Directors’ report

The directors have pleasure in presenting their report for the year ended June 30 2013.

Nature of business

The company is an investment holding company with subsidiaries operating in the services, trading and distribution industries.

Financial reporting

The directors are required by the Companies Act No 71 of 2008, as amended (the Act), to produce financial statements, which fairly present the state of affairs of the company and the Group as at the end of the financial year and the profit or loss for that financial year, in conformity with International Financial Reporting Standards (IFRS) and the Act.

The financial statements as set out in this report have been prepared by management in accordance with IFRS and the Act and are based on appropriate accounting policies supported by reasonable and prudent judgements and estimates.

The directors are of the opinion that the financial statements fairly present the financial position of the company and of the Group as at June 30 2013 and the results of their operations and cash flows for the year then ended.

The directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the financial statements.

Share capital

No shares were issued during the year under review (2012: 386 357).

Acquisitions and disposals

The Group undertook a number of smaller acquisitions during the year. Details of assets acquired and liabilities assumed are contained in note 11 to these financial statements.

Subsequent events

With effect from July 1 2013 the Group acquired the entire issued share capital of Home of Living Brands Holdings Limited (formerly Amalgamated Appliance Holdings Limited) that it did not already own, for a consideration of R532 million (refer note 40).

Results of operations

The results of operations are dealt with in the consolidated income statement, segmental analysis and commentary.

Movement in treasury shares

In terms of general authorities granted to the company to repurchase its ordinary shares, the latest being shareholder authority obtained at the annual general meeting of shareholders held on November 26 2012, a maximum of 65 546 986 ordinary shares may be acquired by the company of which 32 773 493 may be acquired by its subsidiaries.

A total of 1 043 213 ordinary shares were disposed of at an average price of R85,29 per share in settlement of share options exercised by staff.

Dividends

An interim gross cash dividend of 324,0 cents per share (2012: 280,0 cents per share) was declared by the directors to those members registered on the record date, being Thursday, March 28 2013.

Subsequent to year-end, a final cash dividend of 396,0 cents per share (2012: 342,0 cents per share) was declared by the directors to members register on the record date, being September 20 2013. The salient dates are:

Payments to shareholders

Approval was obtained at the last annual general meeting for the company to make payments which would reduce its share capital, share premium, and/or reserves in terms of the Act.

Special resolutions

Special resolutions were passed at the annual general meeting of shareholders held on Monday, November 26 2012 in regard to a general authority to enable the company to acquire its own shares, approval of non-executive directors’ remuneration for the 2013 financial year, general authority to provide financial assistance to related or inter-related companies and corporations in terms of sections 44 and 45 of the Companies Act No 71 of 2008, as amended and the adoption of the new memorandum of incorporation (MoI).

Special resolutions were passed by certain subsidiaries to accommodate the acquisition of various businesses, to change their names and the general authority to provide financial assistance to related or inter-related companies and corporations in terms of sections 44 and 45 of the Companies Act No 71 of 2008, as amended. All South African subsidiaries passed a special resolution for the adoption of a new MoI.

Directorate

Fred Barnes, Lionel Jacobs, Joseph Pamensky and Alan Salomon did not offer themselves for re-election as directors of Bidvest at the AGM held on November 26 2012.
Peter Nyman retired and Rachel Kunene and Muriel Dube resigned from the board with effect from November 26 2012.

The board expresses their thanks to the aforementioned directors for their dedication, advice and guidance provided to the board over the past number of years and wishes them well in the future.

It was announced on March 25 2013 that Cyril Ramaphosa retired from the position of chairman of Bidvest, however would remain a board member until the AGM. The board extends it sincere thanks and gratitude to Cyril for his leadership over the past nine years. Lorato Phalatse, who is an independent non-executive director on the board, was appointed to succeed Cyril as the new chairperson of Bidvest.

In terms of the Company’s MoI the directors who retire by rotation at the forthcoming annual general meeting are Brian Joffe, Bernard Berson, Alfred da Costa, Stephen Koseff,
Nigel Payne and Adv Pansy Tlakula. Stephen Koseff has decided not to make himself available for re-election. All other retiring directors are eligible and have made themselves available for re-election.

