28 / 170
Divisional reviews
United Kingdom is a market-leading foodservice and product distributor serving customers in the hospitality,
institutional, catering and retail sectors in the United Kingdom and Ireland. Foodservice UK is a leading
foodservice distributor and preferred supply partner for over 60 000 customers across the UK, providing every
food option from quality ingredients to finished meals, including a number of own brand ranges. Fresh supply
national and independent customers within the catering industry with fresh ingredients including fish, seafood,
meat, produce, dairy products and ambient goods, offering direct delivery of all ingredients to customers’
kitchens, with product freshness preserved through delivery in temperature-controlled vehicles. Logistics
provides alternative multi-temperature services to meet the varying needs of our ever growing and diverse
customer base.
Environmental awareness is pivotal to a company that has a large international logistics footprint and for whom
food and the agricultural value chain is vital for its prosperity. Bidcorp has a philosophy that green initiatives
make for good business, efficiency too, and there are numerous examples of this throughout the company. For
example, Bidcorp monitors economical use of utilities and packaging and, in certain instances, biofuel is utilised in
running fleets.
Bidcorp United Kingdom
Foodservice
The business posted a strong set of results
in an economy that maintained modest
but consistent growth. Sales and trading
profit were well ahead of the prior year while
expenses were well controlled. All segments
showed year-on-year improvements.
National accounts showed growth as several
major customers renewed contracts. The
strategy of re-tendering low-margin accounts
at higher rates resulted in a number of
customers exiting the relationship.
Free trade volumes, excluding acquisitions,
eased lower, but customer margin improved
slightly. Focus for 2017 is to grow the indirect
customer base while maintaining margins.
The Vivas joint venture in the wholesale
segment achieved pleasing profit and
sales growth. Caterfood, an independent
wholesaler, was acquired in the third quarter
and management are excited about the
synergies that Foodservice can bring.
Working capital management improved and
cash generated from operations remained
robust. The return on funds employed was
up 30,6% on the prior year.
Investment on infrastructure continued and
included spending on new sites in Worthing
and Slough, which became operational
in June.
management and online trading. Voice picking
was rolled out to 19 depots.
Among the specialist businesses, SLF
reported significant trading profit growth and
Catering Equipment exceeded expectations.
Logistics
Logistics overall benefited from higher
revenue. However, trading profit performance
disappointed as margins were squeezed.
Labour shortages pushed expenses
up significantly, as did higher vehicle
accident costs as a result of more agency
labour requirements. In addition, costs of
implementing new contracts, surplus depot
capacity and abnormal expenses eroded
profitability. A review of the commercial scope
of contracts and service levels is under
way, combined with an aggressive review of
management structures and overhead costs.
Management irregularities were identified and
investigated during the year, some of which
relate to a recent acquisition and others to
operational activities, all of which significantly
impacted the division. These irregularities
are subject to ongoing legal processes. Any
impact on non-current assets is continually
being monitored by management. In respect
of the net operating assets, management
has provided for the worst case scenario
notwithstanding recoveries from legal action
and insurance claims.
The upgrading, modernisation and
simplification of IT infrastructure were
completed and included the implementation
of Bidcorp’s e-commerce platform for product
Page 24
| Bidcorp Limited Annual integrated report 2016