Non-executive chairman's report
Resilience, local accountability and entrepreneurship remain the defining characteristics of the Bidcorp business and continue to serve us well.
Overall appraisal
Exciting growth in all regions characterised the year under review. Currency effects may diminish the profit in rand. They cannot diminish the ongoing strides made by teams in all Bidcorp geographies in home currencies.
Last year's unbundling from Bidvest was a momentous step. After such radical change, there is an obvious temptation to move forward slowly. This did not happen at Bidcorp.
The pent-up energy of local teams drove us forward as our people went all out to achieve strategic differentiation as foodservice specialists who relish the task of delivering unique foodservice solutions.
We know we have got a lot on our "plate". Foodservice is an intensely competitive industry. But all the indications are that Bidcorp is well positioned to optimise potential in all targeted market segments. Significant progress has been made to differentiate our offering versus our competitors.
Results
Bidcorp results were highly satisfactory. Headline earnings per share (HEPS) moved 9,4% higher to 1 181,0 cents (pro forma comparison with 2016: 1 080,0 cents). Basic earnings per share (EPS) rose by 16,7% to 1 207,1 cents per share (PF2016: 1 034,0 cents).
A model that has worked for many years
Most business models work when the going is good and economic conditions are buoyant. The real test comes when the business cycle gets tough.
Our model has been shaped by business conditions in many different markets at all stages of the market cycle, including periods of intense pressure on businesses and consumers. To succeed in challenging circumstances, an entrepreneurial mindset and rigorous financial discipline are required, especially in fragmented markets.
Our decentralised business model enables management to exploit opportunities by remaining close to local challenges.
Resilience, local accountability and entrepreneurship remain the defining characteristics of the Bidcorp business and continue to serve us well.
The continuing relevance of our model is evident in all Bidcorp markets. For example, consider the progress made by our South American businesses. In this part of the world, economic conditions are often difficult and the politics usually uncertain, but still our operations grow and develop. Challenge appears to have an invigorating effect on Bidcorp managers and people. The business benefits immeasurably as a result.
A good time to let go
Certainly, Bidcorp has shown itself to be a sturdy addition to the JSE and has performed in line with expectations. The business is in good hands; at business unit level, regionally and strategically. Chief executive, Bernard Berson, has shown himself to be a strong, capable leader with the capacity to secure sustained growth.
The executive chairmanship was always a transitional arrangement and it is now clear the transition has been well managed. I can step away from the executive and assume a non-executive position on the Bidcorp board in the knowledge that the business is strongly positioned and the future bright.
Sovereign rating
Today, South Africa accounts for only a small part of Bidcorp volumes, but this does not lessen the commitment to the group's home country. Senior management are close to socio-political developments and fully support the growth of democracy and efforts to secure a better life for all South Africans.
Downgrading of South Africa's sovereign rating to subinvestment levels by two major ratings agencies was therefore a big disappointment. Our country kept its investment grade for 17 years. Achievement of this status after the isolation of the apartheid years was a signal the rainbow nation was vibrant, growing and had the discipline needed to meet long-term objectives.
Downgrading after so much hard work was therefore a blow. At Bidcorp, we are disappointed, but there is no reason to be downcast. South Africa has huge potential and resourceful people. It has repeatedly proved its ability to bounce back and will do so again.
Integrity without compromise
Serious consideration has been given to the continued audit services by KPMG Inc. following the grave allegations made against them in South Africa. Bidcorp's activities are approximately 90% outside of South Africa and are independently audited by KPMG International in these jurisdictions.
In short, the opinion of the Bidcorp board is that the group retain the services of KPMG as our global auditors, based on the current information that has been presented and the response of the KPMG International team.
Bidcorp welcomes the independent investigation which will be undertaken by KPMG International and awaits the outcome thereof.
Appreciation
Bidcorp's growth is impressive. This would be impossible without loyal customers and reliable suppliers. We thank them all for their support in an exciting, but challenging year.
The Group's people and managers put in a tremendous amount of hard work to ensure our 2017 year was a highly successful one. I thank them for their efforts. They did us proud.
Newcomers to Bidcorp also made telling contributions. Numerous acquisitions were made during the year, including the Guzmán business in Spain. New staff members should be congratulated for settling in so quickly. Bidcorp is delighted to have them on board.
Finally, I also wish to extend my thanks to my fellow directors and the senior executive team. This exceptional group of people put in a sterling performance in 2017.
The year to come
The period following our separate JSE listing was notable for high energy levels and total commitment by businesses in all markets. I see no sign of the energy flagging as we move forward.
Bidcorp people can see that the strategy of a free trade focus is paying off while opening up new opportunities. Sizeable growth potential exists in all channels. Teams in all geographies are enthusiastic about prospects.
Business conditions may remain challenging in some markets, but this should not impede the push for continued growth – both organic and acquisitive – in the year to come. I am confident Bernard Berson and his team will continue to deliver a superior level of performance.
Brian Joffe
Non-executive chairman