Attendance

The names of the directors who were in office during the period August 25 2012 to August 24 2013 and the details of board meetings attended by each of the directors are:

Directors’ interests

The aggregate interests of the directors in the share capital of the company at June 30 2013 were:

Directors’ Curriculum Vitae

Cecilia Wendy Lorato Phalatse, Independent non-executive chairperson, Age: 51, Qualification: BA Political Science, (Hons) University of Leeds UK, MA Southern African Studies, University of York UK, Appointed: April 20 2012
Lorato is a non-executive director of Pick n Pay. Lorato has held various positions over the years including, Deputy Director General in the Office of the President and a number of other positions in the FMCG and Retail Banking sectors. Lorato was a CEO and co-founder of Nozala Investments, a woman led and controlled investment company.

Brian Joffe, Group chief executive, Age: 66, Qualification: CA(SA), Appointed: March 1 1989
Director of numerous Bidvest subsidiaries. Since founding Bid Corporation in 1988, Brian served as executive chairman until his appointment as chief executive in 2004. He has over 33 years of South African and international commercial experience. Brian was one of the Sunday Times’ top five businessmen in 1992 and is a past recipient of the Jewish Business Achiever of the Year award, was listed as one of the Top 100 Africans of the Year in the Africa Almanac in 2001, was voted South Africa’s Top Manager of the Year in 2002 in the Corporate Research Foundation’s publication “South Africa’s Leading Managers”, represented South Africa at the coveted “Ernst & Young World Entrepreneur of the Year” awards in 2003, voted the Sunday Times’ Businessman of the Year in 2007, awarded an honorary doctorate in May 2008 by Unisa and selected in 2010 by Wits Business School
Journal as one of South Africa’s top 25 business leaders, having made a significant impact on business in South Africa over the last five years. Listed by Forbes Magazine as one of the 20 most powerful people in African business.

Paul Cambo Baloyi, Age: 57, Qualification: MBA, MDP, SEP (Harvard), Appointed: April 20 2012
Paul is currently the managing director of CAP Leverage Pty Ltd. Until April 2012, has been chief executive officer and managing director of the Development Bank of Southern Africa from June 11 2006. Paul also served as chief executive officer and managing director of DBSA Development Fund.

Prior to this Paul had spent 30 years in the Financial Services Sector, with both Standard Bank and the Nedbank group. His last position at Nedbank was as managing director of Nedbank Africa.

Paul has been an independent non-executive director on many boards locally and internationally including, African financial institutions. He was a council member of the Institute of Bankers and also served as chairman of the Nedmedical Aid.

Other boards include, Old Mutual South Africa, CAP Leverage, ACBF on which he is chairman and Bidvest Bank Limited.

Douglas Denoon Balharrie Band, Lead independent director, Age: 69, Qualification: BCom, CA(SA), Appointed: October 27 2003
Non-executive director of The Standard Bank Group Limited and MIH Holdings Limited. Doug has extensive experience in both commerce and industry and has served in an executive position in various blue-chip listed companies.

Bernard Larry Berson, Chief executive of Bidvest Foodservice, Age: 48, Qualification: Australian CA, Appointed: October 27 2003
Director of numerous Bidvest subsidiaries. Bernard has 25 years of international financial, administrative and management experience in numerous industries, the past 17 years in the Australian, New Zealand, Asian, South African and European foodservice industries.

David Edward Cleasby, Group financial director, Age: 51, Qualification: CA(SA), Appointed: July 9 2007
Director of numerous Bidvest subsidiaries and associate companies. David was financial director of Rennies Terminals when Bidvest acquired Rennies group in 1998. In 2001, he joined the Bidvest corporate office where he has been involved in both Group corporate finance and investor relations. David was appointed as an alternate director to Peter Nyman on June 28 2006 and appointed Group financial director on July 9 2007.

Alfred Anthony da Costa, Age: 48, Qualification: BCom (Hons), Appointed: December 8 2003
Director of the IQUAD group Limited, Dinatla Investment Holdings (Pty) Limited, chairman of the boards of RGT Smart Limited, and Bidvest Wits University Football Club (Pty) Limited. Alfred is chief executive officer of Ukuvula Investment Holdings (Pty) Limited, council member of the University of South Africa and past president of the Nelson Mandela Bay Business Chamber and is also a trustee of the Bidvest Dinatla Trust. He is a director of various subsidiary and associate companies of the Ukuvula group. Alfred has 22 years’ experience in top management.

