goods primarily to the industrial and commercial sectors. There was a small increased offtake from our factories following the low level of net inventory investment in the last quarter of 2000 and this trend is expected to continue as long as the growth cycle remains positive. Whilst distribution is a theme throughout all of Bidvest’s businesses, it is in this division that acquisitions will be sought specifically for product lines and distribution capabilities. The investment in Voltex is presently seen as part of The Commercial Products Division. Our position in this regard is being evaluated. w Corporate Services Bidvest, relative to its size and in line with its antibureaucracy stance and philosophy of decentralisation, has a small corporate office. Corporate Services’ focus includes the Group’s financial management, identifying and evaluating investment opportunities and then acting on those which meet Bidvest’s stringent criteria. Furthermore, it provides the strategic direction and a broad spectrum of corporate services to the Group, which includes ensuring that there is a ‘red-tape free’ environment so that the underlying businesses are able to operate at maximum efficiency. The property portfolio is currently being evaluated and reviewed and will be managed as its own profit centre. Bidnet Bidnet, built for the Group by I-Fusion, utilises Cisco Systems Incorporated’s technology and is one of PA G E 16 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT South Africa’s most advanced networks to date. It allows potential customers access to a high-speed network infrastructure using the latest technologies with managed service levels at competitive prices. Certain Bidvest companies are already utilising this network as the backbone of their voice and data platform. The network supports mymarket.com and will be offered to the market at large. mymarket.com Electronic trade is the business-to-business channel of the future and Bidvest believes it has identified a unique opportunity in electronic marketplace trading. The combination of Bidvest’s network infrastructure, customer and supplier base and distribution capacity is a world first, providing Bidvest with the necessary critical mass to establish an electronic trading platform without needing to bring in third parties. Through mymarket.com, which went live on July 2 2001, Bidvest has created an enabling environment that will not only introduce the benefits of enterprise resource planning software and supply chain efficiencies to customers, but will also allow them to buy from others. The strategy for mymarket.com is to develop a culture that is ready to embrace technology and adapt to the Group’s business models. This e-commerce initiative is a long-term project and no profit is expected in the immediate future. Paragon’s traditional business is mature and in decline. Its incorporation into Lithotech is expected to extend the industry’s lifecycle and boost the profitability of the combined operation. Bidvest has also made an offer to the minority shareholders in I-Fusion to purchase the 22,7% of the shares it does not already own, for a total consideration of R15 million, assuming acceptance by all the minorities. 73,1% of minority shareholders have given irrevocable undertakings to accept this offer. P ROSPECTS The Services Division Bidfreight is particularly well positioned to benefit from the intended privatisation of the South African port operations and the burgeoning export market. The division aims to expand its warehousing, distribution and logistics businesses offshore. As a number of its clients grow their global operations, Bidfreight is expanding its service offering to handle these cargoes in both the country of export and import. Bidserv is ideally positioned to capture an everincreasing share of the outsourcing market and has established a new division, Bidserv Integrated Service Solutions, to sell a comprehensive package of integrated services. Bidserv operates in a relatively low skills environment, but aims to ascend the skills ladder and to seek international acquisition opportunities. P OST- BALANCE SHEET EVENTS Rennies Financial Services has a distinct advantage with most of the well-known and trusted travel brands in its stable. The promotion of these brands coupled with the leverage of the immense buying power of the Group will deliver unrivalled price and value propositions to both traditional and online customers. An offer to buy 100% of Paragon, the listed business forms and direct mail group, will be made by Bidoffice for between R52 million and R56 million, subject to conditions precedent and the consent of the Competition Commission. PA G E 17 Chairman’s review In all likelihood the Bidvest of tomorrow may look quite different from the Bidvest of today w The Foodservice Products Division This division will continue its geographic and product expansion internationally through Bidvest plc. Acquisitions are currently being sought in the United Kingdom, particularly in the Frozen division. We have always been opportunistic in our approach to acquisitive growth. Bidvest plc has reached the point where it is able to enter the next acquisitive phase, which will position it as a truly international foodservice products distributor and expansion into Europe and the United States of America is now a desirable strategy. This division has already seen the financial benefits of international expansion. The operations in this division share a similar customer and supplier base and similar problems and opportunities. Through the crosspollination of expertise, the Bidvest foodservice products businesses will be able to harness opportunities and enhance service levels, resulting in improved efficiencies of scale and higher margins. In time, and once critical mass is reached, Bidvest plc, including the foodservice products businesses in South Africa, subject to South African Exchange Control approval, will seek a listing on a major international stock exchange. The Commercial Products Division Long-term growth will be delivered through the value Bidoffice adds to its products and services. Bidoffice dedicates both time and resources to ensuring that it offers the best brands, keep abreast of technological change, develop products to meet these changes, has highly trained and motivated staff and deliver an impeccable service. Looking to the year ahead, Bidpac believes that the recovery in the South African economy is already taking place and has budgeted for an improvement in sales and operating profit. PA G E 18 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT The Commercial Products Division continues to pursue synergistic and allied acquisitions. Bidvest As Bidvest begins this new phase of its corporate life we remember the lessons learned to date and understand the value drivers of our future. Across all three of the umbrella divisions, the size of the customer and supplier base is unique and growth will be delivered by not only harnessing the inherent synergies, but also by continuing to build on the value platform. There are numerous benefits in being an international, multi-business company and we will make full use of these benefits in our drive to create ongoing shareholder value. Bidvest’s aim is for each of its three umbrella divisions to be truly international using critical mass in South Africa as the driver of ongoing expansion and to utilize the benefits of global expertise to deliver even greater shareholder value. There are still substantial growth opportunities in South Africa, which we will continue to explore and develop. Bidvest believes that the financial and intellectual capital acquired pursuant to its globalisation strategy will benefit and flow back to South Africa. Bidvest’s management and people, the philosophy of decentralisation and entrepreneurship, the distribution capacity, the product and service offering and the focus on the customer will ensure the success of our expansion strategy, both locally and internationally. Bidvest aims to cautiously increase its debt and would feel comfortable with a debt-to-equity ratio of up to 40%, which will have the effect of reducing the weighted cost of capital and improving shareholder returns. Where appropriate, future acquisitions will be funded through debt. We also intend to substantially increase our international shareholder base. As the Group globalises, so its shareholders should reflect the geographical spread of its operations. The fundamental long-term goal of delivering shareholder value requires further international expansion, which will need to be funded from international sources. With lower levels of South African inflation and a subdued outlook for the South African economy, corporate growth rates are likely to be more modest. In all likelihood the Bidvest of tomorrow may look quite different from the Bidvest of today. A PPRECIATION Thanks once again to all the directors, including those of our local and international subsidiaries. May I take this opportunity to express my sincere gratitude to Issy Berman for his dedication and service to Bidvest. Whilst he has retired as managing director of Chipkins Bakery Supplies, he will continue as a non-executive director of the Group and I look forward to his input in this new role. Bidvest’s spirit lives through its people and we can count ourselves lucky to have such an incredible staff. Their excitement and energy drives us to reach even further and my thanks for their efforts in what was an extremely tough year. Our theme for the year ahead is: “Whilst it is easy to say no – we’ve chosen to say yes.” Brian Joffe Chairman PA G E 19 Executive directors Brian Joffe (54) Executive Chairman CA(SA) Appointed: March 1 1989 Directorships: Executive Chairman of The Bidvest Group Limited, Chairman of Bidvest plc; I-Fusion Holdings Limited; non-executive director of EnviroServ Holdings Limited and Voltex Holdings Limited; director of numerous Bidvest companies w Mervyn Chipkin (75) Deputy Chairman Appointed: May 9 1989 Directorships: Deputy Chairman of The Bidvest Group Limited; director of numerous Bidvest subsidiaries including Bidvest plc Has served as Executive Chairman since he founded Bid Corporation Limited in 1988 and has thirty years of local and international commercial experience. He was one of the Sunday Times top five businessmen in 1992 and the Jewish Business Achiever of the Year in 1994. Has been the Group’s Deputy Chairman ever since Bidvest acquired the business of Chipkins in 1988. Has sixty years experience in the foodservice industry. Lilian Garner Boyle (54)✣ Executive Director MA Econ (Glasgow), MBA Appointed: January 23 2001 Directorships: The Bidvest Group Limited and numerous subsidiaries thereof; Chairman of Rennies Financial Services and non-executive director of the South African Bank Note Company Alan Michael Griffith (51) Executive Director Appointed: August 14 1998 Directorships: The Bidvest Group Limited and numerous subsidiaries thereof; Managing Director of Minolco Has thirty three years of diverse business experience including seven years in the freight management industry and sixteen years in the travel industry. A finalist of the Business Woman of the Year 1992. Former member of the President’s Council of the Institute of Marketing Management and the Wits Business School Advisory Board, and current Chairman of the Business Travel Guild. Has thirty years experience in office automation with Minolta. Appointed to the Board of Bidvest following the acquisition of Waltons. Colin Hugh Kretzmann (54) Leonard Ivan Chimes (67) Executive Director Appointed: June 30 1997 Directorships: The Bidvest Group Limited and numerous subsidiaries thereof; Chairman of Bidoffice Executive Director CA(SA) Appointed: August 10 1992 Directorships: The Bidvest Group Limited and numerous subsidiaries thereof; Bidvest plc and Chairman of Caterplus and Combined Foods Has forty years experience in the office products industry, including office furniture, and has been with Bidvest for four years since the acquisition of Waltons. Has a vast experience in the food manufacturing industry and joined The Bidvest Group nine years ago. He has been instrumental in developing the Group’s food interests through local and international acquisitions. Rodger William Graham (55) Executive Director BCom, MBA Appointed: February 19 2001 Directorships: The Bidvest Group Limited and numerous subsidiaries thereof; Chairman of Bidfreight’s Terminals division Peter Nyman (56)•x Executive Director CA(SA), ACMA, HDip Tax Law Appointed: February 1 1991 Directorships: Financial Director of The Bidvest Group Limited; director of numerous Bidvest subsidiaries including Bidvest plc and Rennies Bank Limited Has twenty years experience in the textile industry and eleven years in the freight industry. Was the Managing Director of Island View Storage when it was acquired by Bidvest in 2000. Has extensive international financial and operational expertise in a diverse range of industries and is a tax specialist. PA G E 20 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Directorate Lindsay Peter Ralphs (46) Executive Director CA(SA) Appointed: May 10 1992 Directorships: The Bidvest Group Limited and numerous subsidiaries thereof; Chairman of Bidserv Charles Eli Singer (55) Executive Director CA(SA) Appointed: June 30 1995 Directorships: The Bidvest Group Limited and Managing Director of Crown National Joined Bidvest as Operations Director in 1992. In 1994 he was appointed Managing Director of Steiner and following the acquisition of Prestige to form Bidserv, appointed Chairman of Bidserv. Has twenty seven years experience in the manufacture and distribution of consumer goods, the last sixteen of which have been spent involved with products relating to the meat and food industries. Pieter Christiaan Steyn (53) Frank Ernest Anthony Robarts (66) Executive Director Appointed: June 30 1997 Directorships: The Bidvest Group Limited and Chairman of Waltons Stationery Executive Director PMD (Harvard) Appointed: December 10 1998 Directorships: The Bidvest Group Limited; numerous Bidfreight companies and Saga SA (France); Chairman of Aeromaritime International Management Services; Manica Holdings Limited; Renfreight and Rennies Ships Agency Was the Managing Director of Waltons when it was acquired by Bidvest. Has been associated with the stationery industry for over thirty years. Has twenty nine years experience in the freight, logistics, terminals and travel industries. David Keith Rosevear (46)• Executive Director CA(SA) Appointed: March 1 1992 Directorships: The Bidvest Group Limited and numerous subsidiaries thereof including Bidvest plc; Chairman of Bidfreight; Non-executive Director of Compu-Clearing Outsourcing Limited, Voltex Holdings Limited and Reclamation Group Limited Roy Wainer (53) Executive Director Appointed: May 14 1991 Directorships: The Bidvest Group Limited and Managing Director of Caterplus’ Frozen division Has many years of diverse experience including nine years of international executive experience in the motor industry. With Bidvest he was involved in the food manufacturing division, where he was a key figure in the acquisition due diligence team before transferring to the freight division. He remains involved in the Group's corporate finance activities. Has traded in the perishable food industry since 1975 specialising in distribution to the foodservice industry. Alan Charles Salomon (52) Executive Director CA(SA), BSc (London) (with honours) Appointed: September 10 1990 Directorships: The Bidvest Group Limited and numerous subsidiaries thereof; Transpaco Limited; Chairman of Bidpac Charles Edward Watt (56) Executive Director Appointed: September 10 1990 Directorships: The Bidvest Group Limited; Caterplus and is Sales and Marketing Manager for Seaworld Has twenty three years experience in the fields of manufacturing and distribution, specialising in productivity and efficiency improvements and customer service excellence programmes. Has thirty five years experience in the foodservice industry, specialising in sales, marketing and business development. He has held various senior management positions in Chipkins and Seaworld. PA G E 21 Executive directors Philip Douglas Womersley (51) Executive Director BA Econ, BSc (cum laude) Appointed: August 14 1998 Directorships: The Bidvest Group Limited; Bidfreight and Chairman of Safcor Panalpina w Howard Lyle Greenstein (38) Alternate Director CA(SA) Appointed: May 14 1999 as alternate to AC Salomon Directorships: Managing Director of Afcom-GE Hudson. Has twenty three years experience in the freight industry – both operational and financial/administrative. Joined Bidpac eight years ago and is active in their operational management. John Araujo (55) Alternate Director Appointed: May 14 1999 as alternate to CH Kretzmann Directorships: Managing Director of Caterplus’ Catering Supplies division Has more than thirty years experience in the retail and foodservice industries, particularly on the buying side. Non-executive directors w Nomhle Gcabashe Canca (35) Anthony John Behrmann (63)• xs Non-executive Director BA, LLB Appointed: June 17 1997 Directorships: inter alia The Bidvest Group Limited Non-executive Director BA Econ, BA Political Science (Emory) Appointed: April 10 1997 Directorships: inter alia The Bidvest Group Limited; Sentech Limited; Women’s Development Capital Bank Limited; Women Investment Portfolio Holdings Limited and Wipcapital Limited Has forty years of legal experience, specialising in corporate law. Is a partner of Werksmans and has had an active part, both from a commercial and legal point of view, in Bidvest’s acquisitions and growth. Co-founder of Wiphold and Wipcapital and former member of the Katz Tax Commission, she qualified as a stockbroker on the New York Stock Exchange and has extensive international financial experience. Isaac Abraham Berman (63) Executive Director Appointed: September 10 1990 Directorships: The Bidvest Group Limited and numerous subsidiaries thereof Bernard Robert Chipkin (72) Non-executive Director BSc Appointed: September 10 1990 Directorships: The Bidvest Group Limited; Caterplus Has forty five years experience in the bakery industry. Recently retired as Managing Director of Chipkins Bakery Supplies, having worked there since the age of eighteen but will remain a non-executive Director of Bidvest. Nearly fifty years experience in the catering supplies industry specialising in the buying and sourcing of goods both locally and overseas. As Managing Director of Chipkins, he received several Fedics Foodservice Supplier of the Year awards. PA G E 22 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Non-executive directors w Eric Ellerine (67) s Non-executive Director Appointed: June 17 1997 Directorships: inter alia The Bidvest Group Limited; Corpcapital Bank Limited; Corpgro Limited; Dunlop Africa Limited; Ellerine Holdings Limited; Redifine Income Fund; Sasani Limited and Softline Technology Limited Phuthuma Freedom Nhleko (41) s Non-executive Director BSc Eng, MBA Appointed: June 17 1997 Directorships: inter alia The Bidvest Group Limited; Johnnic Holdings Limited; Metropolitan Life Limited; Alexander Forbes Group Limited and Managing Director of Worldwide African Investment Holdings (Pty) Limited Has over fifty years of senior executive experience in the private equity, property and retail industries. He is a past recipient of both the Sunday Times Businessman of the Year and the Jewish Businessman of the Year awards, and is a director of a diverse range of public companies. He spent five years in civil engineering before moving into financial services and now specialises in corporate finance. Stephen Koseff (50) s Non-executive Director BCom, CTA, CA(SA), Hdip BDP, MBA Appointed: June 17 1997 Directorships: inter alia The Bidvest Group Limited; Council of Southern African Bankers; Fedsure Holdings Limited; Israel General Bank Limited; Reichmans Australia Limited and Saflife Limited; Chief Executive Officer of Investec Group Limited Joseph Leon Pamensky (71)•x Non-executive Director CA(SA), OMSG Appointed: January 8 1990 Directorships: inter alia The Bidvest Group Limited; Bidvest plc; South African Eagle Insurance Company Limited; Stonehage Financial Services Holdings (Jersey) Limited; Worldwide African Investment Holdings (Pty) Limited; Transpaco Limited; Voltex Holdings Limited and Chairman of Rennies Bank Limited and Schindler Lifts (SA) (Pty) Limited Nearly thirty years of financial experience and the recipient of numerous business awards. He is a former member of the Financial Markets Advisory Board and current Chairman of the Independent Banks Association. Longest serving non-executive director of The Bidvest Group of companies with over forty years’ experience in the financial, insurance and banking industries and the recipient of a number of business awards. He serves as Non-executive Director on the boards of numerous public and private companies, both locally and internationally, and is a member of several audit and remuneration committees. He was also a director of the Company’s former holding company Bid Corporation Limited. Donald Masson (70)• Non-executive Director ACIS Appointed: March 10 1992 Directorships: inter alia The Bidvest Group Limited; Cashbuild Limited; Alacrity Financial Services Limited; Agrinet (Pty) Limited and Prestasi Makelaars (Pty) Limited. Trustee of Investment Solutions; Cashbuild Pension Fund; Typographical Union Pension Fund and former Chairman of the South African Post Office Pension Fund Theodor Herzl Reitmann (75)✣ s Non-executive Director MA (Cantab) Appointed: June 17 1997 Directorships: inter alia The Bidvest Group Limited and Bidvest plc Former President of the Afrikaanse Handelsinstituut and a former member of the President’s Economic Advisory Council. Has thirty six years of diverse business experience in senior executive positions at numerous listed, unlisted and parastatal organisations. Has over forty five years of international financial experience in various industrial and banking organisations. Sibusiso Peter-Paul Ngwenya (48) Non-executive Director BCom (Hons) Appointed: August 24 2000 Directorships: inter alia P4 Radio Station; Zimisele Underwriting; Mail & Guardian and Sebenza Forwarding & Shipping Consultancy (Pty) Limited Former Robben Island political prisoner, founding trustee of the Makana Trust and treasurer of the ex-Political Prisoner’s Committee. An entrepreneur with ten years business experience. q Member of Audit Committee x Member of Remuneration Committee ✣ British s Originally directors of Bid Corporation Limited, the Company’s former holding company and appointed to the Board on the unbundling of Bid Corporation Limited PA G E 23 D IVISIONS OF B IDVEST The Services Division CORPORATE SERVICES The Group’s corporate office, based in Parktown, Johannesburg, provides strategic direction and a broad spectrum of corporate services, which include ensuring that there is a ‘red-tape free’ environment so that the underlying businesses are able to operate at maximum efficiency. It is responsible for the Group’s financial management, for identifying