Bidvest Wits

Short-term results were disappointing, but important progress was made with strategic initiatives designed to reinforce long-term sustainability. The strategy of strengthening grassroots support is a continued success and Bidvest Wits maintained its status as the club with the largest membership in South Africa.

The team finished in the lower half of the Premier Soccer League (PSL) and made limited progress in the Nedbank Cup. However, the team put in a strong showing in the other main cup competition, the Telkom Cup and reached the final.

Early in the new reporting period, management changes were introduced. The positions of club CEO and head coach were split and seasoned professionals with a successful track record were appointed to both posts.

The new managerial team made a commitment to maintain the Bidvest Wits youth policy – responsible for developing many young soccer pros – but remedial action to improve on-field performance was the immediate priority. A better blend of youth and experience will be sought. Performance in the PSL is the key benchmark as this is the premier showcase of the Bidvest brand in South Africa.

A management priority in the coming period will be the establishment of robust corporate governance and reporting systems. Local community engagement remains a priority, with CSI spend targeted mainly at disadvantaged youth in the Johannesburg area.

Operations, including administration, practice facilities and the youth academy, were consolidated at Sturrock Park, Johannesburg.

Bidsport

The principal task was to consolidate internal structures to enable growth in the sports, leisure and entertainment market. By year-end, new management architecture was in place to support three core activities – sports marketing through MSCSPORTS, corporate hospitality services at sports and music events through The Hospitality Company (THC) and the commercialisation of media opportunities through a new business, CREATE.

Revenues were flat in a challenging year as corporates remained under pressure and the sports and leisure market softened.

MSCSPORTS maintained its focus on sports agency business, athlete representation, events and brand activations and sports memorabilia sales. Niche opportunities were investigated. The Bidvest Walk has developed into a national event, demonstrating the motivational and brand-building power of the corporate walk. This was identified as a growth area. Greater volumes will be sought in this specialised niche.

THC, launched in January 2011, gradually gained traction. In the coming year, management expect to reach break-even or better.

Newly established CREATE demonstrated the commercial potential of Bidvest-owned media by marketing advertising space on LED screens deployed in Bidvest Premier Lounges at major airports. Further opportunities of this pattern are being sought.

Fitness, health and lifestyle remain growth sectors. Government initiatives, medical-aid schemes and rising awareness of conditions such as obesity drive greater sports involvement while media focus on sports continues to grow. These positives underpin long-term sustainability. In the immediate term, excitement around the London Olympics early in the new period will give impetus to our 2013 marketing effort. With robust management structures in place, Bidsport will pursue both organic and acquisitive growth in the year ahead.

Bidvest Properties

The portfolio continued to take advantage of competitive pricing conditions in the construction industry and secured cost efficiencies ahead of expected rises in building costs.

Rentals have remained fairly flat over the past two years for existing buildings in the industrial sector; there is also an over-supply in the office market.

Larger-sized industrial premises are increasingly in short supply, particularly in the Durban area. Pressure on land and construction costs into the future will soon translate into higher rentals.

The smart strategy employed by leading companies is to consolidate distribution operations into an upgraded central depot on a single site while employing efficient IT systems in the warehouse design. It has been shown that these larger depots achieve efficiencies in stock holding, distribution patterns, transport costs and employee ratios. Considerable cost savings are possible. This trend will translate into larger floor areas and higher warehouse buildings.

The portfolio completed a new R70 million central distribution depot for Waltons Durban on this model. The depot consolidates four operations into one and successfully captures all the above advantages.

Current projects involve a R30 million extension and consolidation at a single site in Polokwane, increasing the size of Sea World’s multi-temp distribution centre. Included on this site is a new facility for Prestige. A R50 million development for a Sea World multi-temp and BidBake facility is also under way in Bloemfontein.

Refurbishment work is being completed at the Pencil Park complex in Johannesburg and at Lithotech in Stormill on the West Rand while in Isando 3, three business units of Bidvest Rental and Products have been consolidated at previously vacant premises. The Crown manufacturing facility in Cape Town was expanded and a new auditorium, showcase kitchen and new test kitchens were added.

Increased water efficiency is one of the key objectives of the portfolio’s refurbishment programme. Legislation also compels future developments to include water retention ponds on site to save run-off water.

At several sites fire sprinkler systems are being upgraded and new pumps and tanks installed.

A pilot project is under way to supply electricity through solar panels placed on the roof of a multi-temp warehouse. The
long-term project to replace traditional lighting with energy-efficient lighting continues.

Refurbishment and the expansion of premises will continue in the coming year ahead of the expected upturn in construction activity and consequent pressure on building industry costs.

Cost pressures are compounded by delays caused by lack of capacity at local government level to implement and interpret advanced building standards and new environmental requirements. These challenges will remain for the foreseeable future.

Ontime Automotive

In a challenging environment, management re-engineered the business for a much- changed future. Britain’s economic recovery will be long and slow while fundamental change and industry consolidation are under way in the sectors we serve.

Rescue & Recovery (R&R) secured a significant new contract as one of only five operators to replace the 360 companies that previously supported the Green Flag network. The R&R fleet was reconfigured, older vehicles sold and 60 new vehicles purchased. The focus now falls on small, fuel-efficient vehicles with rapid deployment trailers. Previously, small local operators monopolised quick-fix business. Major players were assigned time-consuming breakdowns. Now a broader spread of work eases some margin pressure.

The police and motoring organisations are driving large savings by reducing vehicle storage times, removing the need for an extensive vehicle compound network. In response, leases on vehicle compounds are being exited or renegotiated. Due to an unseasonably warm winter and lower vehicle usage, R&R volumes fell by 20%.

Under-resourced operators closed down. Many of these operators had previously depressed the market by tendering on uneconomic terms. Their departure will enable renegotiated contracts to be agreed at commercially acceptable rates.

Some jobs were lost as R&R exited onerous contracts and closed depots. However, 60 new drivers and 15 administration staff were taken on to support the Green Flag contract, resulting in a small net gain in staff.

Delivery of specialist and prestige vehicles – the focus area of Specialist Transport Operations (STO) – showed greater resilience than the rest of a depressed automotive market.

STO won the contract to deliver all corporate BMW vehicles in the UK. Volumes are expected to run at 4 000 vehicles a year. The contract began in January.

The Aston Martin contract continued and year-on-year volumes remained steady at approximately 4 000 vehicles (the 2008 peak was 8 000 units). The Bentley UK delivery contract was also retained at acceptable rates.

STO continued its fleet upgrade, purchasing 20 new enclosed road ‘trains’, and now has Europe’s largest fleet of specialised enclosed vehicle transporters.

Government cuts created knock-on demands at local government level for cost reductions. Ontime Parking Solutions achieved continued efficiency gains and passed on savings when successfully renegotiating its contracts with London’s Haringey and Fulham/Hammersmith councils.

By the fourth quarter better performance was apparent at Parking Solutions and STO. The late recovery helped Parking Solutions to a small profit, but the vehicle delivery business made a loss as did R&R and Ontime Automotive overall.

Ontime staff have been challenged to seek savings, reduce travel and towing times and secure routing and admin efficiencies. All businesses have set up Team CO₂ committees to shrink the carbon footprint.

To pursue fuel efficiencies, R&R is piloting a new type of recovery vehicle superstructure made of recycled plastic. Weight savings should result in fuel savings.

Ontime has been rightsized for a new future. A return to profit is expected in the coming year as industry pricing is back on a commercial footing and the streamlined business will benefit from recent cost savings.