Anthony William Dawe, Chief executive of Bidvest Freight, Age: 47, Qualification: CA(SA), Appointed: June 28 2006
Director of numerous Bidvest subsidiaries. Anthony has 18 years’ experience in the freight industry with most of those years focused in the South African port environment. Prior to this, Anthony’s finance experience was in London and for one of the large accounting firms in South Africa.

Eric Kevin Diack, Age: 56, Qualification: BAcc CA(SA), AMP Harvard, Appointed: April 20 2012
Eric has extensive experience of the South African industrial and mining landscape. He has been integral to the negotiation and successful conclusion of a multitude of transactions during his corporate and entrepreneurial career. Eric has served on numerous major listed company boards; namely: AMIC, AECI, ArcelorMittal, Daewoo, Dorbyl, Haggie, Highveld Steel, LTA, McCarthy’s, Terra and Tongaat. Eric is a director on the board of Bidvest Bank Limited and Bidvest Bank Holdings Limited. Eric is chairman of the audit committee of Bidvest Bank.

Stephen Koseff, Age: 62, Qualification: BCom, CA(SA), HDip BDP, MBA, Appointed: June 17 1997
Chief executive officer of Investec Limited and Investec plc. Stephen has 36 years of financial experience and is the recipient of numerous business awards. His directorships include Investec Limited and Investec plc, Rensburg Sheppards and various other Investec subsidiaries. His previous non-executive positions have included immediate former Chairman of the South African Banking Association, former director of the Johannesburg Stock Exchange, former member of the Financial Markets Advisory Board and former chairman of the Independent Bankers Association. He is a former member of the Financial Markets Advisory Board and former chairman of the Independent Banks Association.

Alexander Komape Maditsi, Age: 50, Qualification: BProc, LLB (Wits), LLM (Pennsylvania), LLM (Harward), Dip Company Law (Wits), Appointed: April 20 2012
Alex is the current franchise director for Coca-Cola Southern and Eastern Africa. Alex has held various positions in Coca-Cola over the past 15 years.
Alex has held various legal positions in companies in both South Africa and the United States.

Donald Masson, Age: 82, Qualification: ACIS, Appointed: March 10 1992
Director of numerous Bidvest subsidiaries, Valley Irrigation Limited, chairman of Cashbuild Limited, and a trustee of various pension funds. Donald is a former president of the Afrikaanse Handelsinstituut and a former member of the President’s Economic Advisory Council and chairman of the SA Post Office. He has 45 years of diverse business experience in senior executive positions at listed, unlisted and parastatal organisations.

Nigel George Payne, Age: 53, Qualification: BCom (Hons), CA(SA), MBL, Appointed: June 28 2006
Director of a number of companies including the JSE Limited, Mr Price Group Limited (chairman), Vukile Property Fund Limited and BSi Steel Limited and is chairman of Bidvest Bank Limited. Nigel is a leading authority on corporate governance and risk management and is a member of the King Committee.

Lindsay Peter Ralphs, Chief executive of Bidvest South Africa, Age: 57, Qualification: CA(SA), Appointed: May 10 1992
Director of numerous Bidvest subsidiaries. Lindsay joined Bidvest as operations director in 1992. In 1994 he was appointed managing director of Steiner and following the acquisition of Prestige, Bidserv was created and Lindsay was appointed its chief executive. During the Group restructuring in February 2011, Lindsay was appointed CE of Bidvest South Africa.

Matamela Cyril Ramaphosa, Age: 60, Qualification: BProc, Appointed: July 6 2004
Executive chairman of Shanduka Group (Pty) Limited and Auram Restaurants company (Pty) Limited t/a McDonalds S.A. Joint non-executive chairman of Mondi plc and non-executive chairman of MTN Group Limited. Non-executive director of SAB Miller plc, Lonmin plc, Alexander Forbes Equity Holdings Limited and The Standard Bank Group Limited. Cyril is the past chairman of the Black Economic Empowerment Commission and has received several honorary doctorates.