and evaluating investment opportunities and acting on those which meet Bidvest’s stringent criteria. The team extends support to the management of Group operations in the pursuit of their respective business objectives. BIDFREIGHT A leading freight management group serving customers in all major centres in South Africa and sub-Saharan Africa through several independent businesses focusing on freight terminals, international and domestic freight forwarding and clearing, logistics and marine services. BIDSERV Provides a comprehensive range of outsourcing services including contract cleaning, security, staff facilitation, washroom hygiene, laundry services and garment rental and distributes janitorial supplies and workwear. RENNIES FINANCIAL SERVICES Southern Africa’s leading travelrelated financial services group providing an extensive blue-chip client base with the widest range of high quality products and services to meet all their travel and foreign currency needs, locally, regionally and internationally. BIDFREIGHT LOGISTICS Offers total supply chain management and logistics solutions . Its services range from international express freight and overnight domestic express to specialist warehousing and distribution through its three dedicated logistics operations. Rennies International Logistics, Rennies Technology Logistics and Rennies Textile Logistics, which together with Express Air Services, FedEx and Safcon, comprise this division. BIDSERV INTEGRATED SERVICE SOLUTIONS A new division focused on combining the products and services of the entire Bidserv division to sell the complete outsourcing package. RENNIES BANK A niche bank specialising in foreign money transfers. BOSTON LAUNDERERS The country’s largest commercial laundry, dealing extensively in the hospitality industry. RENNIES FOREIGN EXCHANGE Recognised as the foremost provider of specialised travel foreign exchange services, operating a chain of 65 strategically located bureaux de change throughout southern Africa. Backed by a professional currency dealing operation offering the widest range of currencies in traveller’s cheques and foreign bank notes in South Africa. Rennies Foreign Exchange is an authorised representative of Thomas Cook MasterCard Traveller’s Cheques in the region and owns 49% of Master Currency. CLOCKWORK CLOTHING Manufactures and distributes a large range of industrial workwear and leisurewear under the Admiral brand name. INTERNATIONAL FORWARDING AND CLEARING Offers specialist international freight management services through the Safcor Panalpina and Renfreight operations. It has access to an international network of over 300 offices in 65 countries through its longstanding association with Panalpina World Transport of Switzerland. Its joint venture with Sebenza Forwarding and Shipping Consultancy extends the scope of its operations. COMMERCIAL SUNDRIES A major distributor of janitorial, cleaning and related products to industry. BID IT The BidIT division houses the information technology (IT) interests of the Group. MANICA MYMARKET.COM Bidvest’s business-to-business e-commerce initiative, mymarket.com, is a customer-driven electronic exchange using the world’s best technology. mymarket.com harnesses the critical mass of the Bidvest supplier and customer base who are able to integrate their financial management and stock control systems with the mymarket.com back-end, thereby maximising their buying power and supply chain efficiencies. Manica offers a full range of freight and marine-related services in southern Africa with the network and facilities to meet all the needs of regional agriculture and mineral logistical requirements. FIRST GARMENT RENTAL Tailor-made garment rental from industrial protective clothing to corporate wear. Rental services, include laundering, repairs, delivery and collection of garments. PRESTIGE GROUP Southern Africa’s largest contract cleaning operation, also trading as Execu-Clean, Hi-Tech Cleaning Services and Regent Pro-Serve. Its specialised services division offers a variety of services such as agricultural cleaning, food production cleaning, pest control and carpet and window cleaning. The 50/50 joint venture, Bidwip, is a majority shareholder in a number of empowerment cleaning companies. PROVICOM ELECTRONICS Supply and installation of electronic security management systems, offering a range of services including CCTV, fire detection, perimeter and access control and control room design. MARINE SERVICES Through Rennies Ships Agency, Bidfreight Intermodal, P & I Associates and Rennie Murray and the joint venture operations, Cosren, Dudula Freightbulk and Japan Marine Supplies & Services, the division provides a complete range of ships agency-related activities at all South African ports. These activities include charter, marine insurance, port and general agency functions for and on behalf of South African and international shippers and ship owners. TRAVEL SERVICES Group companies provide travel management services to corporate and leisure clients through their local, regional and international networks. Brand names include BTI Connex Travel, BTI World Travel, Concorde Travel, Harvey World Travel (SA), Rennies Travel and its associated airport service companies Aerospace Handling and Premier Club Management. I-FUSION Through its two divisions – Services and Networks – it operates as a partner to its customers to deliver a total IT solution to suit their needs. I-Fusion developed Bidnet, which is being used by the Group as the backbone of its voice and data platform and supports mymarket.com. SHIELD SECURITY A wide spectrum of security and guarding services, including loss control, auditing and investigative services. TERMINALS Bidfreight Terminals, Bluff Mechanical Appliance, Island View Storage, Naval, Rennies Bulk Storage, Rennies Cargo Terminals, SA Stevedores and South African Container Depots operate a wide range of specialist materials handling operations from strategically located facilities in and around the port peripheries and at various inland locations throughout southern Africa. STEINER HYGIENE South Africa’s leading washroom rental service provider offering a large and cost effective range of washroom products. Services include purified water under the brand name Pureau, dust control mats and a range of products for food preparation areas. TMS GROUP INVESTMENTS Bidfreight has an investment in Compu-Clearing. Provides staff facilitation services through Hotel Temp and Ilanga-TMS. High pressure industrial and vacuum cleaning is available through HP Chem. PA G E 24 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT The Foodservice Products Division The Commercial Products Division CATERPLUS A leading, broadline distributor of a comprehensive range of products to the catering, hospitality and foodservice industry through strategically located independent business units situated in all urban and tourist centres in South Africa, the United Kingdom, Australia and New Zealand. COMBINED FOODS Manufactures and distributes a comprehensive range of products to the bakery, meat and food processing industries. BIDOFFICE Engaged in the manufacture, distribution and supply of commercial office products including stationery, office furniture, computer consumables and other office automation products, including printing, through a network of branches throughout southern Africa. BIDPAC Market and technology leader of nailing, stapling, packaging closures, strapping, adhesive tape, marking and coding, construction fasteners, labels and stationery products. These products are distributed through a nationwide branch network to the commercial, industrial, mining, agricultural, construction and retail sectors. CHIPKINS BAKERY SUPPLIES Manufactures and distributes a wide range of pre-mixed convenience products and ingredients and bakery consumables to independent and instore bakeries. CATERING EQUIPMENT One of South Africa’s leading manufacturers, importers and suppliers of catering and refrigeration equipment, heavy duty kitchen equipment and trades as Vulcan-Caars. CROWN NATIONAL One of South Africa’s largest manufacturers and suppliers of spices, seasonings, additives and condiments to the butchery, meat and food processing industries. Recently opened a number of “Spice World” cash and carry outlets for the consumer market. It is also a leading supplier of sausage casings, butchery equipment, packaging and allied products. BIDOFFICE CORPORATE SOLUTIONS This division works together with Bidserv to offer an integrated solution to corporates, be it on an outsourced or inhouse basis. PACKAGING CLOSURES Manufactures and distributes strapping, staples, nails, adhesive tapes, labels, seals and custom-made machinery and systems through its operations AfcomGE Hudson, Buffalo Executape and Ramset. CATERING SUPPLIES A leading supplier of groceries and allied products to the catering, hospitality and foodservice industry, trading under: Catersales, CCW Catering, Chipkins Catering Supplies, D & R Lowe Catering Supplies, First Foods Distributors, Lou’s Wholesalers, Nelpack, Pyramid Catering Supplies and RFS Catering Supplies. OFFICE AUTOMATION Minolco distributes the Minolta range of photocopiers, facsimile machines and laser printers and the Océ range of high volume and specialised printing equipment. NCP YEAST Manufactures and distributes active yeast to the baking, brewing and consumer markets. The product range comprises compressed yeast, active dried yeast (under the Superbake brand name), brewers dried yeast and cream yeast in various pack sizes. OFFICE FURNITURE Manufactures and distributes a wide range of office furniture and associated products for the corporate and commercial markets through Atomic, Cecil Nurse, Dauphin, Nuclear, Pago, Seating and Waltons. FROZEN FOODS Leading supplier of seafood, vegetable, poultry, red meat, dairy and pastry products to the catering, hospitality and foodservice industry and trades under the following names: Blue Marine, East Cape Foods and Seaworld Frozen Foods. SPECIALITY Through Patleys local and imported premium quality food products are marketed under the Goldcrest and other leading local and international brand names. PAPER CONVERSION Manufactures and distributes envelopes, commercial and scholastic stationery, files, adhesive tapes, staplers, rubber bands, paper punches, stamp pads, inks, paste, labels and other stationery products through its operations Hi-Maur Labelling Systems, Ozalid SA and Silveray Stationery Company under well-known brand names including Croxley, Sellotape, Rapid, Tesa, Penguin and Pelican. INVESTMENTS Bidpac has an investment in Transpaco. STATIONERY INVESTMENTS Combined Foods has an investment in Yeastpro. Wholesales and distributes a wide range of stationery products and computer consumables including leading brand names through Contract Office Products, Hortors Stationery, Kolok, Kolok Africa, Quantum Stationers, South African Diaries, Statmark and Waltons Stationery Company. PRINTING AND RELATED Distributes print and print-related products to the trade through approximately twenty operational divisions of Lithotech, including mailing and laser personalisation. BIDVEST AUSTRALIA The leading multi-temperature foodservice products distributor in Australia offering a broad range of products on a national basis under a number of different trade names. BIDVEST NEW ZEALAND Crean Foodservice, the leading, national, broadline foodservice products distributor in New Zealand. INVESTMENTS Bidoffice has investments in Budget Desks and Chairs, Corporate Concepts, Matlafatso Stationery Supplies and Office Furniture Clearance House. BIDVEST UNITED KINGDOM One of the top two foodservice products distributors in the United Kingdom, 3663 First for Foodservice is made up of three distinct trading divisions: Multi-Temperture Frozen Logistics INVESTMENTS The Commercial Products Division has an investment in Voltex. INVESTMENTS Caterplus has an investment in Vuka Catering Supplies. PA G E 25 R EVIEW OF OPERATIONS T H E S E RV I C E S D I V I S I O N ‘ S REVENUE CONTRIBUTION TO GROUP INCOME O P E R AT I N G 45,1% 42,3% 40,2% 37,9% The Services Division The Services Division The Services Division The Services Division 2001 2000 2001 2000 CONTRIBUTION BIDFREIGHT TO T H E S E RV I C E S D I V I S I O N – 2001 B I D S E RV RENNIES FINANCIAL S E RV I C E S REVENUE 3,4% REVENUE 8,4% REVENUE 88,2% O P E R AT I N G INCOME O P E R AT I N G INCOME O P E R AT I N G 15,5% INCOME 65,9% 18,6% PA G E 26 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT The Services Division T H E S E RV I C E S D I V I S I O N ’ S TO GROUP REVENUE CONTRIBUTION O P E R AT I N G INCOME Rmillion Rmillion 11 516 13 759 ’00 ’01 ’00 464 ’01 576 2001 SEGMENTAL ANALYSIS (R’000) Revenue Operating income Depreciation Capital expenditure Funds employed Employee benefits and remuneration RATIOS AND STATISTICS Return on average funds employed (%) Operating income margin (%) Number of employees 13 759 072 576 013 128 256 230 997 593 112 1 478 871 2000 11 515 848 464 149 131 720 231 585 559 394 1 395 557 97,9 4,2 37 895 115,5 4,0 35 261 PA G E 27 R EVIEW OF OPERATIONS Bidfreight is the leading freight and logistics service provider in southern Africa Dave Rosevear Chairman PA G E 28 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Bidfreight International forwarding and clearing DIVISIONAL CONTRIBUTION TO GROUP Safcor Panalpina performed well and maintained its high levels of market share achieved in prior years. With three international charter flights by Panalpina into southern Africa per week, Safcor Panalpina holds a unique position in the airfreight market, which is REVENUE O P E R AT I N G INCOME Rmillion 12 132 Rmillion 10 124 enhanced by Panalpina’s spread of offshore operations. 311 380 The Oceanfreight operations showed satisfactory growth year-on-year and closed ahead of expectations. Renfreight benefited from increased levels of activity in ’00 ’01 ’00 ’01 the automotive industry where Renfreight is a significant force. The resultant higher sales, together with the continued focus on driving costs and working M ARKET OVERVIEW capital downwards, resulted in an improvement in the results year-on-year. Bidfreight increased its shareholding in Renfreight to 100% by buying the 20% minority shareholding from Circle International. As a consequence of this change, Renfreight entered into an agency agreement with Panalpina. Sebenza Forwarding and Shipping Consultancy, in which the Group has a 45% stake, performed extremely well. The strategic focus on marketing the company to parastatal and blue-chip organisations has resulted in Bidfreight is the leading freight and logistics service provider in southern Africa. The division’s capability to provide fully integrated logistics solutions across the entire logistics chain is founded upon its diverse expertise, alliances with the world’s best freight operators and strategically positioned facilities, as well as a vision to harness these resources in providing innovative services to key clients and market sectors. Trading conditions were mixed throughout the year with buoyant export volumes, as reflected in the continuing strength of the country’s trade surplus, partially offset by lower inbound volumes, which impacted on import and international courier operations. strong growth in the business. Logistics Bidfreight Logistics comprises three dedicated logistics operations focused on high-tech branded goods, apparel and the motor industry, together with PA G E 29 Bidfreight ▼ DIVISIONAL REVENUE CONTRIBUTION TO GROUP O P E R AT I N G INCOME 26,5% 39,7% 37,2% 25,4% 2001 2000 2001 2000 Express Air Services, Safcon and FedEx, the southern African franchised operations of international giant Federal Express. A general decline in domestic and regional parcel volumes had a negative effect on both Safcon and FedEx. Investments into operational and IT systems at Safcon and resized operations at both FedEx and Safcon should pay off in the year to come. Rennies Textile Logistics has grown from a single- to a multi-client base resulting in a 35% increase in volumes which, together with effective risk management and cost control, contributed to favourable results achieved during the period under review. Both Rennies International Logistics and Rennies Technology Logistics performed to expected levels. Express Air Services, a sales and handling agent for domestic and regional air carriers and couriers, had an outstanding year. Terminals Bidfreight Terminals comprises a formidable network of storage and handling facilities for bulk and break-bulk cargoes. These facilities are strategically positioned in all South African ports and at key inland locations. Trends towards increased outsourcing together with the strong growth in export volumes impacted positively upon Terminals’ businesses, which have performed well and have increased their market share. Privatisation, or concessioning, of South Africa’s ports is not progressing as smoothly as initially anticipated. Bidfreight hopes that, through active dialogue and participation with all key players, the process will advance, giving South African companies the opportunity to participate in improving the efficiency of the country’s port operations. A new shiploader at the Durban coal handling facility, Bluff Mechanical Appliance (BMA), was commissioned PA G E 30 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT during the year and a third is planned for the new year. BMA handles two million tons of sized export coal per annum. Negotiations continue with Spoornet, aimed at enhancing rail efficiency and throughput. The benefits of this commitment, together with enhanced operational efficiencies, have produced good results in the current year and should have greater impact in the years ahead. An above average maize crop contributed to a successful year for the freeflow bulk terminals, which handle products such as maize, wheat, rice, fertiliser, soda ash, fluorspar and oilcake. Construction of new capacity at Rennies Bulk Terminals has begun in response to the increased volumes. In adapting to new containerisation market dynamics and increased competition, South African Container Depots (SACD) has increased its participation in the logistics chain and are now packing containers on the clients’ premises. This strategy will ensure continued growth in this market sector. The terminals operations of Manica Mozambique, trading as Naval, came into Bidfreight’s Terminals division during the year. Despite the difficulties of dealing in that country, management has done much to reposition and focus the operations, mainly in Maputo, and Naval is operating profitably. Marine This division, which provides a full range of ships The liquids division had a reasonable year and maintained previous levels of profitability despite the reduced volumes of certain products due to a reduction in market size. New liquid bulk tanks were built at the Isando depot of Island View Storage to handle chemicals, fats and oils. This additional capacity should contribute to an improved performance in the future. Rennies Cargo Terminals, which specialises in warehousing, distribution and staging facilities for inter alia metals, forest products and chemicals, for both the domestic and export markets, performed exceptionally well during the past year. Additional warehousing has been secured to handle the increasing volumes. The tough trading conditions which SA Stevedores experienced has led them to implement a commodityfocused service improvement strategy with the objective of increasing profitability and market share. agency services at all South African ports to ship owners, ship operators and charterers, performed extremely well against a background of intense competition. Rennies Ships Agency maintained its position as a market leader with high market share in both the liner and bulk agency businesses, through its representation of a wide range of top class principals. Streamlined operations and improved efficiencies combined with increased volumes resulted in improved market share. The joint venture operations, Cosren and Dudula Freightbulk, produced pleasing results as did the marine insurance operations, comprising Rennie Murray and P & I Associates. Given the reduction of the Japanese tuna fishing fleet and the depressed Japanese economy, the 50% joint venture company, Japan Marine Supplies & Services, performed well. PA G E 31 Bidfreight Bidfreight has a substantial investment in irreplaceable strategic assets ▼ Manica Africa Marginal activities throughout the regions have been sharply curtailed and operations are now focused on agricultural and mineral products. The extensive facilities owned by Bidfreight within southern Africa are well positioned to cater for significant volumes of these commodities. In an effort to refocus the business, the ships agency and general freight operations in Mozambique were sold to management, although the terminal operations were retained. The Zambian operations continue to concentrate extensively on the significant growth sector of minerals, whilst in Malawi, agriculture products dominate activities. Poor economic and political conditions in Zimbabwe have had dire consequences for operations in that region. Namibian operations are primarily involved with the fishing industry and, whilst profitability has been affected by the significant fuel price increases and falling catch sizes, this continues to be a significant and profitable operation. F INANCIAL REVIEW Revenue increased by 19,8% to R12,1 billion (2000: R10,1 billion) and operating income was up by 22,0% at R380 million (2000: R311 million) with pleasing improvements in asset management. The balance sheet remained strong and the return on funds employed was pleasing given the asset base of the division. PA G E 32 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT VALUE STRATEGY The African operations saw some turmoil in employee relations due to the necessary restructuring of the Bidfreight has a substantial investment in irreplaceable strategic assets in the form of facilities, licences, equipment, manpower and branded services. It combines its resources and expertise in the implementation of its value strategy, which is to supply niched logistics solutions. This strategy has not yet been fully implemented and the division is currently building up its capacity, its people and its systems to realise this value. businesses following unstable political and economic conditions in some countries. All other divisions reported satisfactory levels of employee satisfaction. New product development The move to outsourcing is driving improvements in the product and service offering. Bidfreight continually looks to provide niche solutions for clients and develops new products to meet these demands. Y EAR UNDER REVIEW Operational highlights Acquisitions and disposals Bidfreight’s systems have been installed into a number The 20% minority interest in Renfreight was acquired, and Bidfreight increased its effective interest in the Namsov Fishing operations by 13% to 28%. Manica Freight Services (Mozambique) SARL, the general freight