Cost pressures

Bidvest businesses worldwide experienced significant cost increases; including fuel, utility and labour costs. Skills are scarce in many markets while pressure on resources can be expected to mount year after year. These pressures are part of the ‘new normal’ and are unlikely to ease.

A distinction should be drawn, however, between increases related to scarcity and unavoidable pricing pressure and cost increases attributable to inefficiency and failure.

Managers have to address the challenge and develop efficient operational practices that assure exceptional service for our customers. Consumers deserve value for money. Those working for public utilities should be incentivised to provide it. For example, managers at a power utility should be rewarded for providing the most electricity at the lowest cost.

If inflation is to be contained and proper service delivered, this approach to incentivisation should be urgently reviewed.

Stock losses and fraud

Regrettably, the problem does not end there.

Theft, fraud and misrepresentation are rife. In 2012, the board spent more time on issues relating to crime in our South African operations than ever before. Substantial stock losses and frauds were uncovered.

Some of our operations have been targeted by organised crime syndicates. Honest workers have been intimidated. Those who turn a blind eye and those who receive stolen goods enable the cancer to spread. Morale suffers. Efficiency plummets. Entire departments are undermined.

Government has a duty to tackle these issues urgently. Effective law enforcement and certain punishment are essential. But the responsibility is wider than that. Business and civil society must play their part. Ethical practice, in business and everyday life, is vital.

Sustainability

Sustainability at Bidvest is about readiness for the future and preparedness in the face of increasingly challenging business conditions. This is why we build flexibility into our operations and why we avoid cumbersome overhead structures.

We build businesses that are well regarded within their home communities because these operations support local initiatives and foster local development. We recycle and reduce water and energy consumption because it increases our efficiency while reducing our carbon footprint. These interventions also increase staff buy-in and motivation. Good people feel good about working for a company that is a good citizen.

Sustainability is a way of life in our business. We rely on sustainable business practice to take us forward into an exciting but increasingly unpredictable future.

Gender equality

Bidvest is an equal opportunity company. We succeed because we harness the contribution of all our people. Women share the management ranks across our operations, achieving notable successes in Australia and the UK. In South Africa, two divisional financial directors are women and at operating company level five out of 47 managing directors are women. Bidvest Namibia has a female financial director.

We regard this as a promising start. A key employment equity objective is the development of women into leadership roles. The Bidvest policy of promotion from within creates opportunities for successful women. This is how it should be.

Education imperative

Bidvest continues to invest substantially in education and people development.

Tragically, many South Africans continue to have substantial gaps in their education. Children still fail to receive textbooks. Some are still educated in the shade of a tree. Education budgets are reportedly looted while maladministration and poor oversight make it difficult to pinpoint the wrongdoers.

The educational crisis deepens even as our nation celebrates higher numbers of supposedly successful matriculants. They enter university believing their educational grounding will support their ambitions only to find they are not equipped for success at tertiary level.

Yet our country makes one of the world’s highest investments in education as a percentage of GDP. In the 2012/13 Budget the education allocation rose to R207 billion. Investment must be properly targeted and quality outcomes must be a measure of success.

Bidvest and many other private sector groups are ready and willing to help. Government should adopt a strategy embracing the private sector as an active partner. Almost every policy goal of the South African government depends on education. Without a ready supply of educated young people, government cannot promote economic growth and job creation.

Empowerment cannot be realised without an educated population.

Brand Bidvest

Substantial investment has been made in the development of the Bidvest brand, notably through the Bidvest Wits soccer team and the high profile achieved by branded sporting infrastructure such as Bidvest Wanderers. These efforts have been supported by spending on new corporate identity elements, including the rebranding of Bidvest vehicles in both local and international markets.

Our branding over the last three years is as a result of decisions made by local managers and their people. They saw the value in closer identification with the Bidvest brand. They drove the brand strategy from the ground up. Today we see the motivational benefits at local level as Proudly Bidvest teams recommit themselves to superior service and performance.

The Proudly Bidvest slogan is sustainable into the future because pride in performance is one of our core characteristics. Performance is an integral part of our DNA.

Executive pay

Internationally, there have been several recent instances of shareholder dissatisfaction with the remuneration of company executives. I sympathise with shareholders who protest when executive pay rises even as profits tumble.

Bidvest embraces a basic, easy-to-understand principle. We reward performance, not failure. Our senior people are incentivised to grow their businesses on a sustainable basis, deliver acceptable returns and increase their profits – outcomes that are rewarding for shareholders.

Honest, hard-working entrepreneurs and executives should be encouraged, not pilloried. Encouragement must include financial rewards.

Economic recovery will be driven by highly motivated (and sometimes highly incentivised) wealth creators.

Structures supporting succession

Recent structural changes have created a clear focus of Bidvest’s activities.

Performance over the last 15 months indicates that Bidvest continues to achieve growth by operating as a large enterprise that is active in multiple sectors.

Realignments and new structures have created opportunities to promote talented managers and provide for succession into senior positions at operational and divisional level.

We see managerial strength increasing across the organisation. This will enable continued growth.

Appreciation

I am indebted to a knowledgeable board of directors for their support over the past year. I extend my sincere thanks for your invaluable assistance and insight. I am also happy to acknowledge the whole-hearted contribution of an energetic and extremely hard-working management team.

A special word of appreciation goes to the people of Bidvest in all markets and sectors. In a challenging year, you have again performed at exceptional levels. You maintained strong momentum and never flagged in the face of some tough trading conditions. Thank you.

We are also beholden to the work of our suppliers and partners. Your contribution is absolutely vital to our success. However, the people who are most responsible for our growth are our customers. Serving you is our core motivation. You are the reason we are in business. We thank you for coming to Bidvest and supporting our brand.

Future

Bidvest has been remodelled and re-energised over the past 18 months. Bidvest is well placed to pursue continued growth in all markets.

A new generation of operational managers is coming through, contributing new insights and fresh impetus. The pace of innovation has been stepped up as management explore opportunities in a world where ‘business as usual’ is no longer an option.

Business as usual means business as it was in the past. This is not appropriate for a business determined to assure the success of its model for the next 20 to 30 years. ‘Business unusual’ is more pertinent.

This was the theme of Bidvest’s most recent management conference. This indaba was also notable for the establishment of blogs by senior managers, enabling them to engage real-time with colleagues in their home markets.

Bidvest is keenly interested in developments involving social and mobile media. Small suppliers and a number of our staff may not have desktop systems, but they do have cell phones. Connecting with them via mobile media creates numerous time- and cost-savings.

We increasingly adopt new approaches and tools. Bidvest is not generally regarded as a high-tech business. This is not entirely true. Our operations in markets such as New Zealand and Australia are leaders in e-commerce innovation, for instance.

In South Africa, our booking engines in the travel industry and procurement tools are a source of competitive advantage. We also use advanced data-gathering and management tools to measure energy consumption and environmental impacts.

Energetic adoption of new approaches increasingly characterises our Group.

The future is never certain, but Bidvest began life in uncertain times and has been growing in the face of unpredictable market conditions ever since. We are excited about the future.

We have begun to feel the benefits of our recent reorganisation. Further efficiencies and market-share gains are anticipated in the year ahead.

We are well capitalised and under-geared, creating capacity for further acquisitions. We will explore new geographies and, where appropriate, the resilient, adaptable Bidvest model will be introduced to new national markets.

Bidvest will pursue organic and acquisitive growth in 2013 and looks forward to an exciting year.

Brian Joffe
Chief executive