Tania Slabbert, Age: 46, Qualification: BA, MBA, Appointed: August 20 2007
Tania is the CEO of WDB Investment Holdings (Pty) Limited a company which, through its shareholder, the WDB Trust, provides women entrepreneurs across South Africa with access to financial and non-financial resources to support their businesses. Non-executive director of BP South Africa (Pty) Limited, Discovery Holdings (Pty) Limited, Caxton Holdings (Pty) Limited and Dinatla Investment Holdings (Pty) Limited.

Adv Faith Dikeledi Pansy Tlakula, Age: 56, Qualification: DTech (Legal Studies) Honoris Causa (VUT), BProc (UNIN – now UL), LLB (Wits), LLM (Harvard),
Appointed: June 28 2006
Chairperson of the Electoral Commission of South Africa, Director of MMRT (Pty) Limited, Lehotsa Investment (Pty) Limited and Khomanani Women’s Investment (Pty) Limited, former Chairperson of Board of the National Credit Regulator and Chancellor of the Vaal University of Technology. Pansy is a member of the African Commission on Human and Peoples Rights, part of the African Union, for which she is the Special Rapporteur on Freedom of Expression and Access to Information in Africa.

Lebogang Joseph Mokoena, Age: 54, Qualification: BSc (Med Sci), MBA, Appointed: As alternate to AA da Costa on December 8 2003
Non-executive director of Ten Alliance Holdings (Pty) Limited, Sesiu Investment Holdings (Pty) Limited, Bloemfontein Correctional Contracts (Pty) Limited, Culca Investments (Pty) Limited and Dinatla Investment Holdings (Pty) Limited. Currently Chairman of Bloemfontein Correctional Contracts (Pty) Limited. Lebogang has a number of years’ experience as a director of private companies. Over the years he provided management consultancy services to SMMEs, the public and private sectors. In recent years he devoted most of his time to investment management and strategy development.

Committees

Audit committee

Remuneration committee

Risk committee

Acquisitions committee

Nominations committee

Social and ethics committee

Directors’ shareholdings

Beneficial

The individual beneficial interests declared by the current directors and officers in the company’s share capital at June 30 2013 held directly or indirectly were:

Held in terms of The Bidvest Incentive Scheme

The Bidvest Incentive Scheme grants loans to staff and executive directors for the acquisition of shares in the company. The number of shares and carrying values of the loans issued to directors and officers as at June 30 2013 were:

Non-beneficial

In addition to the aforementioned holdings:

The interests of the directors remained unchanged from the end of the financial year to the date of this report.

Directors’ remuneration

The remuneration paid to executive directors while in office of the company during the year ended June 30 2013 can be analysed as follows:

For comparative purposes the remuneration paid to executive directors while in office of the company during the year ended June 30 2012 can be analysed as follows:

The remuneration paid to non-executive directors while in office of the company during the year ended June 30 2013 is analysed as follows:

Prescribed officers

Due to the nature and structure of the Group and the number of executive directors on the board of the company, the directors have concluded that there are no prescribed officers of the company.

Directors’ long-term incentives
Details of the directors’ and officers’ outstanding share options

These options were granted to directors prior to April 30 2005 and are exercisable over the period July 1 2013 to April 30 2015. A detailed register of options outstanding by tranche is available for inspection at the company’s registered office.

Share-based payment expense

Details of directors’ and officers’ outstanding conditional share plan (CSP)

A conditional award is a conditional right to a share, which is awarded subject to performance and vesting conditions.

During 2013, the shares were awarded at R203,10 per share.

Summary of executive directors’ long-term incentives (LTI)

Directors’ service contracts

Directors do not have fixed-term contracts.

Directors’ and officers’ disclosure of interest in contracts

During the financial year no contracts were entered into in which directors and officers of the company had an interest and which significantly affected the business of the Group. The directors had no interest in any third party or company responsible for managing any of the business activities of the Group.

Secretary

During the year under review, and in compliance with paragraph 3.84(i) and (j) of the JSE Listings Requirements, the board evaluated Mr CA Brighten, the company secretary, and is satisfied that he is competent, suitably qualified and experienced. Furthermore, since he is not a director, nor is he related to or connected to any of the directors, thereby negating a potential conflict of interest, it was agreed that he maintains an arm’s length relationship with the board.

The business and postal addresses of the secretary, which are also the registered addresses of the company, are Bidvest House, 18 Crescent Drive, Melrose Arch, Melrose, Johannesburg, 2196 and PO Box 87274, Houghton, 2041, respectively.