and ships agency businesses in Mozambique, were disposed of in terms of a management buy-out with effect from October 1 2000. Significant new properties were leased during the year creating an additional 80 000m2 capacity to support logistics solutions for blue-chip clients with whom the division has long-term commercial relationships. Customer and employee satisfaction Bidfreight follows preferential employment practices, Customer satisfaction remains high and the number of customers lost in the review period was negligible and more than compensated for by the number of new customers obtained. The nature of the business and the reputation of Bidfreight rests on the long-term relationships built with customers and accordingly all staff continuously strive to improve the service Bidfreight provides. based on merit, in order to meet employment equity targets. The Skills Development plan is being implemented and the division has well-established training and advancement programmes. Bidfreight’s empowerment strategy is to be involved in genuine relationships with empowerment partners and it will continue to look for new opportunities. Current joint ventures include: of third party locations for e-commerce and distribution operations – testimony to the excellence and efficiency of the systems. A landside intermodal transportation service was started to promote the efficient delivery of containerised rail traffic to shipping lines, forwarders and merchants. This fits well with the operations of SACD, as clients’ cargoes can now be transported directly from the shippers to the inland SACD storage facilities for onward distribution. E MPOWERMENT PA G E 33 Bidfreight Bidfreight aims to be the most efficient logistics operation in the region Sebenza Forwarding and Shipping Consultancy Sebenza is the largest, most established black empowerment forwarding company in South Africa, having fully staffed branches in Johannesburg, Cape Town and Durban. The Makana Trust, via Makana Investments, holds the majority shareholding in Sebenza. The Makana Trust, which provides for the needs of the ex-Robben Island prisoners and their dependants, was founded at the urging of Dr Nelson Mandela, who is a patron of the Trust. ▼ Saldanha Logistics Company In 1998 Rennies Terminals formed Saldanha Logistics Company with a consortium of black businessmen comprising Siphumelele Investments and Chroku Investments. Bidvest holds 50% with Siphumelele Investments and Chroku Investments each holding 25%. Saldanha Logistics Company manages and controls the logistics chain for Saldanha Steel, handling steel coils destined for export markets and incoming raw materials for the steel mill. Namsov Fishing Enterprises Manica Namibia owns 50,1% of Namsov Fishing Enterprises, the balance is held by Namibian citizens. Namsov is active in the midwater trawling industry and owns and operates five midwater trawlers. Dudula Freightbulk Dudula Freightbulk is a 50/50 joint venture between operations within Bidfreight and Dudula Shipping Corporation, part of the Hi-Beam Investment Group, a black investment consortium. PA G E 34 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT The company is an industry leader and contributes significantly to the development of the Namibian fishing industry. Twafika Fishing Enterprises Twafika is 50,1% owned by Namsov Fishing Enterprises and 49,9% by the National Union of Namibian Workers. Twafika was awarded monk fishing rights in 2000, and effectively puts these rights in the hands of thousands of Namibians. International expansion to handle key clients’ warehousing, distribution and logistics in both the country of export and import is being explored. Locally, the focus for the upcoming year is to motivate and train all sales staff to sell the total product range and to promote the Bidfreight brand and capabilities to create value in the logistics chain. Possibilities to expand the number of customers in the motor industry are being pursued and niche products are being developed. The division has always been involved in S OCIAL RESPONSIBILITY business-to-business distribution and it intends to maintain its positioning in this market. Empowerment Bidfreight is involved in the Good Luck Foods feeding scheme, which provides a meal for over 2 000 children each school day with weekly deliveries to Inanda and Kwa-Mashu crèches, and daily deliveries to schools in the greater Durban area. Vegetable shops, supermarkets, bakeries and factories donate the food and Rennies Cargo Terminals covers the distribution costs of the scheme. The Namsov Community Trust is a 10% shareholder of Namsov Fishing Enterprises. The Trust distributes its proceeds to projects all over Namibia with emphasis on the Namibian youth. To date the Trust has allocated well in excess of N$ 6 million to worthy projects. The Trust receives its continuous funding from the 10% dividend payments received from Namsov Fishing Enterprises. opportunities are being investigated in the field of home delivery. Bidfreight aims to be the most efficient logistics operation in the region and, with its strong relationships with traditional customers, its excellent management teams, its enviable asset base and access to the world’s best tracking systems, it is well positioned to achieve this in the near future. The prospects for the year ahead are promising and management looks forward to delivering increased shareholder value. P ROSPECTS Bidfreight is well positioned to benefit from the intended privatisation of the South African port operations and the burgeoning export market. PA G E 35 R EVIEW OF OPERATIONS The trend to outsourcing in South Africa remains strong Lindsay Ralphs Chairman PA G E 36 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Bidserv DIVISIONAL REVENUE CONTRIBUTION TO GROUP South Africa’s crime situation continues to drive the security industry and a number of high profile residential contracts were secured in the review period as citizens privatised their security O P E R AT I N G INCOME Rmillion Rmillion requirements. The industries it serves are growing and Bidserv 1 163 997 90 107 achieved pleasing growth in its market share. HIV/AIDS is beginning to have an impact on Bidserv’s businesses and is expected to become more of an ’00 ’01 ’00 ’01 issue in years to come as training costs start to escalate. The move to automation and the resultant retrenchments in the industrial sector has impacted on the laundry and garment rental industry as fewer staff are required to fulfil traditional functions. The outsourcing industry has seen some pressure on margins as a result of increased competition and the added cost of facility managers. Bidserv, however, mainly contracts directly with the market. M ARKET OVERVIEW Bidserv operates in the outsourcing market by supplying cleaning, laundry, hygiene, security, staff facilitation services, janitorial products and industrial workwear. The trend to outsourcing in South Africa remains strong and the number of facility management companies increased significantly. Bidserv is positioned as a service provider to these companies and derives its competitive advantage from its mix of industry leading brands. The outsourcing of non-core competencies has proved to be a considerable cost saving for corporations around the world as, in an era of increased competitiveness, the ability to focus on one’s core business becomes a critical factor. F INANCIAL REVIEW Bidserv saw revenue grow by 16,6% to R1,2 billion (2000: R1,0 billion) and an increase in operating income of 18,6% to R107 million (2000:R90 million). The division achieved a return on average funds employed of 30,2% (2000: 34,0%). PA G E 37 Bidserv ▼ DIVISIONAL REVENUE CONTRIBUTION TO GROUP O P E R AT I N G INCOME 7,5% 3,8% 3,7% 7,4% 2001 2000 2001 2000 VALUE STRATEGY 9002 certifications which are in place at most of the Bidserv businesses. Bidserv aims to retain its position as South Africa’s leading outsourcing company with the most comprehensive range of products and services and the best infrastructure and systems. Management places importance on ensuring that staff are highly trained and motivated and products and services remain at the leading edge of international trends. In the review period, the division made a considerable investment in upgrading its IT systems. The entire group is in the process of being networked and service standards are being enhanced through the implementation of customer relationship management systems, the establishment of a call centre and the creation of dedicated account managers to act as the client interface. Significant ongoing investments are made in training on both a managerial and operational level and high service standards are ensured through the ISO 9000 or To date the market’s response has been most encouraging and the reputation of the Group has contributed to securing a number of large, high value accounts. Bidserv continuously seeks opportunities in industries that traditionally have not been outsourced and have pioneered a number of such markets – Bidserv was the first to offer specialised healthcare and hospitality cleaning and is now the first to offer agricultural cleaning solutions. Future value will be created through the sale of the entire outsourcing package to industry via Bidserv Integrated Service Solutions which has been created to drive this process. The division is staffed by industry specialists and their focus is to promote cross-selling between the division’s businesses. They are also responsible for targeting major accounts and marketing the integrated package of services to them. PA G E 38 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Y EAR UNDER REVIEW offers meet the changing needs of the industry and entrench Bidserv’s competitive advantage. Acquisitions and disposals Operational highlights Provicom Industries was acquired with effect from November 1 2000 to bolster the electronic security business. They have been merged with Shield Electronics and now trade as Provicom Electronics. The acquisition expanded the range of security services offered by Bidserv, which now includes fire detection and audio technology. The QMS division saw significant growth in the staff facilitation segment of its business and in order to maximise the opportunities presented, the peripheral operations were closed down. The division has been rebranded as the Total Manpower Solutions group. Customer and employee satisfaction Customer retention exceeded budget despite a few losses due to pricing issues. The aggressive nature of the market does result in a certain amount of customer fickleness, but Bidserv’s superior service and high standards have won the loyalty of its major clients and client acquisition far exceeds client loss. Relationships with the unions have always been good, even during the industry-wide security strike, which did not affect Bidserv adversely. Bidserv has high levels of employee satisfaction and the ongoing training, motivation and incentives contribute to the low levels of staff turnover. New product development Bidserv has not only pioneered a number of outsourcing services, but also regularly attends international trade shows to ensure that the products it Specialist skills were brought on board to manage the division and the team that has been set up has already achieved beyond expectation. Communication levels within the division have been improved and the series of conferences and road shows held throughout the country has won the support of all the division’s businesses in the drive to promote cross-selling. Boston Launderers, in a joint venture with Caterplus, opened a new facility in Zambia for Sun International supplying laundry, warehousing and logistics services. The operation is proving to be a success and similar contracts are being investigated. During the review period Provicom Electronics won one of the South African Reserve Bank contracts, which is not only strategically important, but is a powerful affirmation of the superior products and services offered by Bidserv’s Security division. Significant work was also done on developing new IT systems for the division, which will provide high levels of management information from which corporate strategies can be monitored and refined. People Bidserv’s people are the backbone of its operations and ensuring that all staff members are trained and The establishment of the Integrated Service Solutions division was undoubtedly the major highlight for the division in the review period and the formalised focus on providing a packaged outsourcing solution to industry has innumerable benefits. PA G E 39 Bidserv Bidserv’s people are the backbone of its operations and ensuring that all staff members are trained and motivated remains a high priority motivated remains a high priority. Every Bidserv company has its own repertoire of training courses, which are South African Qualifications Authority accredited. Bidserv believes in incentivising staff to encourage superior performance. Numerous financial and travel incentives are in place and are open to a broad spectrum of employees. ▼ ownership of financial, managerial and operational control. All businesses must have a focus on training and skills development and must empower previously disadvantaged individuals both inside and outside the company. Bidwip Bidwip is a 50/50 joint venture between Bidvest and Wiphold. A number of black entrepreneurs and exBidvest employees have been given the opportunity to be part of this joint arrangement to set up cleaning businesses. E MPOWERMENT Bidserv’s commitment to the principle of empowerment has seen the creation of a number of joint ventures. More recently, contract specific empowerment vehicles have also been established. The strategic intent of these initiatives is to enter into agreements with credible individuals to ensure fair P ROSPECTS Bidserv has spent over R100 million in the last few years upgrading its laundry facilities and the last of these projects is being completed in Johannesburg. PA G E 40 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Once commissioned all the Boston laundries will have the latest, state-of-the-art equipment, setting them far ahead of the competition. In the next financial year the division’s businesses will increasingly be co-branded as Bidserv Integrated Service Solutions. The focus of the group will be on providing an integrated outsourcing package, thus strengthening Bidserv’s positioning as the leading outsourcing solutions provider. Sales teams will be focused on more aggressively targeting national accounts and both the distribution and branch network will be expanded to meet demand. In the last year, six new branches were opened and this trend is expected to continue. Bidserv operates in a relatively low skills environment, but aims to ascend the skills ladder. mymarket.com will be used as a marketing tool and a financial billing system, although its value as a sales tool is limited as high levels of client interaction are a necessary part of securing a service-based deal. Bidserv’s prospects are promising and it intends to seek international acquisition opportunities. The division is expected to grow as the industries in which it operates continue to develop. PA G E 41 R EVIEW OF OPERATIONS The travel companies enjoyed a buoyant year Lilian Boyle Chairman PA G E 42 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Renfin Given pressures on margin and volumes, the internal DIVISIONAL REVENUE CONTRIBUTION TO GROUP focus continued to be on cost reduction, working capital management and creating optimal economies of O P E R AT I N G INCOME scale whilst concentrating on client retention by investing more heavily in service delivery, people Rmillion Rmillion development and training. As a result, the travel companies enjoyed a buoyant year 465 89 395 and management is to be commended on excellent results in a tough environment. During the year, several major airlines disinvested from ’00 ’01 ’00 ’01 63 South Africa claiming that this route had become uneconomic by the escalation in fuel prices and a further depreciation of the rand. The net effect has been a serious reduction of capacity into Europe especially M ARKET OVERVIEW and a marked increase in fares domestically and internationally. Following the successful acquisition of a banking licence in June 2000, a full Authorised Dealer’s licence was approved in January 2001, enabling the commencement of the sale of non-travel-related foreign exchange. This business has grown well over the latter half of the year, albeit from a very low base, and is poised to become a major contributor in the year ahead. The forex market was also marked by periods of significant discounting mainly via “zero commission” marketing campaigns being cross-subsidised by other products. Rennies Bank elected to offer guaranteed, lowest exchange rates in preference to reduced Trading conditions in all businesses were somewhat constrained by the fragile nature of business confidence, seriously damaged at the beginning of the year by the political and economic crisis in Zimbabwe, and political uncertainty in South Africa. Margins again were under pressure as the travel industry came to terms with further reductions in airline commissions. Both travel and foreign exchange markets were characterised by competitor discounting as companies sought to compensate reduced revenues through increased volumes. Rennies Financial Services (Renfin) maintained its market share across the division at the previous year’s levels. PA G E 43 Renfin ▼ DIVISIONAL REVENUE CONTRIBUTION TO GROUP O P E R AT I N G INCOME 1,5% 1,4% 6,2% 5,1% 2001 2000 2001 2000 commissions, which resulted in improved revenue margins. one which encompasses a fully integrated, multichannel approach. This has driven the development of call centres and web-based solutions in tandem with F INANCIAL REVIEW the extensive bricks and mortar network. Renfin has developed several unique electronic solutions to suit clients’ requirements. Above average performance of all companies in the division will be delivered through a combination of technological developments coupled with the growth and development of a new skills set. The changing marketplace demands more initiative and creativity at the point of transaction together with the provision of reliable and up-to-the-minute information Revenue increased by 17,6% to R465 million (2000: R395 million) and operating income grew by 42,3% to R89 million (2000: R63 million) as a result of productivity improvements, rigorous cost control and good cash management. Renfin’s contribution to the Group’s value creation is strong and the return on average funds employed was 37,0% (2000: 46,8%). VALUE STRATEGY for online customers. Renfin’s extensive training programmes are aimed at securing a competitive advantage by offering the best point-of-transaction service. In the face of a great deal of hype relating to electronic distribution channels, Renfin’s growth strategy is built on the belief that the only sustainable business model is PA G E 44 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Y EAR UNDER REVIEW acquisition of skills. Treasury activities were introduced, as were the required risk management Customer and employee satisfaction Client retention takes priority over client acquisition, nonetheless, the division was successful in securing many new, quality clients during the year and improved its risk management by closing a few unprofitable accounts. As a whole, employee satisfaction remained high with relatively low rates of staff turnover. Of great concern is the loss of several well-trained and experienced middle management and supervisory staff to emigration. Accelerated development programmes for existing employees from previously disadvantaged groups, together with expanded learnership programmes, have been intensified to fill the gaps. New product development A suite of online solutions was launched during the year together with a unique ‘no frills’ proposition for small and medium businesses, namely Rennies Business Direct, providing access to specially negotiated rates through the division’s buying power, and which is serviced through the call centre and web site. New destinations were added to the range of “Options” travel products, which provide unbeatable value for high quality packages. The innovative ExecuflexTM and LeisureflexTM products for the domestic market were enhanced. policies and procedures. Rennies Foreign Exchange The year was marked by relatively buoyant trading in the traditional travel-related forex products. The delay in approval of the full Authorised Dealer’s licence, only received in January 2001, meant that the anticipated revenue flow from non-travel products was restricted to the second half of the year. The growth in nontraditional product sales has been very encouraging and it is expected that these will become a more significant contributor to operating income in the coming year. Rennies Travel Capitalising on the strong growth of corporate accounts in the previous year, the division turned in an excellent performance in the year to June. The volume of outbound international travel in particular picked up markedly during the year. The retail operations focused on “the power of managed travel” converting more corporate clients to net rates and fee payments thereby yielding significant cost savings to the client and replacing diminishing commission as the only source of revenue. Productivity improvements, rigorous cost control and good cash management all contributed to a substantial increase in earnings. The Travel Services division maintained a steady flow O PERATIONAL Rennies Bank HIGHLIGHTS of new product development, also concentrating on adding value with specially negotiated rates for the benefit of the business and leisure customer base. Significant resources were channeled into e-commerce developments in various forms, tailor-made to clients’ Banking operations were refocused and significant investment made in systems development and the PA G E 45 Renfin The experience gained to date has proved the wisdom of the multi-channel distribution strategy ▼ needs and integrated through the web site, the call centre and the retail branch network. The experience gained to date has proved the wisdom of the multichannel distribution strategy, borne out by the ‘dot com’ experience globally. Continuous incentivisation and training of front line staff in excellence in service delivery as the true differentiator has paid dividends and will continue to do so. Concorde Travel New business gains were partly offset by the loss of several accounts, which were closed as a result of margin pressures, which rendered them no longer viable from a profitability point of view. Concorde Travel consolidated several branches in Johannesburg into a completely restructured business travel centre, yielding significant cost savings and enhanced productivity. Carlson Wagonlit Travel, the global alliance partner of Concorde, acquired 10% of the equity in the business early in the year, thereby cementing the relationship in the long-term. BTI Connex Travel BTI Connex had an excellent year of growth. Many national accounts were secured, administrative procedures were improved and stringent cost management resulted in significant earnings growth. Now operating five branches and twelve inhouses, BTI Connex is poised for another year of strong growth building on the relationship and support within Renfin and impeccable empowerment credentials. World Travel BTI The year was one of consolidation and rationalisation under the World Travel BTI banner resulting in a pleasing turnaround in earnings and the establishment of a solid foundation for future growth. PA G E 46 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Harvey World Travel (SA) The joint venture leisure travel franchise company also enjoyed a successful year of trading as the stronger trend in leisure travel continued throughout the period. The network grew to 88 franchises in southern Africa. Master Currency Master Currency enjoyed a year of strong growth in sales and improved profitability. The business is now well established, operating from sixteen strategically located branches countrywide, with excellent prospects for growth in the coming year, by building on brand strength and the significantly lower cost increases forecast. Namibia Both operations in Namibia, Rennies Travel and Namibia Bureau de Change, were able to take advantage of the increase in outbound travel in that country and produced satisfactory growth in earnings. Zimbabwe In the face of immensely difficult trading conditions, Rennies Travel and Rennies Foreign Exchange achieved commendable performances in spite of massive cost pressures and the loss of many skilled people through emigration. The future is plagued by uncertainty with management committed to exploiting every opportunity presented by such an environment. BidFin After the rapid growth of the previous year, the focus in the asset-based financing division was on consolidation, together with the introduction of controls, procedures and operating systems, to strengthen the foundation of this business unit. People Unfortunately, many skilled people were lost to emigration and much emphasis was placed on attracting new entrants to the industry, accelerating learnership programmes and intensive training at all levels. E MPOWERMENT Much work was done over the past year in ensuring all personnel policies were brought into line with all the newly formulated labour legislation. Renfin runs a number of travel and foreign exchange courses as well as accelerated development and mentorship programmes. Rennies Travel has set itself the objective of eradicating illiteracy and innumeracy in the organisation by 2005 and has implemented an Adult Basic Education Training programme to empower all staff with basic life and business skills. Rennies Travel is a full partner and cash sponsor of the Reach and Teach projects, which introduces Travel and Tourism as career options to students in disadvantaged schools. They have also funded, and subsequently employed, a number of black students on the Cotac Bridging Programme, which helps black school leavers compete more effectively for positions in Travel and Tourism. Renfin also believes in developing commercial equity and has a number of joint ventures with black-owned or empowered businesses with a view to developing long-term wealth for those businesses. Agreements include: BTI Connex Travel Rennies Travel acquired a 49% stake in Connex in 1999 from Transnet, the balance being held by economic PA G E 47 Renfin The combination of excellent service and competitive pricing, together with technology appropriate to the client’s needs, is expected to deliver long-term value empowerment partners (31% Shumi Travel and Leisure; 10% National Empowerment Fund and 10% by the Employees Share Option Trust). BTI Connex has enjoyed rapid growth as a result of the acquisition of many large corporate, parastatal and government accounts and operates five branches and twelve inhouse corporate travel offices around the country. The benefits of the association with Rennies Travel include membership of Business Travel International (BTI), access to products, training and development initiatives and negotiated rates, all of which have a direct benefit to BTI Connex’s corporate travellers. Master Currency Master Currency is a successful empowerment foreign exchange bureau and a joint venture between Rennies Travel and Mr ZL Combi (51%). The goal of Rennies Travel in this endeavour is to aid black business ▼ empowerment in a traditionally white-dominated industry. In 2000 Mr Combi, the executive chairman of Master Currency, was voted winner of the Ernst & Young “Entrepreneur of the Year” competition in South Africa and went on to win the world “Entrepreneur of the Year” earlier this year in the category of Managing Transformation. S OCIAL RESPONSIBILITY Each region and branch of Renfin is encouraged to become involved in community projects in the areas of education, children, conservation and crime prevention. Current projects include work with AIDS babies and abused children, fundraising programmes for the Red Cross and the Salvation Army and work with the blind. The division is also an active member of Business Against Crime. PA G E 48 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT P OST- BALANCE SHEET EVENTS understands the reality of future non-commission income streams. The many Renfin clients who have With effect from July 1 2001 25% of the equity in Rennies Travel, encompassing the retail and wholesale operations of Rennies Travel and the related airport services business, was acquired by Women’s Development Bank Investment Holdings, which is part of the Women’s Development Bank Trust, a non-profit organisation founded by Mrs Mbeki in 1991 to provide small business loans and business training for rural women. migrated to management and transaction fees are already enjoying the benefits of this method of payment as the focus of the travel management company is clearly on achieving significant cost savings for the client without being dependent on suppliers remuneration only. Rennies Bank continues to invest in the systems infrastructure required for the launch of new products and services, which will be rolled out during the P ROSPECTS Global experience in e-business has shown that consumer confidence is an important ingredient in the value mix and Renfin has a distinct advantage with most of the well-known and trusted brands in its stable. Promotion of those brands coupled with the leverage of the immense buying power of the group will deliver unrivalled price and value propositions to both traditional and online customers. The combination of excellent service and competitive pricing, together with technology appropriate to the client’s needs, is expected to deliver long-term value. The immediate future of the travel businesses will be challenging as commission-based income is migrated to fee-based income. Fixed percentage commissions from suppliers will disappear altogether, being replaced by fees for services provided to clients plus fees for services rendered on behalf of suppliers. It is believed that this is a more appropriate form of remuneration and, in the long-term, will restore profitability to all travel companies. The transition period could prove difficult until the market coming year. The focus of the Bank will continue to be in the core competence arena of foreign money transfers, while expanding the full range of treasury services to existing clients, and capitalising on the opportunities offered by the Group companies. Participation in several e-commerce portals, including mymarket.com, offers the Renfin companies the opportunity not only to be the preferred travel and forex service provider to a wide range of business consumers, but also to effect process improvements with many existing corporate clients. PA G E 49 R EVIEW OF OPERATIONS T H E F O O D S E RV I C E P R O D U C T S D I V I S I O N ’ S REVENUE CONTRIBUTION TO GROUP O P E R AT I N G INCOME The Foodservice Products Division The Foodservice Products Division The Foodservice Products Division The Foodservice Products Division 43,3% 46,5% 31,0% 29,3% 2001 2000 2001 2000 CONTRIBUTION C AT E R P L U S LOCAL TO T H E F O O D S E RV I C E P R O D U C T S D I V I S I O N – 2001 C AT E R P L U S FOREIGN COMBINED FOODS REVENUE 10,3% REVENUE REVENUE 4,9% 84,8% O P E R AT I N G INCOME O P E R AT I N G INCOME O P E R AT I N G INCOME 23,9% 15,5% 60,6% PA G E 50 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT The Foodservice Products Division T H E F O O D S E RV I C E P R O D U C T S D I V I S I O N ’ S CONTRIBUTION TO GROUP REVENUE O P E R AT I N G INCOME Rmillion 12 663 13 227 Rmillion ’00 ’01 ’00 ’01 359 445 2001 SEGMENTAL ANALYSIS (R’000) Revenue Operating income Depreciation Capital expenditure Funds employed Employee benefits and remuneration RATIOS AND STATISTICS Return on average funds employed (%) Operating income margin (%) Number of employees 13 226 694 444 791 160 806 205 990 1 076 427 1 300 725 2000 12 663 190 358 792 124 062 162 631 928 795 1 127 404 44,4 3,4 8 492 40,5 2,8 8 044 PA G E 51 R EVIEW OF OPERATIONS Caterplus will continue to seek additional benefits from the market and improve its market share Colin Kretzmann Chairman PA G E 52 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Caterplus spend more of their disposable income on the lotto, DIVISIONAL REVENUE CONTRIBUTION TO GROUP gambling and cellphones, there has been a decline in ‘out-of-home’ food consumption. O P E R AT I N G INCOME During the year certain major national customers grouped together to create a consolidated purchasing forum intensifying pricing demands on traditional Rmillion Rmillion 270 10 778 11 213 distributors, which resulted in a decline in our trading margins. In response, Caterplus focused on managing 191 99 106 1 246 1 361 Local Foreign overheads and infrastructural costs more acutely. This consolidation process is likely to continue and the ’00 ’01 ’00 ’01 national account market will be serviced differently in the future. In spite of these difficulties, Caterplus will continue to S OUTH A FRICAN MARKET OVERVIEW seek additional benefits from the market and improve its market share by selling range extension to existing customers. The division has budgeted improved results for the forthcoming year. Catering Supplies division The market has changed over the last few years with the introduction of new competitors and the move to outsourcing, which has resulted in increased sales to industrial caterers. Furthermore, the fast food segment has grown at the expense of the restaurant trade. A major trend in the review period has been the tendency of customers to order fewer items more often. This has increased the number of deliveries, which is negatively impacting on the cost of delivery. Caterplus retained its market share despite depressed market conditions, which resulted in a lack of volume growth and an intensifying of competition. The review period also saw a decline in the parastatal segment of the market as subsidies in some areas were reduced or completely withdrawn. The market is at risk of further contraction should the benefits of privatisation and improved tourism not filter through in the near future. The advent of casinos has had both a positive and a negative impact in that the increased volumes from operators inside the casinos has been to the detriment of restaurants in the vicinity. Furthermore, as consumers PA G E 53 Caterplus ▼ DIVISIONAL REVENUE CONTRIBUTION TO GROUP O P E R AT I N G INCOME 41,2% 44,1% 26,2% 23,7% 2001 2000 2001 2000 To compensate, all operations within the Catering Supplies division have moved to a more servicefocused business model in which, to improve the economies of scale, superior service and a bigger basket of products are sold. Frozen Foods division The Frozen Foods division has recorded good results for the year. The market, which remains in a state of flux, has seen a certain amount of consolidation in the period under review. To achieve continued growth, Seaworld is expanding its geographical spread with the planned introduction of multi-temperature branches in Nelspruit, the Northern Province and Port Elizabeth. The feasibility of areas bordering on South Africa is also being researched. Continued volume growth is anticipated and improved profitability has been budgeted for the year ahead. Speciality division Patleys, which differs from the other divisions within Caterplus in that it markets, sells and distributes global and local brands on an exclusive basis in South Africa to the retail, wholesale and industrial markets, has also had an excellent year. As the products are targeted towards the upper income brackets the recessionary effects of the foodservice industry are not as keenly felt and the demand for luxury products has not abated. Patleys’ growth has been significant as a result of the introduction of new agencies and the organic growth of both Goldcrest and existing agencies. The development of new distribution channels contributes to the organic growth with products now being sold to retailers traditionally not involved in foods. PA G E 54 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Patleys is privileged to be in the position to select only leading international brands in line with its strategy to distribute only a brand leader per product category. Patleys is very discerning as it strives to attract manufacturers of special occasion foods to complement its existing high profile basket of brands. All advertising and marketing strategies are designed to create a unique awareness of the variety of special occasion foods, which Patleys has to offer. Patleys is a member of Cercle Européen Importeurs Spécialités Alimentaires and hosted their annual conference in the period under review. The Cape Town factory was integrated with the Johannesburg factory. Significant costs have been taken out of the Vulcan-Caars operation and the division is encouraged by the big improvement in productivity and efficiency within their now enlarged Johannesburg factory. The redefined focus on sales branches nationwide is expected to contribute a large increase in operating profits for the next financial year. I NTERNATIONAL MARKET OVERVIEW Bidvest United Kingdom The depreciating rand does pose a potential risk, but to date this has not had any material effect and there has not been any significant drop in volumes. Catering Equipment division merger of manufacturers, wholesalers and operators. Vulcan and CAARS were successfully integrated into a single cohesive group in the early part of the financial year under review. The initial stages of the merger of the two operations had its problems, but the newly created Vulcan-Caars group is beginning to develop to its full potential. Vulcan-Caars operated in a difficult, volatile and cyclical market and yet was able to generate a doubledigit increase in sales, which improved their leading market share in South Africa. The depressed local construction industry and volatile political events in the southern African sub-continent impacted on the growth of domestic and export sales respectively. Despite increased sales, operating profit declined marginally, primarily as a result of the costs arising from the closure of the La Chef factory in Cape Town and the warehouse distribution centre in Johannesburg. As foodservice customers become more discerning, the pressure on operators to create new dining out experiences and to continually improve quality and value offerings, is increased. This tendency strengthens the position of innovative players who have already invested in market research and development. 3663 First for Foodservice, with its quality customer base, is well positioned to benefit from these trends. Despite an overall flat market with no product cost inflation, market confidence remains positive. Eating out has become part of people’s lifestyle and is less affected by economic performance. It is believed that 32 pence out of each food pound is spent dining out of home and is set to follow the American model, rising to 50 pence in the pound in the medium- to long-term. 3663 First for Foodservice performed well against the backdrop of a foodservice industry which continues to polarise by the consolidation and PA G E 55 Caterplus The increased intellectual capacity will further fuel the cross-pollination of ideas and expertise The much publicised foot-and-mouth disease had little effect on overall trading results. As a true national distributor, 3663 has experienced significant trading downturn in some badly affected areas, but this was adequately compensated by additional sales in holiday resorts and theme parks. As the competition for labour increases, the recruitment of new staff to manage and process newly won business becomes more challenging. However, the new recruitment and retention techniques that have been trialled at 3663 have enjoyed early success. Bidvest Australia Bidvest Australia managed to gain market share through strong organic growth of approximately 10% in a market that grew by only 3 to 4%, a feat attributable ▼ to the focus and synchronisation achieved from the years of consolidation, which has positioned Bidvest Australia as the Australian foodservice market’s supplier of choice. The Australian economy slowed in the second half of 2000 as a result of the post-Olympics effect and the introduction of General Sales Tax. However, the country showed small positive GDP growth in the first quarter of 2001. Whilst economists are cautiously optimistic, there remains uncertainty. The total foodservice market, estimated to be in the region of A$2,4 billion at retail level, saw growth below that of the previous reporting period. The bulk of the national distribution structure is now in place and Bidvest Australia offers one of the most comprehensive ranges of products and services to the PA G E 56 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT foodservice market, which is growing as more people eat outside the home due to shifting consumer demands. Bidvest Australia is well positioned to further benefit form these changing dynamics and continue its previous organic growth. The acquisition of John Lewis Foodservice, with effect from June 4 2001, greatly enhances Bidvest Australia’s position as the leading national foodservice products distributor, providing increased national coverage, enhanced economics of scale and greater purchasing efficiency. Bidvest New Zealand share in the review period as a result of both strong organic and acquisitive growth. F INANCIAL REVIEW Caterplus’ revenue grew by a modest 4,6% to R12,6 billion (2000: R12,0 billion). The local contribution to revenue increased by 9,2% to R1,4 billion (2000: R1,2 billion), yet the foreign contribution only rose 4,0% to R11,2 billion (2000: R10,8 billion) mainly as a result of the reduction in revenue in the 3663 First for Foodservice Logistics division arising from the changeover of contracts to a bespoke logistics offering. Operating income increased by 29,8% to R376 million New Zealand’s economy grew solidly in 2000, but slowed towards the end of the financial year. The exchange rate depreciation had a positive impact on exports and the world prices of New Zealand’s commodity exports have remained favourable. There is anecdotal evidence of an increase in tourism as a result of the weakness of the New Zealand dollar, which has in turn benefited the foodservice industry. Bidvest New Zealand, trading as Crean Foodservice, is the leading player in the New Zealand foodservice market, which was historically highly fragmented. Frozen and chilled distribution consisted of many small to mid-size privately-owned businesses and dry product distribution was largely dominated by two cash and carry wholesalers. Crean Foodservice, under Bidvest ownership, has altered the foodservice landscape and is now the only national, servicefocused, broadline foodservice products distributor in New Zealand. The foodservice industry is a growing market and Crean Foodservice substantially increased its market (2000: R290 million), assisted by the strong performance of Bidvest plc. Strong growth in operating margins in the UK and Australasia, augmented by acquisition activity in Australasia, resulted in a 41,0% increase in the foreign contribution to operating income to R270 million (2000: R191 million). Caterplus’ return on average funds employed increased to 42,6% (2000: 37,6%). VALUE STRATEGY Caterplus’ strategy is to maintain its position as a leading food and foodservices organisation in the countries in which it operates and to use the critical mass of the local and international operations as the base from which to drive international expansion. The globalisation phenomenon is not without opportunities and the foodservice industry is expected to see the emergence of global foodservice operators who seek out international opportunities. Bidvest’s foodservice companies are ideally positioned to supply PA G E 57 Caterplus The introduction of the ‘First for Service’ programme, as used in the United Kingdom, is undoubtedly the most significant development such a service and the economies of scale that this international distribution will bring, hold promising prospects. Already, the knowledge transfer between the various Caterplus operations has resulted in improved efficiencies and practices and, as new acquisitions are sought, the increased intellectual capacity will further fuel the cross-pollination of ideas and expertise. ▼ Patleys acquired new brands from the Phillip Morris group (Kraft confectionery, Post cereals and Jacobs coffee), the Pascual range of ambient temperature yoghurts and HP and Lea Perrins sauces. Bidvest Australia acquired Citifoods in Melbourne, Garozzo Agencies in Cairns and John Lewis Foodservice with its twelve branches throughout Australia. These acquisitions have greatly enhanced Bidvest Australia’s position as the leading national Y EAR UNDER REVIEW foodservice products distributor, but have had no material impact on results of the review period. Rotorua Juice in Rotorua, New Zealand’s main tourist destination, Seafood Specialities and Coolfoods in Wellington, and Mainstream Foods in the South Island were acquired by Bidvest New Zealand giving them national coverage and a broadline product range. Acquisitions and disposals The Frozen Foods division acquired East Cape Foods. The business is situated in Port Elizabeth and this acquisition gives the division its first multi-temperature branch as well as distribution capacity in the eastern Cape. PA G E 58 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Bidvest Australia disposed of its non-core business, Peter’s Fish Market, at the Sydney Fish Market. Customer and employee satisfaction Customer retention has overall been high although the Catering Supplies division has chosen not to compete for very low margin business. In the upcoming year the division intends being more aggressive in retaining its customer base by supplying an even wider range of products, which has historically been its competitive advantage. No industrial action took place in the review period and training and motivational programmes have contributed to a high level of employee satisfaction. The ‘First for Service’ quality management programme was introduced to the local operations in the review period and is expected to significantly contribute to employee satisfaction. New product development As distributors, the Caterplus operations are not directly involved in developing new products and rather see innovation in their mix of product and service offering. Patleys, however, is in the process of significantly reviewing and updating its own brand, Goldcrest. The intention is to dramatically grow this brand and new products are currently being developed that will be launched in the next financial year. Operational highlights In the review period Patleys embraced the philosophy of category management and segmented its operations into three divisions – Groceries, Perishables and Confectionery – with a general manager now responsible for developing both the category and the brands in each. This is expected to bolster the growth of the business through an increased focus on the operational areas. With the exception of John Lewis Foodservice, which was acquired late in the reporting period, all the Bidvest Australia operations are now operating on a single IT system, which greatly improves operating efficiencies and enhances their competitive advantage. Bidvest Australia is also substantially down the path of obtaining Quality Assurance and Hazard Analysis Critical Control Point accreditation at all sites, with the majority already having achieved this status as at the end of June 2001. 3663’s highlights include the Frozen division’s entry into the retail market, including a new depot at Barking, London, the expansion of the Ministry of Defence operations into Sierra Leone, where it now operates a small depot with its service partner, and the start of the new Compass contract in the MultiTemperature division, which saw an increase of total volume of 10% of their entire business over four weeks. Crean Foodservice’s centralised billing and reporting systems have been installed in Wellington and the other South Island branches are in the process of converting. The division also began rebranding all of its operations as Crean Foodservice, which has been met with positive reaction from all quarters. People The introduction of the ‘First for Service’ programme, as used in the United Kingdom, is undoubtedly the most significant development in Caterplus South Africa. This programme, which has been modified PA G E 59 Caterplus Caterplus has a significant competitive advantage and the aggressive implementation of its sales drive is expected to entrench its position as the supplier of choice for local conditions, is a quality management programme aimed at developing every member of staff and is also directed towards promoting excellence in customer service by improving internal communications and teaching employees the value of their contribution to the supply chain. It is an interactive programme with workshops and courses and will see the introduction of service level measurements to monitor its success. A significant investment will be made in the next financial year and it is anticipated that the benefits of the programme will flow through immediately. ▼ legal requirements pertaining to the Employment Equity and Skills Development Acts. In giving support to the philosophy of decentralised management, each operating branch within the division has submitted individual Work Place Skills and Equity plans where appropriate. Progress reports against training targets have already been submitted to the relevant Sector Education Training Authority for the first year’s plans, and the compilation of new plans is at an advanced stage. Focusing at branch level has allowed accelerated progress in terms of appointing previously E MPOWERMENT Caterplus continues to invest in training and development with emphasis being placed on previously disadvantaged individuals. The division has met all disadvantaged individuals, who have obtained the requisite skills, into managerial positions. The division has continued to increase training and development budgets and had put training resources in PA G E 60 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT place to support and give impetus to its commitment in terms of equity and skills. In addition to the training initiatives, Caterplus drives empowerment through its 25% holding in Vuka Catering Supplies. The balance of the shares are held by Victor Matsoane (51%) and the Orlando Children’s Home (24%). Vuka Catering Supplies is a wholesale marketer of a full range of grocery products to the catering, leisure and foodservice industries. distribution network and the necessary capacity to meet the increased demands of privatisation and improved tourism. All Bidvest plc operations are market leaders in their respective areas and their focus on superior service and supplying the appropriate product mix is expected to contribute to another pleasing performance in the next financial year. The division will continue its geographic and product expansion through Bidvest plc. The offshore operations are expected to continue to deliver above average returns as both organic and acquisitive growth drive those businesses. Acquisitions will continue to be sought with an emphasis on securing a presence in the American and European markets. P ROSPECTS Catering Supplies is expected to improve its performance in the upcoming year and to maintain its returns. As the only national distributor to the catering industry it has a significant competitive advantage and the aggressive implementation of its sales drive is expected to entrench its position as the supplier of choice. Although frozen foodservice has, in the past, not been brand driven, international trends are changing and the Frozen Foods division is following suit. This move is anticipated to increase the product offering and, in turn, see an increase in volumes. Patleys will be launching a number of new products in the next financial year. Its current performance is anticipated to persist with the continuing consumer demand for higher quality, ‘designer’ foods. mymarket.com is expected to boost revenues in the medium-term as it is an ideal procurement mechanism for foodservice operators. Caterplus is the only national player in the South African foodservice industry with an incomparable PA G E 61 R EVIEW OF OPERATIONS Combined Foods’ strategy is to become the leading manufacturer in the sectors of the food industry in which it operates Colin Kretzmann Chairman PA G E 62 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Combined Foods levels of service. However, there was a marked increase DIVISIONAL REVENUE CONTRIBUTION TO GROUP in competition with the deregulation of the industry, which now allows for smaller, lighter loaves to be O P E R AT I N G INCOME produced. The effect has been two-fold: Firstly, a number of small new entrants have been set up and are supplying the industry with low-price, low-quality products, which Rmillion Rmillion 639 652 69 69 has had a negative effect on Chipkins Bakery’s margins. Secondly, the lower standards have led to a reduction in volumes, as less of Chipkins Bakery’s products are ’00 ’01 ’00 ’01 required per loaf of bread produced. NCP Yeast The rationalisation of the baking industry resulted in a M ARKET OVERVIEW generally flat market for yeast products. The markets in which the division serves have all been affected by HIV AIDS, reduced disposable income and / Chipkins Bakery Supplies There have been significant changes in the bakery market in recent years as many milling companies closed down some bakeries and reorganised their businesses. There are now substantially fewer plant bakeries, but this has been countered by the growth in small in-store, hot bread bakeries. Despite this movement, there has been an overall decline in the size of the market. Chipkins Bakery was not as affected as some of the other players in the market as it already services many of these smaller bakeries and the division performed reasonably well, due in part to its consistently high unemployment. To compensate, NCP Yeast has embarked on branding and advertising programmes for its Superbake instant dry yeast brand. The objective is to promote the NCP brand as the brand of choice in the marketplace. The division, nevertheless, produced pleasing results and maintained its market share due to the consistently high quality of its products and the high level of service it provides to its customers. Chipkins Bakery will complement the NCP Yeast distribution network to improve market penetration. PA G E 63 Combined Foods DIVISIONAL REVENUE 2,1% 2,3% ▼ CONTRIBUTION TO GROUP O P E R AT I N G INCOME 4,8% 5,6% 2001 2000 2001 2000 Crown National The anticipated improvement in market conditions did not materialise and consumer demand for red meat and other related food products continued to decline during the period under review. This resulted in more competitive trading conditions, with an adverse effect on margins. In addition, the outbreak of foot-and-mouth disease played havoc with the red meat market. In response Crown National resolved to innovate and create opportunities from these adverse conditions and has set the objective to become a low cost manufacturer and distributor with a superb service culture. Repositioning key people in order to achieve maximum utilisation of their strengths, to improve service levels to customers and to reinforce their "We’re Here to Help" philosophy, further strengthened the decentralised business units. The division has identified, focused on and exploited opportunities, which exist with key customers in specific market segments, and will continue to focus on research and development to drive the implementation of cost effective, convenient, innovative ingredients for the meat and food industries. The full benefit of these opportunities are expected to materialise in the year ahead. F INANCIAL REVIEW Revenue increased by 2,1% to R652 million (2000: R639 million) with a marginal decline in operating income to R69 million as a result of the highly competitive trading environment in which this division operates. Combined Foods continues to add value to the Group with a return on average funds employed of 57,1% (2000: 60,2%). PA G E 64 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT VALUE STRATEGY Employee satisfaction has also been high. Many staff members have been with Combined Foods for a Combined Foods’ strategy is to become the leading manufacturer in the sectors of the food industry in which it operates by offering customers business solutions and technical advice, which will add value to their businesses and cement relationships with them. The aim is to be innovative and able to respond swiftly to market movements by introducing new products, new recipes and new flavours to both the butchery and bakery industries, thereby maximising the capabilities of current production facilities and Combined Foods’ pool of highly skilled personnel. In addition, the division continues to strive to maintain its position as a low cost producer of quality products and to be the lowest cost distributor. Innovation and flexibility are critical attributes in the drive to add the kind of value to clients that will assist them in maintaining their competitive edge. Services that are now being marketed to clients include demonstrations and new product testing using Combined Foods’ facilities. Clients are encouraged to make use of the division’s expertise to develop new flavours and products best suited to their markets. number of years and there is a strong feeling of unity and loyalty amongst both management and staff. New product development Crown National strengthened its research and development facilities with the objective to provide a world-class product research and development service, which not only satisfies but pre-empts customers’ needs, and creates new opportunities through the development of new and unique products. Chipkins Bakery continuously seeks to develop new products and improve existing products, whilst NCP Yeast, which operates in a market that has seen no new product development for a number of years, changed the packaging of some of its products, in order to seek better brand image advantages. Operational highlights NCP Yeast’s agreement with Yeastpro, its joint venture manufacturing operation, was amended so as to reflect a more equitable allocation of costs. The benefits of this change materialised and are expected to continue to be felt in years to come. Crown National opened a number of “Spice World” cash and carry outlets, catering to retail butchers and Y EAR UNDER REVIEW Customer and employee satisfaction As a customer-centric organisation with superior service levels, the division reported extremely low levels of customer turnover. All the Combined Foods operations reported improved levels of customer satisfaction and their continued emphasis on adding value to their customers’ businesses is expected to further strengthen relationships. consumers. They also achieved Hazard Analysis Critical Control Point accreditation, through the South African Bureau of Standards, during the third quarter of the trading year and the benefits are being realised. People Issy Berman, who had been with Chipkins for forty five years, retired as Managing Director of PA G E 65 Combined Foods The focus on innovation, flexibility and high levels of client interaction are expected to contribute to an improved performance Chipkins Bakery at the end of June 2001. He was responsible for setting up the Bakery Supplies division and can take much credit for its success. ▼ and secondary school education as well as business appreciation programmes. In order to support the division’s commitment to E MPOWERMENT All operations have met the requirements of the Employment Equity and Skills Development Acts. The division has submitted progress reports in terms of its first year Work Place Skills plans to the relevant Sector Education Training Authority and individual business units are currently advanced with their second phase skills plans. Emphasis continues to be placed on training and development of previously disadvantaged individuals and, within the division, programmes are in place for continued adult education, comprising primary equity and skills development, training budgets continue to be increased. S OCIAL RESPONSIBILITY Crown National runs an adult education program me through an institution called Leadership Through Creative Education. The programme has been running in Johannesburg since 1993 and is fully subsidised by Crown National. Classes include tuition to matric, various basic adult education programmes as well as courses on business appreciation, motivation and corrective counselling. PA G E 66 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Crown National has seen some staff members progress successfully from basic education through matric to tertiary education level. P ROSPECTS The focus on innovation, flexibility and high levels of client interaction are expected to contribute to an improved performance. As Combined Foods becomes a truly service-focused organisation, the value it adds to the market through its research and development of new foods and flavours, and its participation in its clients’ product strategy, will position it as a world-class food and foodservice supplier. Combined Foods’ expertise and facilities gives it a competitive advantage not easily matched. The implementation of the ‘First for Service’ quality management programme is also expected to deliver improved returns in the next financial year. The programme is focused on training all levels of staff on all the elements that make up service excellence. It is designed to develop people’s capabilities to their maximum potential and create a ‘buy-in’ to the company’s mission and vision and to thereby promote accountability and pride in the services rendered. PA G E 67 R EVIEW OF OPERATIONS THE COMMERCIAL PRODUCTS DIVISION’S REVENUE CONTRIBUTION TO GROUP O P E R AT I N G INCOME 11,0% 11,3% 20,3% The Commercial Products Division The Commercial Products Division The Commercial Products Division 21,2% The Commercial Products Division 2001 2000 2001 2000 CONTRIBUTION TO T H E C O M M E R C I A L P R O D U C T S D I V I S I O N – 2001 B I D PA C BIDOFFICE REVENUE REVENUE 20,4% 79,6% O P E R AT I N G INCOME O P E R AT I N G INCOME 29,4% 70,6% PA G E 68 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT The Commercial Products Division THE COMMERCIAL PRODUCTS DIVISION’S CONTRIBUTION TO GROUP REVENUE O P E R AT I N G INCOME Rmillion Rmillion 3 069 3 372 ’00 ’01 ’00 ’01 259 290 2001 SEGMENTAL ANALYSIS (R’000) Revenue Operating income Depreciation Capital expenditure Funds employed Employee benefits and remuneration RATIOS AND STATISTICS Return on average funds employed (%) Operating income margin (%) Number of employees 3 372 066 290 216 95 352 114 166 1 018 468 566 374 2000 3 068 867 259 466 84 646 113 740 926 875 521 587 29,8 8,6 7 526 29,6 8,5 7 238 PA G E 69 R EVIEW OF OPERATIONS Bidoffice’s success rests on its ability to anticipate and successfully adapt to the unstable office environment Len Chimes Chairman PA G E 70 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Bidoffice DIVISIONAL REVENUE CONTRIBUTION TO GROUP Kolok has continued to increase market share through the expansion of its core business. Despite pressure on O P E R AT I N G INCOME margins, the business increased volumes and improved efficiencies which translated into cost reductions and an Rmillion Rmillion increased operating profit contribution. Furniture 2 414 2 686 172 205 The corporate furniture market has been tough and appears to be slowly dominated by joint ventures with black empowerment companies. Cecil Nurse participates in this sector via its empowerment partner, ’00 ’01 ’00 ’01 Corporate Concepts. Some competing manufacturers closed down and as a result the Furniture division’s trading volumes M ARKET Stationery OVERVIEW increased. Bidoffice participated in this growth and increased its market share. These closures also led to industry specialists offering their services as brokers. Their ability to source the cheapest product for their clients from a number of manufacturers has seen pressure on margins. The move of businesses to the suburbs is expected to continue and this holds promise for the industry as relocations often involve the purchase of new furniture. Cecil Nurse, which has been refocused and now operates predominately in its traditional markets, servicing small- to medium-sized businesses, differentiates itself in terms of the value it adds. It has an in-stock position and is able to deliver faster than its competitors. Where required, Cecil Nurse is also able to offer its clients designers and installation crews. Waltons has followed the international trend away from computer hardware and software to focus on stationery and related products. The market has, furthermore, seen a continued shift in the mix of products sold, moving away from traditional paper-based stationery to computer consumables. Being the leading company in the stationery division, with its national coverage, Waltons is a major player in the market, a position it has ably maintained. The company has redefined its target market with a split between retail and commercial, and the reworking of the retail model has refined this new strategy. Waltons, incorporating OfficeMart, operates through smaller, more focused stores with lower overheads, a new model that is working well. PA G E 71 Bidoffice ▼ DIVISIONAL REVENUE CONTRIBUTION TO GROUP O P E R AT I N G INCOME 8,8% 8,9% 14,3% 14,1% 2001 2000 2001 2000 Following significant restructuring and refocusing, Cecil Nurse has exceeded expectations. The business is well positioned to further increase its contribution to the division in the new financial year. Dauphin’s results have also been pleasing and it is anticipated that it will maintain its current market share. Automation The industry transition from analogue to digital copying is expected to continue. This transition has changed the typical sales cycle with sales representatives now dealing with IT managers rather than office managers, and the sales decision appears to be taking longer, as a result of the more complicated network matters that need to be addressed. Earlier in the reporting period, the digital offering was lacking as Minolco Japan lagged behind its competitors. This situation has been rectified and the ranges are now complete and competitive. It is anticipated that growth in the office automation market will be slow as market conditions are tough. Many corporates have now invested in digital technology and the past exceptional performance is not expected to be repeated. Nonetheless, Bidoffice does expect real growth from the Automation division. Outsourcing of corporate copying functions is a promising development and Minolco, which is well positioned to take advantage of this, currently runs a number of such operations. It is expected that this trend will continue, with an increasing number of corporates making use of this alternative. Despite coming off such a high base the Automation division has performed exceptionally well relative to its competitors, with 27% of its income coming from annuity revenue. Independent research has shown that this division has increased its market share and that it is one of the ‘big three’ players in the market. Lithotech The printing industry has evolved over the last few years and to remain competitive it is no longer sufficient merely to deliver the simple print commodities. Companies are now expected to be able to offer a full communications solution encompassing PA G E 72 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT print, processing, design and logistics. Lithotech’s offering meets this demand and includes various traditional printed products, electronic and IT products, and outsourced services such as personalisation, mailing, storage and distribution. Lithotech performed well in a contracting market and it is currently taking steps to ensure that it meets future market demands, especially in the printing outsourcing arena, which is proving to be a growth area as companies attempt to reduce costs in non-core business activities. The division, with its empowerment partner, Zinhle Printers, was awarded the strategically important Census contract, validation of the decision to step up production capacity and to niche Lithotech in this high volume segment of the market. The next financial year should show reasonable growth from the continued ‘right sizing’ of the operation. Each of Bidoffice’s divisions operates in its own segment of the office market and acts independently to meet the shifting demands of those industries. Bidoffice prides itself on the superb quality of its management and the agility of its structure, which allow it to continuously refocus to keep abreast of market movements. Bidoffice’s vision and mission is to retain its position as a leading player in the office environment and to this end has, for a number of years now, incentivised its prized pool of management, actively developed the skills of its staff across the board, focused on service levels and added value to its product offering. Y EAR UNDER REVIEW Acquisitions and disposals There were a number of small acquisitions in the Stationery and Printing divisions, and there are further acquisitions still under negotiation. F INANCIAL REVIEW In the Automation division, QMS Minolta was acquired, and there are a few small acquisitions pending in the Furniture division. There were no disposals, but OfficeMart was downsized and integrated into Waltons. Customer and employee satisfaction Customer retention and satisfaction remained high, Bidoffice saw an increase in revenue of 11,3% to R2,7 billion (2000: R2,4 billion) and a 19,0% rise in operating income to R205 million (2000: R172 million). Bidoffice is meeting the expectations of the Bidvest Group. It is generating cash and has a return on average funds employed of 29,3% (2000: 27,4%). VALUE STRATEGY highlighted by the remarkable performance of Kolok’s consumables division. Customer satisfaction is an important focus of the division and to this end Bidoffice Corporate Solutions was started in an ongoing drive to exceed customer expectations. Employee satisfaction was also above average in the reporting period with few distractions and staff turnover was at a minimum. Bidoffice’s success rests on its ability to anticipate and successfully adapt to the unstable office environment. One such initiative is the formation of Bidoffice Corporate Solutions in the period under review. This division works together with Bidserv to offer an integrated solution to corporates, be it on an outsourced or in-house basis. To date the move has been successful and shows great potential. The initiative, furthermore, fits well with mymarket.com, which will be the fulfilment mechanism. PA G E 73 Bidoffice Bidoffice’s vision and mission is to retain its position as a leading player in the office environment ▼ Operational highlights Kolok has improved both profitability and market share in the review period. Since the award of the Hewlett Packard distributorship this division has grown exponentially despite general market conditions in which competitors have floundered. Waltons performed exceptionally well and the integration of the OfficeMart stores has been successfully completed. Cecil Nurse was refocused and will be opening up more showroom branches, the first of which is due to be opened early in the new financial year. Other sites are currently being investigated. It has been a focus of the division to develop meaningful empowerment relationships and the formula followed has proved to be successful. The following joint ventures are currently in place: Corporate Concepts Corporate Concepts is a 50/50 partnership, established in 1994 between Peter Mbolekwa and Cecil Nurse promoted by a joint vision of the parties to create what is believed to be one of the first empowerment initiatives in the industry. Dalisu Office Supplies Dalisu is 100% black empowered with a distribution agreement with Waltons. Dalisu supplies office stationery, office furniture and computer consumables in the KwaZulu-Natal region. Ilanga Minolta Ilanga Minolta is a distributor of Minolta and Océ photocopiers, facsimile machines and laser printers E MPOWERMENT Bidoffice has committed itself to having a staff profile representative of the demographics of the country and both the Employment Equity and Skills Development plans are being implemented without problems. PA G E 74 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT under a dealership and co-operation agreement with the principal importers and distributors, Minolco. P OST- BALANCE SHEET EVENTS An offer to buy Paragon, the listed business forms and Katuliiba Southern Trading Katuliiba Southern Trading, registered as a close corporation in 1991, and owner, Peter John Katuliiba, linked up with Lithotech to form a 50/50 joint venture in 1997. It has since been agreed to transfer 10% of Katuliiba Southern Trading’s shareholding to previously disadvantaged individuals who generate agreed sales levels within a specified period. Matlafatso Stationery Bidvest owns 49% of Matlafatso Stationery, whilst the balance is owned by Sedibeng Investment Holdings, which is 100% controlled by an empowerment group. Matlafatso Stationery sells stationery and allied equipment and office furniture. Phakama Phakama is a 50/50 joint venture between Lithotech and Nhlanhla F Nkosi, and is active in the sale and distribution of Lithotech products. Silapha Office Products Silapha Office Products is 100% black-owned with a distribution agreement with Waltons operating in the western, northern and eastern Cape regions. It is involved in the sale of office stationery, office furniture and computer consumables. Zinhle Printers This company is a 50/50 joint venture between Lithotech and Sisekelo Printing Publishing and Stationery. The closing down of the Southern Life Printing operation created an opportunity for two of its employees, Alfred Sithole and Eddie Colledge, to start their own business, Zinhle Printing Publishing and Stationery (ZPPS). After a year of operation ZPPS joined forces with Lithotech to form Zinhle Printers. PA G E direct mail group, will be made for between R52 million and R56 million. The deal is subject to a due diligence, the final Paragon year ended June 30 2001 figures, approval by the Competition Authorities and JSE, and acceptance by at least 90% of Paragon’s shareholders, or approval by at least 75% of those present at the required meeting. P ROSPECTS Long-term growth will be delivered through the value Bidoffice adds to its product and services. Bidoffice dedicates both time and resources to ensuring that they offer the best brands, keep abreast of technological change, develop products to meet these changes, have highly trained and motivated staff and deliver an impeccable service. Waltons has developed a range of proprietary ‘prime line’ brands and has implemented an online ordering system for those customers who do not have Internet access and who cannot take part in mymarket.com. The incorporation of Paragon into Lithotech, should the transaction be concluded, is expected to boost the profit contribution of that division through cost rationalisation and the extending of its product and service offering. Bidoffice’s distribution capacity is another cornerstone of long-term value creation, demonstrated by the advantage the Furniture division has over its competitors by being able to deliver within 24 hours. Speedy delivery is a motto and a service culture is actively promoted. The agility and managerial excellence of Bidoffice is expected to deliver above average returns in the coming financial year. 75 R EVIEW OF OPERATIONS Bidpac is a low cost producer and distributor of its products and aggressively addresses productivity and efficiency attributes Alan Salomon Chairman PA G E 76 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Bidpac background of modest turnover growth, the Packaging DIVISIONAL REVENUE CONTRIBUTION TO GROUP Closure division improved operating profit and margins, a highly commendable accomplishment when O P E R AT I N G INCOME measured against the benchmark performance of the dominant players listed under the packaging sector of Rmillion Rmillion the JSE. Buffalo Executape once again produced excellent results 655 686 87 85 off a high base. Afcom-GE Hudson and Buffalo Executape have strong balance sheets, stringent internal controls and excellent corporate governance and are ’00 ’01 ’00 ’01 well positioned to maximise their opportunities in an improved economy. The second half of the financial year showed a distinct improvement in trading activity M ARKET OVERVIEW and this augurs well for the year ahead. Afcom-GE Hudson and Buffalo Executape’s high profile brand names, Sellotape, Tesa, Signode, Paslode, Senco and Rapid enhanced their market position during the year and the relationship with overseas principals improved measurably. These licence agreements have been renewed for lengthy periods. Stationery division The Stationery division, consisting of Silveray Stationery Company, Hi-Maur Labelling Systems and Ozalid (South Africa), had a difficult year, which was exacerbated by lower throughput and lower economies of scale in their respective factories. Silveray enhanced its market share with good sales growth, but the level of profitability remained the same Bidpac operated in the difficult, low-growth, manufacturing sector of the South African economy, which impacted measurably on volumes produced throughout the division’s ten factories. Notwithstanding declining manufacturing volumes and lower economies of scale, Bidpac once again showed its mettle in a difficult business environment. There was no growth in the markets it serves, but through aggressive and dynamic sales programmes, market share was maintained and, in some instances, improved, and all operations within Bidpac maintained their leadership positions. Packaging Closure division The Packaging Closure division encompasses Afcom-GE Hudson and Buffalo Executape. Against a PA G E 77 Bidpac ▼ DIVISIONAL REVENUE CONTRIBUTION TO GROUP O P E R AT I N G INCOME 2,2% 2,4% 6,0% 7,1% 2001 2000 2001 2000 as last year, primarily as a result of the increased costs of advertising and costs related to distribution to the major retail chains. These increased costs have been addressed and management is optimistic that the improved market share and service levels to customers will yield materially improved results to Silveray in the 2002 financial year. Silveray’s asset management improved considerably and was a significant positive cash generator during the year. Silveray maintained its market leadership through superior service, improved product quality and further enhanced its positioning of the Croxley, Rapid and Sellotape brands. Silveray’s export programme into Africa is in its infancy, but the encouraging results achieved in the latter part of the financial year bode well for the future. Hi-Maur Labelling Systems and Ozalid (South Africa) had a poor year and posted a drop in operating profit. There has been a distinct technological shift in customer demand from their core price marking systems and labels as a result of the acceleration of scanning systems being implemented throughout the retail market. Notwithstanding the drop in profitability, these two businesses generated significant positive cash inflows and maintained a healthy return on funds employed, even though these businesses were scaled down in the face of a declining market in their core areas of competency. F INANCIAL REVIEW Difficult trading conditions resulted in only 4,8% rise in revenue to R686 million (2000: R655 million) and a decrease of 2,2% in operating income to R85 million (2000: R87 million). The division’s return on average funds employed was 31,3% (2000: 35,0%). PA G E 78 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT VALUE STRATEGY anticipates good profits and synergistic selling opportunities with other product categories within the Bidpac’s Packaging Closure and Stationery divisions manufacture a wide range of branded products, which are distributed through a nationwide network of branch trading business units. Both divisions manufacture products under licence to some of the world’s leading principals, which provides access to international manufacturing technology and techniques. These agreements together with high profile brands, provide Bidpac with a strategic advantage in the markets it serves. Bidpac is a low cost producer and distributor of its products and aggressively addresses productivity and efficiency attributes in all of its areas of expertise. Bidpac benchmarks itself on international standards of performance set by overseas principals and ensures that products manufactured are competitive in unit cost price and quality. The division is focused on niche products and industries, which earn premium returns compared to large volume commodity type products and services. During the year, Bidpac launched a range of value added products complementing the existing product range. division. During the year the Roll-a-Pak business was closed primarily because customer demand for its lowtechnology, commodity type products had reached the end of its life cycle. Roll-a-Pak’s gummed tape, which is a packaging closure, was integrated into Afcom-GE Hudson and their stationery products consolidated with Silveray. Customer and employee satisfaction Customer service levels continue to improve and, in most cases, exceeded customer expectations. The division’s extensive, nationwide distribution infrastructure, supported by a highly experienced staff, has created a competitive edge. As a market leader, Bidpac has maintained its service and quality leadership status. Staff morale and enthusiasm is high and employees are motivated and optimistic about the growth opportunities in the year ahead. New product development New product development, innovative product changes Y EAR UNDER REVIEW and improved aesthetics have been integral to the division’s strategy over the past decade. Afcom-GE Hudson recently commissioned a state-of-the-art polyethylene extruded (PET) strapping line to manufacture previously imported PET strapping. Similar import substitution initiatives are being explored where the locally sourced manufacturing inputs constitute the majority of the cost of the product being produced. Silveray’s new sophisticated Acquisitions and disposals Effective February 1 2001 the Ramset business was acquired and rationalised into the Afcom-GE Hudson operations. Ramset is a leading brand name, distributing equipment systems and fasteners to the construction and mining industries. Ramset was successfully integrated into Afcom-GE Hudson within a short period after the date of acquisition and Bidpac PA G E 79 Bidpac Bidpac’s ability to trade effectively in a difficult business environment was clearly evident packaging and wrapping line has improved their retail product presentation, which further enhances Croxley as a quality, leading brand. Operational highlights The merger of Afcom and GE Hudson at the end of the previous financial year proved an unqualified success. Focused and aggressive sales programmes saw a significant number of new accounts opened, the full benefit of which will be enjoyed in the year ahead. Furthermore, the synergistic rationalisation of these two operations took significant costs out of the system, some of which were ploughed back into generating a broader customer base in a depressed marketplace. Improved profitability, coupled with tight expense and asset management, generated significant positive cash inflows and this division maintained healthy returns on funds employed. ▼ The Packaging Closure division purchased new equipment and upgraded existing plant, in order to improve the quality of product sold to customers. New equipment purchases were capitalised out of current cash flows and the refurbishment programme was expensed through the income statement. The benefits of the plant upgrade programme will definitely become evident in the year ahead. People The training and development of Bidpac’s people has been at the forefront of the strategy to provide the customer with product quality and service excellence. Bidpac has invested substantial time and resources to provide employees with skills and performance measuring criteria, the benefits of which have resulted in more efficient operations and sound labour relations. PA G E 80 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT P ROSPECTS Silveray’s e-commerce initiative, linked inter alia with mymarket.com, is in the final stages of completion and this Internet offering is anticipated to generate a trading and competitive advantage in the short-term. Hi-Maur is shifting away from price marking systems and labels and is aggressively targeting the large product identification label market in which it is a small player. In the context of this re-direction it has been decided to move Hi-Maur Labelling Systems and Ozalid from Bidpac into Bidoffice’s Lithotech operation, which also manufactures and distributes labels. The synergies between these businesses will generate greater market share in the large, lucrative product identification market. Looking to the year ahead, Bidpac believes the recovery in the South African economy is already taking place and has budgeted for a significant improvement in sales and operating profit. The division continues to pursue synergistic and allied acquisitions. Once again, Bidpac’s ability to trade effectively in a difficult business environment was clearly evident in the past year and demonstrates Bidpac’s potential when reasonable economic and manufacturing growth materialises. The division is now leaner than ever before, which will make it more competitive as a low-cost operation in the markets it serves. PA G E 81 E CONOMIC EMPOWERMENT AND SOCIAL RESPONSIBILITY Bidvest is committed to the concept of good corporate citizenship Former President Nelson Mandela at opening of Queen Noti Clinic. Brian Joffe and Nelson Mandela at the ribbon cutting ceremony, Queen Noti Clinic. Mr Harald Dennewill (director – Namsov) together with a teacher and learners from the Namsov Learn in Peace Centre. Bidvest contributed a fully equipped kitchen to the Topsy Foundation which cares for AIDS orphans. H ISTORY Bidvest is committed to the concept of good corporate citizenship. As a South African company there are a unique set of requirements and obligations towards stakeholders, which for the purpose of economic empowerment, include employees and the communities in which Group companies operate. Because Bidvest operates on a decentralised basis, it has a multifaceted approach to economic empowerment. Each operating unit is responsible, within an overall framework, for its own activities, which would include economic empowerment and social responsibility. are responsible for the daily operations. This policy ensures an active participation by our empowerment partners and delivers real meaning to the transformation process. Joint ventures with previously disadvantaged groups have contributed both to the communities in which they operate, and to Bidvest’s growth. P HILOSOPHY In line with its philosophy of economic empowerment of previously disadvantaged groups through job and wealth creation, Bidvest has to date generated R250 million for organisations seeking to redress imbalances of the past. Bidvest’s 54 000 employees worldwide are also actively Bidvest has sought out and established successful and sustainable joint ventures with empowerment partners who, on a principled basis, are involved as owners and being empowered through training programmes and an equal opportunity policy based on merit and performance. PA G E 82 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Empowerment All Bidvest’s subsidiaries have submitted their Employment Equity and Skills Development plans to the relevant authorities and are on track to meet, if not exceed, the required targets. Bidvest’s strategy regarding affirmative action is aimed at the development of all its employees. It believes that the promotion of a select few individuals is inappropriate. Opportunities are created to enable previously disadvantaged employees to prepare themselves to occupy more skilled and responsible positions within the organisation. The promotion of education and training opportunities, both internally and externally, for all employees is a key aspect of this strategy. The Group sees the acquisition of skills and the provision of career paths as a fundamental pre-requisite for empowerment. Bidvest also believes in the importance of a clean and healthy environment for the well-being of its employees, and for the people of the countries in which it operates. All relevant Bidvest companies have accreditation, or are in the process of becoming certificated with the required international safety and environmental standards. At June 30 2001, Women’s Investment Portfolio Holdings and Worldwide African Investment Holdings respectively hold 1,4% and 1,3% of Bidvest, and together constitute the largest empowerment shareholding, valued at R370 million. Wiphold was set up as an empowerment vehicle specifically for women and has in excess of 1 000 shareholders. Both empowerment groups have main board representation and play a role in the Group’s management. P EOPLE Empowerment is essentially about people and it is our strategic intention that our empowerment and social responsibility initiatives reach the people for whom the programmes are designed. Accordingly, we place great emphasis on dealing only with credible and reputable parties. It is an unfortunate reality that the current legislation encourages ‘fronting’ and Bidvest is vehemently opposed to such practices. People are our greatest asset and lifting the living standards of the communities in which we operate can only serve to strengthen our prospects. The people with whom we have aligned ourselves inspire us and lead us C URRENT EMPOWERMENT HOLDINGS down this road of transformation and we are proud to be associated with them. Approximately 90% of the shares of Bidvest are held by institutions and the extent to which these institutions may be managing or holding these shares for the benefit of black economic empowerment or the previously disadvantaged, is not known. A NEW MEASURE OF EMPOWERMENT In our opinion, government should recognise the wealth created for empowerment groups in monetary PA G E 83 Economic empowerment and social responsibility Bidvest also believes in the importance of a clean and healthy environment for the well-being of its employees and for the people of the countries in which it operates value rather than percentage shareholding. As Bidvest has expanded its capital base the empowerment percentage shareholding has come down, whilst the rand value of the investment of our empowerment partners over the period has been substantially enhanced. Enormous wealth has been created for the Group’s known empowerment shareholders some of whom have liquidated their positions. There are yet others who have indicated their intention to sell their shares and as none of these empowerment groups will reflect on the shareholder register in the future, we will not be acknowledged for the wealth created for them. Empowerment should not be determined by percentages, but should be measured on the rand value of projects, wealth created, educational initiatives and skills development. We have recommended a ‘star rating’ system in which companies are independently and objectively rated according to their achievements in terms of ‘real’ empowerment of previously disadvantaged groups against a predetermined set of standards negotiated by all relevant stakeholders. Under this system companies would submit their empowerment initiatives to an independent body for objective evaluation and would be rated on a scale as a one to five star empowerment company. Tenders and government spending would be awarded on the basis of this rating. E MPOWERMENT JOINT VENTURES The establishment of joint ventures with empowerment groups is an ongoing process within the Bidvest Group of companies: Bidwip Bidwip is a 50/50 joint venture between Bidvest and Wiphold. A number of black entrepreneurs and exBidvest employees have been given an opportunity to be part of this joint arrangement, encompassing: Setsebi Cleaning Services; Thubelihle Property Services; Eyethu Property Cleaning Services; Nomtsalane Cleaning Services; PA G E 84 w THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Ibhayi Cleaning Services; Imonti Cleaning Services; Hlwekisa Cleaning Services; Melisizwa Cleaning Services and Langa Status Cleaning Services. Corporation, part of the Hi-Beam Investment Group, a black investment consortium. Ikhono Technologies BTI Connex Travel Ikhono Technologies, in partnership with I-Fusion, is a Rennies Travel acquired a 49% stake in BTI Connex in 1999 from Transnet. Economic empowerment partners acquired the balance of the shares (31% Shumi Travel and Leisure, 10% National Empowerment Fund and 10% by the Employee Share Option Trust). BTI Connex has enjoyed rapid growth as a result of the acquisition of many large corporate, parastatal and government accounts and operates five branches and nine in-house corporate travel offices around the country. The benefits of the association with Rennies Travel include membership of Business Travel International (BTI), access to products, training and development initiatives and negotiated rates, all of which have a direct benefit to BTI Connex’s corporate travellers. Corporate Concepts Corporate Concepts is a 50/50 partnership, established in 1994 between Peter Mbolekwa and Cecil Nurse Business Furniture, promoted by a joint vision of the parties to create what is believed to be one of the first empowerment initiatives in the industry. Dalisu Office Supplies Dalisu is 100% black empowered with a distribution agreement with Waltons. Dalisu supplies office stationery, office furniture and computer consumables in the KwaZulu-Natal region. Dudula Freightbulk Dudula Freightbulk is a 50/50 joint venture between operations within Bidfreight and Dudula Shipping Master Currency Master Currency is a successful empowerment foreign exchange bureau and a joint venture between Rennies Travel and Mr ZL Combi (51%). The goal of Rennies Travel in this endeavour is to aid black business empowerment in a traditionally Ilanga Minolta Ilanga Minolta is a distributor of Minolta and Océ photocopiers, facsimile machines and laser printers under a dealership and co-operation agreement with the principal importers and distributors Minolco. Katuliiba Southern Trading Katuliiba Southern Trading, registered as a close corporation in 1991, and owner, Peter John Katuliiba, linked up with Lithotech to form a 50/50 joint venture in 1997. It has since been agreed to transfer 10% of Katuliiba Southern Trading’s shareholding to previously disadvantaged individuals who generate agreed sales levels within a specified period. provider of IT systems and infrastructure, and offers an end-to-end IT solution to the corporate, financial and parastatal sectors. The operations include consultation, supply, service, support, implementation of equipment and ongoing management – with a dedicated focus on service excellence and customer success. Ikhono Technologies is 70%-owned by a black empowered consortium headed by Fakazi Nkosi. The balance of 30% is owned by I-Fusion. PA G E 85 Economic empowerment and social responsibility People are our greatest asset In 2000 Mr Combi, the Executive Chairman of Master Currency, was voted winner of the Ernst & Young “Entrepreneur of the Year” competition in South Africa and went on to win the world Entrepreneur of the Year earlier this year in the category of Managing Transformation. Alfred started at Bidvest as driver at corporate office. He since progressed through the adult education programme and was awarded his matric recently. Now working as Store Manager and studying for a business qualification through Unisa. Moses Baloyi worked as a forklift driver for Crown National and has since been promoted to Warehouse Manager. He recently obtained his matric through the inhouse training programme and is studying for a business qualification through Unisa. white-dominated industry. In 2000 Mr Combi, the Executive Chairman of Master Currency, was voted winner of the Ernst & Young “Entrepreneur of the Year” competition in South Africa and went on to win the world “Entrepreneur of the Year” earlier this year in the category of Managing Transformation. Phakama Phakama is a 50/50 joint venture between Lithotech and Nhlanhla F Nkosi, and is active in the sale and distribution of Lithotech products. Rennies Travel Matlafatso Stationery Bidvest owns 49% of Matlafatso Stationery, whilst the balance is owned by Sedibeng Investment Holdings, which is 100% controlled by an empowerment group. Matlafatso Stationery sells stationery and allied equipment and office furniture. 25% of the equity in Rennies Travel is owned by the Women’s Development Bank Investment Holdings, which is part of the Women’s Development Bank Trust, a non-profit organisation, founded by Mrs Mbeki in 1991, to provide small business loans and business training to rural women. PA G E 86 w THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Saldanha Logistics Company In 1998 Rennies Terminals formed Saldanha Logistics Company with a consortium of black businessmen comprising Siphumelele Investments and Chroku Investments. Bidvest holds 50%, with Siphumelele Investments and Chroku Investments each holding 25%. Saldanha Logistics Company manages and controls the logistics chain for Saldanha Steel, handling steel coils destined for export markets and incoming raw materials for the steel mill. Sebenza Forwarding and Shipping Consultancy Sebenza is the largest, most established black empowerment forwarding company in South Africa, having fully staffed branches in Johannesburg, Cape Town and Durban. The Makana Trust, via Makana Investments, holds the majority shareholding in Sebenza. The Makana Trust, which provides for the needs of the ex-Robben Island prisoners and their dependants, was founded at the urging of Dr Nelson Mandela, who is a patron of the Trust. Silapha Office Products Silapha Office Products is 100% black-owned with a distribution agreement with Waltons operating in the western, northern and eastern Cape regions. It is involved in the sale of office stationery, office furniture and computer consumables. Vuka Catering Supplies Victor Matsoane holds 51% of Vuka Catering Supplies and the balance is held by the Orlando Children’s Home (24%) and Bidvest (25%). Vuka Catering Supplies is a wholesale distributor of a full range of grocery products to the catering, leisure and foodservice industries. Wise Freight Services In restructuring its domestic distribution service in November 2000, Renfreight enabled the empowerment of its former employees in the formation of Wise Freight Services in which its drivers would become owner-managed drivers and former warehouse and office staff would have a stake in the business. The business is backed by Sarhwu Investment Holdings who will pay and manage the running costs for a period of five years, during which time the drivers will be trained to become employers and businessmen in their own right. Zinhle Printers This company is a 50/50 joint venture between Lithotech, and Sisekelo Printing Publishing and Stationery. The closing down of the Southern Life Printing operation created an opportunity for two of its employees, Alfred Sithole and Eddie Colledge, to start their own business, Zinhle Printing Publishing and Stationery (ZPPS). After a year of operation ZPPS joined forces with Lithotech to form Zinhle Printers. Namsov Fishing Enterprises Manica Namibia owns 50,1% of Namsov Fishing Enterprises, the balance is held by Namibian citizens. Namsov is active in the midwater trawling industry and owns and operates five midwater trawlers. The company is an industry leader and contributes significantly to the development of the Namibian fishing industry. PA G E 87 Economic empowerment and social responsibility Bidvest has a multi-faceted approach to economic empowerment Twafika Fishing Enterprises Twafika is 50,1% owned by Namsov Fishing Enterprises and 49,9% by the National Union of Namibian Workers. Twafika was awarded monk fishing rights in 2000, and effectively puts these rights in the hands of thousands of Namibians. weekly deliveries to Inanda and Kwa-Mashu crèches and daily deliveries to schools in the greater Durban area. Vegetable shops, supermarkets, bakeries and factories donate food and Rennies Terminals covers the distribution costs of the scheme. Hill High School Crown National runs an adult education programme through an institution called Leadership Through S OCIAL RESPONSIBILITY Cotac Bridging Programme Rennies Travel have funded, and subsequently employed, a number of black students on the Cotac Bridging Programme, which helps black school leavers compete more effectively for positions in travel and tourism. Creative Education, which was initiated through the Hill High School, but has since split and is headed by a Hill High School teacher, Mrs Walters, in her private capacity. The programme has been running in Johannesburg since 1993 and is fully subsidised by Crown National. Classes include tuition to matric and various Basic Good Luck Foods Good Luck Foods is a feeding scheme which provides a meal for over 2 000 children each school day with Adult Education Programmes. 25 students are currently participating in the programme. A number of employees have matriculated PA G E 88 w THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT and some are presently studying through UNISA towards BCom and various other degrees. The programme does not only concentrate on the structured school subjects, but also provides courses on business appreciation, motivation and corrective counselling. Namsov Community Trust Reach and Teach Rennies Travel is a full partner and cash sponsor of the Reach and Teach projects, which introduces travel and tourism as career options to students in disadvantaged schools. Renfin Community Projects Each region and branch of Renfin is encouraged to The Namsov Community Trust is a 10% shareholder of Namsov Fishing Enterprises. The Trust distributes its proceeds to projects all over Namibia with emphasis on the Namibian youth. To date the Trust has allocated well in excess of N$ 6 million to worthy projects. The Trust receives its continuous funding from the 10% dividend payments received from Namsov Fishing Enterprises. Nelson Mandela Children’s Fund Bidvest is a contributing member to the Nelson Mandela Children’s Fund. Queen Noti Clinic, Tsolo At the request of Dr Nelson Mandela, Bidvest developed and built a natal clinic in the Tsolo area of the Eastern Cape, using local labour and contractors. It also equipped this clinic, which comprises delivery rooms, recovery rooms, a dispensary, nurses quarters and ample facilities for visitors. Bidvest installed electricity, water, sewerage, waste disposal and a laundry. The standards and requirements, which were laid down by the Department of Health in the Eastern Cape, were exceeded. Dr Nelson Mandela and Mr Brian Joffe opened the clinic on Monday, December 4 2000. become involved in community projects in the areas of education, children, conservation and crime prevention. Current projects include work with AIDS babies and abused children, fundraising programmes for the Red Cross and the Salvation Army and work with the blind. The division is also an active member of Business Against Crime and are contributors to READ, the Endangered Wildlife Trust and Child Welfare. The Bidvest Chairman’s Fund The Bidvest Chairman’s Fund supports numerous charitable organisations and other worthwhile causes. Topsy Foundation Bidvest donated a fully equipped kitchen to the Topsy Foundation south of Heidelberg, which cares for AIDS orphans from Soweto and Dube. PA G E 89 C ORPORATE GOVERNANCE The Board subscribes to the values of and accepts the inclusive approach to good corporate governance espoused in the King Report. The directors have long recognised that good corporate governance is essentially about leadership and that there exists the need to conduct the enterprise with integrity and in compliance with best international practices, whilst taking cognisance of the value systems of the countries in which it operates. This recognition is evidenced by the directors’ support of the Code. to the formulation of policy and decision-making through inter alia their knowledge and experience of other business sectors. All directors bring independent judgement to issues of strategy, performance, resources, including key appointments and standards of conduct. The Board considers that, given the circumstances, it is in the Group’s best interest that the Chief Executive Officer also be Chairman of the Board. The nonexecutive directors take responsibility for ensuring that the Chairman encourages proper deliberation of all matters requiring the Board’s attention. The Board C ORPORATE C ODE O F C ONDUCT Bidvest is committed to: • The highest standards of integrity and behaviour in all its dealings with its stakeholders and society at large; • Carrying on of business through fair commercial competitive practices; • Removing discrimination and the promotion of employees to realise their potential through training and development of their skills; and ensures that there is an appropriate balance of power and authority on the Board so that no one individual or block of individuals can dominate the Board’s decisionmaking process. The Board meets quarterly and has a formal schedule of matters reserved to it. The Board retains full and effective control over the Group and monitors executive management through a structured approach to reporting and accountability under the auspices of an executive committee. The Board, through the audit committee, regularly • Being proactive toward environmental and social issues. reviews processes and procedures to ensure the effectiveness of its internal systems of control. The Board, furthermore, receives relevant non-financial B OARD OF DIRECTORS information that goes beyond assessing the financial and qualitative performance of the Group, which take The Board comprises eleven non-executive and seventeen executive directors. The executive directors have responsibility for making and implementing operational decisions for the running of the Group’s businesses. Non-executive directors support the skills and experience of the executive directors, contributing into account broader stakeholder issues. The Board and its committees are supplied with full and timely information which enables them to discharge their responsibilities and have unrestricted access to all Group information, records, documents PA G E 90 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT and property. All directors have access to the advice and services of the Group Secretariat and are entitled to obtain independent professional advice at the Group’s expense, should they deem this necessary. internal controls. The members of the committee are JL Pamensky (Chairman), AJ Behrmann, D Masson, P Nyman, DK Rosevear. The Group internal audit manager and external auditors are invited to attend all meetings and other members of the management team B OARD COMMITTEES attend, as required. The committee meets not less than three times a year. The committee is responsible for reviewing the interim and annual accounts, internal financial control procedures, accounting policies, Specific responsibilities have been delegated to board committees with defined terms of reference. The principal board committees are as follows: Remuneration Committee The remuneration committee is chaired by JL Pamensky, and its other members are AJ Behrmann and P Nyman. The committee is responsible for the assessment and approval of the remuneration of senior executives. The executive director that is a member of the remuneration committee is excluded from the review of his own remuneration. The remuneration committee’s overall strategy is to ensure that executives are rewarded for their contribution to the Group’s operating and financial performance at levels which take account of industry, market and country benchmarks. In order to promote an identity of interests with shareholders, share incentives are considered to be critical elements of executive incentive pay. A schedule setting out the levels of directors’ remuneration appears on page 105. Audit Committee An audit committee was established in 1995 and is an important element of the Board’s system of monitoring compliance and regulatory matters, recommending the appointment of external auditors and other related issues. It also considers whether adequate and appropriate internal financial controls are in place to meet the future needs; that significant business, statutory and financial risks have been identified and are being monitored and managed; that appropriate standards of governance, reporting and compliance are in operation. It advises the Board on issues relating to the application of accounting standards to published financial information. A CCOUNTABILITY Going concern AND AUDIT The Board minutes the facts and assumptions used in the assessment of the going concern status of the Group at the financial year-end. Internal financial controls The directors are responsible for ensuring that internal control systems exist that provide reasonable assurance regarding the safeguarding of assets and the prevention of their unauthorised use or disposition, the maintenance PA G E 91 Corporate governance of proper accounting records and the reliability of financial and operational information used in business. Internal audit function The internal audit departments are an independent appraisal function whose primary mandate is to examine and evaluate the effectiveness of the applicable operational activities, the attendant business risks, including those which arise subsequent to the year-end, and the systems of internal financial control, so as to bring material deficiencies, instances of non-compliance and development needs to the attention of the audit committee, external auditors and operational management for resolution. The purpose, authority and responsibility of the internal auditing activity is formally defined in an internal audit charter, which has been approved by the Board, and which is consistent with the Institute of Internal Auditors’ definition of internal auditing. The activities of the divisional internal auditors are coordinated by the internal audit manager based at the corporate office. The internal audit manager reports at audit committee meetings and has unrestricted access to the Chairman. The internal audit function co-ordinates with external auditors to ensure proper coverage and to minimise duplication of effort. The external auditors also review reports issued by internal audit. Audit plans for each business segment are tabled annually to take account of changing business needs. Follow-up audits are conducted in areas where weaknesses are identified. w The internal audit plan is based on risk assessment, which is of a continuous nature so as to identify not only existing and residual risks, but also emerging risks. Risk management The Board is responsible for the total process of risk management, which is based on the need to identify, assess, manage and monitor all known forms of risk across the Group, in liaison with the executive directors and senior management. Management is accountable to the Board for designing, implementing and monitoring the processes of risk management and integrating it into the day-to-day activities of the Group. The risk aversion philosophy is communicated to all managers in an endeavour to incorporate this philosophy into the culture of the Group. The management of risk and loss control is decentralised, in compliance with the Group’s stance on risk financing, including self-insurance. Compliance measurement is through periodic risk activity reports, and measurement of the loss control supported by independent consultants. At operational level, senior management identifies critical, major business risks, promotes awareness, introduces applicable control environments and procedures and applies risk-monitoring techniques. The process is monitored by the divisional audit committees, identifying the manner in which, and the extent to which, risk is controlled and/or reduced. Bidvest’s decentralised structure forms the basis of the Group’s business continuity plan with each of the operations being self-sufficient with disaster recovery and management succession plans. PA G E 92 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT R ELATIONS WITH SHAREHOLDERS It is the policy of the Group to pursue dialogue with institutional shareholders. To achieve this dialogue, there have been a number of presentations to and meetings with investors and analysts to communicate the strategy and performance of the Group. The quality of this information is based on the standards of promptness, relevance and transparency. T RAINING AND AFFIRMATIVE ACTION Bidvest’s strategy regarding affirmative action is aimed at the development of all of its employees. It does not believe that the promotion of a select few individuals is appropriate. Bidvest’s strategy centres on creating opportunities that will enable previously disadvantaged employees to prepare themselves to occupy more skilled and responsible positions within the organisation. A key aspect of this strategy is to promote education and training opportunities for all employees within the organisation and externally. More information on Bidvest’s philosophy and activities regarding empowerment are available on pages 82 to 89 of this report. PA G E 93 M ANAGEMENT Chairman: P Steyn DIRECTORY RENFREIGHT SAFCON Chief Executive Officer: C Donald Financial Director: R Balona Business Development Director: G Popple IS Director: T Afnan-Holmes REGIONAL DIRECTORS Cape Town: R Buchanan Durban: M Martin Gauteng: D Trotter SA STEVEDORES Director: R Herman TERMINAL MOCAMBIQUE NAVAL Chairman: P Steyn Managing Director: L Goncalves Managing Director: G Griffiths Sales and Marketing Director: B Thoresson The Services Division Financial Director: C Pretorius Ocean Director: B Morris Air Director: D Logan TERMINALS Chief Executive Officer: R Graham Financial Director: A Dawe Business Development Director: A Lax Senior Consulting Engineer – Dry Bulk: R Searle SABT Managing Director: K Smith Shipping Director: M Moodley Financial Director: M Steyn BLUFF MECHANICAL APPLIANCE Managing Director: I Geldart Financial Director: W Pillay Engineering Director: A Bedingham Operations Director: B Deghaye ISLAND VIEW STORAGE Managing Director: K Ehlers Financial Director: D Liesegang Human Resources Director: S Smith Operations Director: G Brooks Technical Director: L Redhead RENNIES CARGO TERMINALS Managing Director: R Herman Financial Director: R Carsons Operations Director: R Sheldrake DIRECTORS S Dixon R Ford B Carey J Roux C Church SACD Managing Director: G Peinke Financial Director: S Coetzee Bidfreight CHAIRMAN: D Rosevear FINANCIAL DIRECTOR: M Steele REGIONAL MANAGERS Cape: G Robison Gauteng: D Logan Natal: B Morris Port Elizabeth: D Rothman Customs Broking Executive: J Marais IT Executive: K Casey Sales Executive: S Cockcroft SAFCOR PANALPINA Chairman and Managing Director: P Womersley National Airfreight Director: H Visser National Seafreight Director: P Williams Financial Director: N Thompson Commercial Director: C Speed-Andrews Human Resources Director: S McSweeney Sales Manager: A Nowak CAPE TOWN Regional Director Western and Eastern Cape: S Goslett Branch Manager: G White Commercial Manager: B Alison DURBAN Regional Director: E Cawood Operations Director: J Cummins Airfreight Director: T Barron EAST LONDON Branch Manager: G Jarvis JOHANNESBURG INTERNATIONAL AIRPORT – AIRFREIGHT General Manager: M du Preez Branch Manager: C Greyling JOHANNESBURG – SEAFREIGHT Import Manager: C Pisapia Commercial Manager: C Crowther PORT ELIZABETH Branch Manager: R Jesson SEBENZA FORWARDING & SHIPPING CONSULTANCY Managing Director: M Goodger BIDFREIGHT LOGISTICS Chairman: G Griffiths Managing Director: G Marshall Financial Director: A Howie Business Development Director: A Verploegh EXPRESS AIR SERVICES Managing Director: F Wolmarans Financial Director: I Butterworth FEDEX Managing Director: G Marshall Operations Director: M Rissik Marketing Director: D Johnson Financial Director: G Priest RENNIES INTERNATIONAL LOGISTICS Managing Director: T Wilkinson Financial Director: I Noorbhai RENNIES TECHNOLOGY LOGISTICS Managing Director: K Jackson Financial Director: I Noorbhai RENNIES TEXTILE LOGISTICS Managing Director: D Pringle Financial Director: I Noorbhai MANICA AFRICA Chairman: P Steyn Director: Logistics and SA operations: C Clark Director: Non-SA operations: M Gunther Financial Director: M Hodgson MANICA MALAWI Managing Director: A Chitsime MANICA ZAMBIA Managing Director: L Welgemoed MANICA ZIMBABWE Chairman: P Steyn Managing Director: A Kamhunga Director: G Davies MANICA INVESTMENTS AND INTERNATIONAL MANICA NAMIBIA Chairman: P Steyn Managing Director: Manica T Templin Managing Director: Namsov J Arnold Financial Director: C Lotheringen MARINE Chairman: P Steyn PA G E 94 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Chief Executive: M Atter Financial Director: D Anderson COSREN Managing Director: H Shou Sen DUDULA FREIGHTBULK Chairman: S Mthetwa Managing Director: A Kee JAPAN MARINE SUPPLIES AND SERVICES Managing Director: C Kotze General Manager: H Jinguji P&I ASSOCIATES Chairman: M Atter Managing Director: A Reid RENNIE MURRAY Managing Director: A Edwards RENNIES SHIPS AGENCY Chairman: P Steyn Managing Director: M Atter Financial Director: D Andersen OPERATIONS DIRECTORS Non-Liner division: L Smith Liner division: B Petzer COMMERCIAL MARKETING DIRECTORS Non-Liner division: A Kee Liner division: R Murray National Sales and Customer Care: D Koff COMMERCIAL SUNDRIES Managing Director: S Xenophon Financial Director: A Muir BRANCH MANAGERS Cape Town: H Axsel Durban: C Henstock Johannesburg: P Rice Pietersburg: R Prins GENERAL MANAGER Protection Service: A Shaw OPERATIONS MANAGERS Eastern Cape: J van Vuuren Gauteng North: K Tredoux Gauteng East: Y Wilke Gauteng Central: G Smith Gauteng West: I Smith Natal: C Peel Risk Control: L Knight Western Cape: C Rademeyer MARKETING MANAGEMENT R Ward J Dowling STRATEGIC CORPORATE SOLUTIONS R Clarke STEINER HYGIENE Managing Director: N Smith Financial Director: P Meijer Marketing Director: R Tyack Sales Director: M van Wyk DIRECTORS G Ronan J Fritz J Forman A Cowan A Steyn Group IT Manager: P Schoeman REGIONAL MANAGERS Aeroport: G Kellerman Benrose: J Forman Bloemfontein: E Barnard Centurion: P Labuschagne Durban: Y Smith Kya Sands: A Cowan Pretoria West: J Fritz BRANCH MANAGERS East London: S Ferguson Ermelo: R Heuer George: Q Harris Kimberley: C Ross Nelspruit: S Knoessen N’dabeni: R Gallagher Newcastle: K du Plessis Pietermaritzburg: A Botha Pietersburg: R Hagerty Port Elizabeth: L Krause Potchefstroom: M Veldman Richards Bay: D Adamson Rustenburg: A Retief Vereeniging: M Markram Welkom: E Grove CLOCKWORK CLOTHING Managing Director: S Xenophon General Manager: R Sparks Financial Manager: A Green Sales Manager: F Marais DIRECTOR – GIANT CLOTHING H Thomas TMS GROUP ILANGA-TMS/ HOTEL TEMP/ HP CHEM Managing Director: M Dreyer Financial Director: J Venter PROVICOM ELECTRONICS Managing Director: S van Aswegen Financial Director: A Shiba Marketing Manager: S Nel CAPE TOWN General Manager: G Schluter Operations Manager: W Schluter DURBAN General Manager: T Coom JOHANNESBURG General Manager: G Shelton Operations Manager: R Partridge Financial Manager: C Rader Technical Manager: K Whelan PORT ELIZABETH General Manager: G Buchner Operations Manager: M Nel RICHARDS BAY Branch Manager: D van der Berg DIRECTORS B Anderson N Mfundisi R van Zyl C Louw S Grobler DIVISIONAL DIRECTORS D Pretorius S Balie M Steyn PRESTIGE CLEANING SERVICES Managing Director: J Taylor Financial Director: B Gosai Operations Director: D Otto Marketing and Sales Director: J du Toit Human Resources Director: P Roux DIVISIONAL DIRECTORS Finance: A Still Operations Northern: M Medallie Operations Southern: H Liebenberg Operations Central: J Seegers Operations Healthcare: S Bell Operations Hospitality: P van der Westhuizen Operations KwaZulu-Natal: R White Operations Cape Coastal: E de Kok BOSTON LAUNDERERS/ FIRST GARMENT RENTAL Managing Director: A Fainman Financial Director: M van Niekerk Operations Director: L Volans DIRECTORS Gauteng: P Dunn Western Cape: V Sutherland GENERAL MANAGERS Mogwase: S Heath Port Elizabeth: A Mather-Brown Zambia: C Field Bidserv CHAIRMAN: L Ralphs GROUP FINANCIAL MANAGER: B Teixeira Internal Auditor: A Tendeiro SHIELD SECURITY Managing Director: A Whiteley Financial Director: L le Roux Human Resources Director: L Maree DIVISIONAL DIRECTORS Eastern Gauteng division: T Perkins East Coast division: N Lamble West Coast division: A Heyns INTEGRATED SERVICE SOLUTIONS: Sales and Service Manager: O Hall Marketing Manager: L Fleissig PA G E 95 Management directory Operations Specialised Services: J Dames Joint Ventures: B Bussell GENERAL MANAGERS Bloemfontein: C van der Merwe East Rand: S Coetzee Execu-clean: C Erwee Hospitality – Durban: N Withers Healthcare – Johannesburg: P Heilig Healthcare – Pretoria: I Oosthuizen Healthcare – KwaZulu-Natal South: B Burnill Hi-Tech – Botswana: L Guille Human Resources KwaZuluNatal: M Futcher Human Resources Industrial Relations: R Malinowski Mpumalanga-Highveld: H Holtzhausen Mpumalanga-Lowveld: M van der Merwe North Rand: C Labuschagne Office Valet Services – KwaZuluNatal: A Kimble Northwest: G Ehlers Port Elizabeth (Eastern Cape): A Fulton Pretoria: L Steyn Food Hygiene division: J Vogel South Rand: C Maguire Technical, Training, Buying: E Matthews Technical and Training KwaZulu-Natal: J du Toit Vaal: A Pretorius Cape Town: J Fleischer Hospitality – Johannesburg: S Mallett Hospitality – Midrand/Pretoria: J Weiffenbach Sales – Hospitality, Food Hygiene: B Sanders Sales – Healthcare: J Kalkwarf Sales – Central division: S Fulton Sales – Southern division: B Bockel Sales – Northern division: D Neilon Sales – Cape Coastal and KwaZulu-Natal Coastal: R Mackenzie Specialised Services – Cape Town: A Hepburn Specialised Services – Rustenburg: M Marais Specialised Services – Johannesburg and Vaal: J Tapp Specialised Services – Pretoria and East Rand: C Venter Specialised Services – Sales and Marketing: A Dippenaar Specialised Services – KwaZuluNatal: P Melvin Specialised Services – Finance: N Prinsloo IT: R Shepherd Quality and Training: C Barrat Finance: D Gomersall Finance: M Kruger Finance: L Casaleiro Credit Control: M de Swardt w WORLD TRAVEL BTI Operations Director: B Langner Operations: R Ramos Sales: K Ross CCW CATERING EMPANGENI General Manager: A Müller Administration: M Ashmore PIETERMARITZBURG Managing Director: N Yeats Administration: C van der Velden Sales: M Meyer Buying: R Govender CHIPKINS CATERING SUPPLIES BLOEMFONTEIN Managing Director: S Marais Administration: L Roll Buying: M Malherbe CAPE TOWN Managing Director: E Webster Administration: C Fourie Buying: A du Toit Sales: S Horwitz DURBAN Managing Director: R Lowe Administration: C Palmer Operations: S Naicker Sales: B Mathura EAST LONDON Managing Director: R Sneddon Administration: R Hechter Operations: P Zwane JOHANNESBURG Managing Director: J Uys Administration: J de Vries Buying: W Forbes Operations: J Inglis Sales: M Bonnette, P Barrett Rennies Financial Services CHIEF EXECUTIVE: L Boyle Sales and Marketing Director: I Hunter MASTER CURRENCY Executive Chairman: Z Combi IT DIRECTOR: N Steingold GENERAL MANAGER Human Resources: K Morobe HARVEY WORLD TRAVEL (SA) General Manager: B Lutman RENNIES BANK Managing Director: D Walker Financial Director: D Erlank GENERAL MANAGERS Treasury: G Bower Operations: C Macfarlane BID FINANCIAL SERVICES Managing Director: H Rostowsky Financial Manager: L Allsop RENNIES TRAVEL Chief Executive: L Boyle Financial Director: J Butler RETAIL OPERATIONS DIRECTORS Northern region: N Esnouf Coastal region: C Holmes Travel Services Director: K Harris Client Relationships Director: D James Commercial Director: R Lawlor NAMIBIA Managing Director (Travel): H Schultz General Manager (Foreign Exchange): M Baas ZIMBABWE Operations Director – Travel: L Valler Operations Director – Foreign Exchange: R Sutherland McLeod The Foodservice Products Division Caterplus CHAIRMAN: C Kretzmann FINANCIAL DIRECTOR: T Scruse MPUMALANGA General Manager: R Lyon Administration: H van Houten Operations: M Dewar Buying: M Lawton PIETERSBURG General Manager: A McLeod Sales: N Strydom PORT ELIZABETH Managing Director: F da Silva Administration: P Gouws Sales/Operations: F Bekker D & R LOWE Managing Director: C McCormack Administration: W Auret Operations: SJK Uys Sales: N Papas FIRST FOODS DISTRIBUTORS Managing Director: D Smit Administration: R van Vlaanderen HUMAN RESOURCES DIRECTOR: M Lockley CONCORDE TRAVEL Managing Director: A Lunz Finance Director: M Katz Information Systems Director: D Tagari Human Resources Director: D McCartney Operations Director: M Martins Operations Director: A Grey IT MANAGER: L Haasbroek TRAINING CONSULTANT: A Craig CATERING SUPPLIES DIVISION Managing Director: J Araujo Financial Director: A Jochens Human Resources Manager: E Motsiri CATERSALES BTI CONNEX TRAVEL Managing Director: K Makhetha Managing Director: E Eagar Administration: W Venter PA G E 96 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT Buying: M Wainwright Sales: C Webb LOU’S WHOLESALERS Managing Director: H Dorfling Administration: P Roberts Sales: C Lee Operations: L Sibanda NELPACK General Manager: B Moore PYRAMID CATERING SUPPLIES Managing Director: B Saharin Administration: A Ramsaroop Buying: R Jankiepersadh Operations: A Govender Sales: B Govender RFS CATERING SUPPLIES General Manager: M Murphy Administration: F Ball Operations: D Mofokeng Sales: K Drake SPECIALITY DIVISION PATLEYS Managing Director: M Notrica Administration: H Angove CAPE TOWN General Manager: J de Jager Sales: M Gliddon C Schoeman DURBAN General Manager: P Whitton Sales: E Tuback JOHANNESBURG Sales: R Fitzsimmons PORT ELIZABETH General Manager: E Mossop Sales: S Crouse AUSTRALIA BIDVEST AUSTRALIA Managing Director: K Bielby National Marketing Manager: A Fechner National Accounts Manager: P Jamieson National Purchasing Manager: N Stephenson Management Information Systems: A Stainlay Financial Accounting Manager: Barry Plit Financial Controller – New South Wales: R Romano Financial Controller – Queensland: I Allan Financial Controller – Victoria P Watson Financial Controller – South Australia/Northern Territories P Wright Internal Audit: B Boreham BRANCHES Adelaide: G Turner Albury: A Lewis Alice Springs: C Lillicrap Brisbane: P Jamieson Cairns: L Garozzo Cairns (John Lewis Foodservice): M Stansfield Canberra: M Moullakis Geelong: R Barnes Gold Coast: I McLeod Gold Coast (Dymel Distributions): G Sobel Hervey Bay: R Peterson Melbourne: R Dally Newcastle: A Harman Sunshine Coast: C James Sydney (Felans Fisheries): C Mantikas Sydney (RM Smith): J Lequertier Sydney (Stephensons): P Cronin Townsville: R Kippen Wollongong: C Fechner NEW ZEALAND CREAN FOODSERVICE Hamilton: G McGregor Wellington: D Magrath Nelson: G Parkin Christchurch: G McGale Dunedin: K Galbraith Invercargill: L Hourston Greymouth: G Aben Timaru: R Brown Queenstown: J Sinclair UNITED KINGDOM 3663 FIRST FOR FOODSERVICE Chief Executive: F Barnes Finance Director: P Weir Managing Director – Multi-Temperature Division: A Fisher Managing Director – Frozen division: R O’Keefe Managing Director – Logistics division: A Selley Sales Director: A Kemp Buying Director: I Crawford Trading Director: W Pearce IT Director: P King REGIONAL DIRECTORS P de Ternant G Hughes S Rich B Rowlands A Tiplady N Wemyss NATIONAL ACCOUNTS SALES DIRECTOR L Webb DIRECTORS OF FINANCE Logistics division: C Jones Multi-Temperature division: M Tyler Frozen division: I Uren DIRECTOR OF SYSTEMS DEVELOPMENT M Blank DIRECTOR OF CLIENT RELATIONS M Dickinson DIRECTOR OF INTERNAL AUDIT J Foster DIRECTOR OF QUALITY M Holmes DIRECTOR OF OPERATIONS SERVICES D Morgan DIRECTOR OF MOD SUPPLY G Pritchard BIDVEST UNITED KINGDOM FROZEN FOODS DIVISION Managing Director: R Wainer Financial Director: B Varcoe Human Resources: P Kashe BLUE MARINE CAPE TOWN General Manager: J Ferreira DURBAN General Manager: R Gravett JOHANNESBURG General Manager: K Köhler EAST CAPE FOODS General Manager: A Roberts SEAWORLD CATERING EQUIPMENT DIVISION VULCAN-CAARS Managing Director: D Leibowitz Production: R Barros Financial: R Lucas Exports: R McMurray Information Systems: M Hoff BRANCH DISTRIBUTION Cape Town: B du Bois, D Thewlis Durban: G Robertson East London: J Wright Johannesburg: M Neilson Port Elizabeth: T van der Merwe Sales and Marketing: C Watt BLOEMFONTEIN General Manager: A Rheeder CAPE TOWN General Manager: L Fouche DURBAN General Manager: S Naidoo JOHANNESBURG General Manager: R Seaward NELSPRUIT General Manager: A Brower PIETERSBURG General Manager: N Myburgh Managing Director: N Boswell Financial Manager: P Ballantine National Retail Manager: M Hogarth IT Manager: M Dorward BRANCHES Auckland: A Crean Rotorua: K Buckthought BIDVEST plc AUSTRALASIA Managing Director: B Berson Financial Manager: S Bender PA G E 97 Management directory Combined Foods CHAIRMAN: C Kretzmann Functional Ingredients: General Manager: L Filho Procurement and Shipping: Director: G Fasser Technical: Director: G Keeling Spice Production: Cape Town: J Philogene Johannesburg: E Nardelli BRANCH MANAGING DIRECTORS Cape Town: A Cleghorn Durban: M Critien Johannesburg: J Dyssel BRANCHES CAPE TOWN Managing Director: A Cleghorn DURBAN Managing Director: M Critien JOHANNESBURG Managing Director: J Dyssel BLOEMFONTEIN General Manager: N Le Grange NELSPRUIT General Manager: T Quarmby PORT ELIZABETH General Manager: P Roos PRETORIA General Manager: H Pheiffer EQUIPMENT DIVISION Managing Director: M Jacob NATURAL CASINGS DIVISION K Geldenhuys MODERN PACKAGING General Manager: I McBride w KOLOK AFRICA Managing Director: R Smith Production Director: D Lino Finance Manager: C Pettitt The Commercial Products Division FINANCIAL DIRECTOR: T Scruse QUANTUM STATIONERS Managing Directors: T Miles T Palphramand SA DIARIES Managing Director: Peter Honeyman HUMAN RESOURCES DIRECTOR: M Lockley IT MANAGER: L Haasbroek TRAINING CONSULTANT: A Craig Bidoffice CHAIRMAN: L Chimes STATMARK Managing Director: H Servas Sales Manager: Gordon Reid Finance Manager: E Kleynhans WALTONS STATIONERY CHIPKINS BAKERY SUPPLIES Managing Director: R Mooney Finance Director: N Phillips Technical Director: E Kohlöffel Human Resources Manager: J Ngcobo BLOEMFONTEIN General Manager: H de Vries CAPE TOWN Managing Director: M Myers Administration: R Hitchins Sales: L Gareis DURBAN Managing Director: F Goddaer Administration: V Govender Sales: A Smith JOHANNESBURG Operations: B Boshoff Administration: B Tozer Sales: A Duursema NAMIBIA General Manager: A Viljoen NELSPRUIT Managing Director: J Wolter PIETERSBURG Managing Director: H Lippenberger PORT ELIZABETH Managing Director: D Stevenson FINANCIAL DIRECTOR: C Rostowsky INTERNAL AUDITOR: D Conradie BIDOFFICE CORPORATE SOLUTIONS Managing Director: L Tager Chairman: F Robarts Managing Director: J Farrell Procurement Director: P Cronje Financial Director: F Reyneke IT Director: D Crooke GAUTENG Managing Director: D Pewsey Financial Director: E Choonara Sales Director: E Kleynhans KWAZULU-NATAL Managing Director: M Frizelle Sales Director: T Kane-Berman WESTERN CAPE Managing Director: R Bowes Sales Director: K Spence IMPORT DIVISION Managing Director: R Sepp EAST LONDON Managing Director: G Cohen FREE STATE Managing Director: D Gallagher NAMIBIA Managing Director: J van Tonder PORT ELIZABETH Managing Director: D Hugo Financial Director: P Knight STATIONERY DIVISION CONTRACT OFFICE PRODUCTS Managing Director: H Magid Sales Director: H Elison Operations Director: B Eisenstein Financial Director: N George HORTORS Managing Director: L Carlson Editor: E Bungay KOLOK Managing Director: A Thompson Financial Director: P Kleynhans Operations Director: E Cassim Business Unit Managers: S Smith L Stevens K Ruthnum KWAZULU-NATAL Branch Manager: B Pullock NAMIBIA Branch Manager: M Roets WESTERN CAPE Branch Manager: R Abels NCP YEAST Managing Director: W Bright Operations Director: J du Plessis Financial Director: K Jacobs Sales and Marketing Director: J Oosthuizen Logistics Director: A Singh Exports: S Ferreira Credit Control: D Greyling Promotions: A Huma BORDER, EASTERN AND WESTERN CAPE Sales: G Goschen FREE STATE, LESOTHO Sales: G Scheepers GAUTENG, BOTSWANA, NAMIBIA, SWAZILAND Sales: S Ferreira KWAZULU-NATAL Maintenance engineer: J van Rensburg Technical: J du Plessis Financial: A Singh Sales: G Goschen CROWN NATIONAL Managing Director: C Singer Financial Manager: I Simpson National Key Accounts: R Maasdorp CROWN FOOD INGREDIENTS Managing Director: H Hunkin Product Director: J Morris OFFICE FURNITURE DIVISION Chairman: N Levin Financial Director: M Rubin ATOMIC Managing Director: N Mentoor PA G E 98 THE BIDVEST GROUP LIMITED 2001 ANNUAL REPORT BUDGET Managing Director: G Diamond CECIL NURSE Managing Director: R Bergh Financial Director: W du Plessis EAST LONDON Managing Director: R Lindesay FREE STATE Managing Director: E Coetzee KWAZULU-NATAL Managing Director: G Bolton PORT ELIZABETH Managing Director: R Pudney WESTERN CAPE Managing Director: H Meyer DAUPHIN Managing Director: I Galloway Finance Director: J Allen Sales Manager: J Chalmers NUCLEAR Managing Director: M Janutsch Sales Director: M Phillips Finance Manager: E Keene PAGO Managing Director: N Noack SEATING Managing Director: S Gerber Financial Director: L Snyman Marketing Director: S Lavarone PRINTING AND RELATED DIVISION LITHOTECH Managing Director: N Birch Financial Director: C Adendorff Financial: C van der Westhuizen Production: T Isaacs Sales: A Nel Operations: S Sewpersad Corporate Services GROUP FINANCIAL DIRECTOR: P Nyman STATIONERY PRODUCTS DIVISION GROUP FINANCIAL MANAGER: N Goodwin Bidpac CHAIRMAN: A Salomon SILVERAY STATIONERY COMPANY Managing Director: A Muirhead Financial: P Haripersad National Sales: J Wheatley Information Systems: V Hoare Retail: J Feldman Divisional Sales: I Zimerman, S Zimmerman, L Tippett PRODUCTION Mobeni: D Foure Globe: J Davis BRANCH DISTRIBUTION Bloemfontein: E Maree Cape Town: K Meehan, G Baines Durban: H Yunus East London: J Trefusis-Paynter Johannesburg: T Harman, J Millinger Port Elizabeth: J Kinnell HI-MAUR LABELLING SYSTEMS Managing Director: T Rupping Financial: R Hill Production: J Kulshekaran National Sales: F Harmen BRANCH DISTRIBUTION Bloemfontein: J Bouwer Cape Town: W Hitchins Durban: G Gordon East London: J Hart Johannesburg: D van Niekerk Port Elizabeth: D Kozak Pretoria: M Botes OZALID SA Managing Director: T Rupping Financial: R Hill Sales: K Jardine Production: J van Heerden GROUP COMPANY SECRETARY: MA David INTERNAL AUDIT: B Kerkhoff GROUP ASSISTANT SECRETARY: E Neuhoff CREDIT MANAGEMENT: E Jenkinson GROUP CORPORATE FINANCE AND INVESTOR RELATIONS: J Hochfeld D Cleasby PACKAGING CLOSURE DIVISION AFCOM – GE HUDSON Managing Director: H Greenstein Financial: C Levin Operations: C Stedman Administration: B Kerkhoff Fastening: I Hunter Strapping: K Oliver, B Smith Packaging: M Hilson Stretchfilm: R Trent Labels: W Coetzer Ramset: J East Human Resources: B Campbell GROUP CREDIT: H Zinman GROUP INTERNAL AUDIT: B Smith GROUP ACCOUNTANT: J Wilson GROUP PUBLIC RELATIONS: B Dorfman GROUP PURCHASING: R Cohen GROUP PROPERTIES: I Menashe GROUP TAXATION: S Diss ISLE OF MAN Managing Director: J Unsworth BID IT OFFICE AUTOMATION DIVISION MINOLCO Managing Director: A Griffith Financial Director: I Keshwar Administration Director: M Holahan Technical Director: A Barbosa General Manager – Minolta copiers: B Ludlum Director – fax and lasers: P Enslin REGIONAL MANAGERS: K Dix-Peek D Jackson Accounting: M Berthelot PRODUCTION Strapping: F Fremouw, N Cloete Collated Nails and Staples: J van Ryssen, A Craukamp, P Weir Ti-Strap: W Molautsi Workshop: F Oudmayer BRANCH DISTRIBUTION Bloemfontein: W Coetzer Cape Town: P Sykes, D McVean-Nicol Durban: K Oliver, D Poovan East London: K Guess Nelspruit: A de Beer Port Elizabeth: H Nel Pretoria: T Nel Tzaneen: J van der Merwe Markwell: P Steyn BUFFALO EXECUTAPE Managing Director: T Girnun BID IT MYMARKET.COM Managing Director: P Katz General Manager: T Piccione I-FUSION Managing Director: R Sackstein Financial Director: J Hnizdo Group Services: H Wason NATAL D Hall WESTERN CAPE G Wood PA G E 99 VALUE ADDED STATEMENT “Value added” is the value which the Group has added to purchased materials and goods by process of manufacture and conversion, and the sale of its products and services. This statement shows how the value so added has been distributed. 2001 24,7% 2001 2000 % R’000 26 427 620 21 911 718 4 515 902 77 241 100,0 4 593 143 100,0 % R’000 Revenue Net cost of raw materials, goods and services Wealth created by trading operations Finance income Total wealth created 29 415 011 24 335 807 5 079 204 134 451 5 213 655 5,0% 4,8% 65,5% 2000 20,2% 8,3% 4,8% 66,7% Employees Retained for growth Providers of capital Government Distributed as follows Employees Benefits and remuneration Government Taxation Providers of capital Finance charges Dividends and capitalisation awards Retained for growth Depreciation Retained income 3 413 006 251 821 113 766 146 183 389 534 899 345 5 213 655 65,5 4,8 2,2 2,8 7,5 17,2 100,0 3 064 828 220 300 71 288 306 032 342 725 587 970 4 593 143 66,7 4,8 1,6 6,7 7,4 12,8 100,0 E XCHANGES WITH GOVERNMENTS 2001 R’000 2000 R’000 539 311 220 300 4 593 306 2 302 581 76 864 7 732 362 including amounts collected on their behalf Employee taxes Company taxes Value added and sales taxes Customs and excise duty Other 598 724 251 821 5 551 103 2 325 538 91 731 8 818 917 Paid to South African authorities Other 8 344 419 474 498 8 818 917 7 317 532 414 830 7 732 362 PA G E 100