Annual integrated report 2018

We step up preventive measures and safeguards immediately any outbreak of foodborne disease is notified. Instant reaction is complemented by a proactive policy of staying permanently on guard, rather than waiting for specific cases to occur. We not only focus on internal processes and procedures to minimise risk. Among our criteria for the selection of food suppliers is their commitment to the highest quality and safety standards. Experience tells us that, once aroused, food safety concerns are contagious. The public becomes defensive about affected brands, products and specific companies. As health concerns rise, consumers may avoid entire categories of food, affecting volumes across all industry players. Given appropriate remedial action – in South Africa and elsewhere – we believe public confidence will be restored over time. We therefore expect our CFG volumes to recover in the coming months. Legacy issues and balance Increased focus on foodservice, with special emphasis on freetrade, is rapidly turning into a worldwide success story for Bidcorp. However, redirecting and refocusing a business also creates challenges, especially for an acquisitive group that purchases international businesses in highly fragmented industries. Legacy issues are one such challenge. Clearly, some activities in some national markets may be non-core and on occasion can consume an inordinate amount of management time while distracting leadership teams from the high-growth areas of the business. This situation arises in many geographies. Resolution may be swift and pain free or may take time. For example, the historical bias in Singapore toward commodity trading activities took some time to correct, but the business has gone from strength to strength since foodservice excellence became its core focus. A current priority is portfolio rebalancing at many Asian businesses as the traditionally heavy weighting of dairy products can result in undue risk. This is work in progress, but a good start has been made. In the UK, the legacy question involved a strong historical commitment to logistics. We are a foodservice business, not a transport business. We have spent some years putting in place structures that enable us to compete with great success in the where regulations have yet to catch up with the demands made in some advanced economies. An ESG yardstick not only applies operationally. It also shapes strategic thinking. This is understandable as international experience suggests acceptable financial outcomes are unlikely without acceptable ESG outcomes. Our deepest sympathy It is with the deepest regret that we report one fatality in the review period. This involved a contractor in South Africa and we extend our sympathies to his family. The incident serves as a reminder that even when rigorous health and safety measures are in place it is imperative to ensure all guidelines are strictly observed by those on the job. Ongoing progress Revolution is rare at Bidcorp. We prefer evolution. We do what works for us and then build further momentum by reinforcing success. Ecommerce has become a key differentiator. We are not a technology company. We use technology as a means of staying close to customers. We don’t just take and fulfil orders across an e-platform, we identify needs and meet them. Our online platform leads the local markets. We are not complacent about these successes. To ensure our IP continues to give us competitive advantage we commit to constant enhancement. In many markets, more than half our sales are digitally driven. In other markets, these platforms have only recently been scoped or are in the process of being rolled out. This creates opportunities for sharing knowledge and systems. This shortens implementation periods and helps local teams avoid costly missteps. We remain a decentralised business and local managers are trusted to optimise local opportunities, but we see collaboration in more and more areas in which it makes sense to share experience, cut costs and save time. This not only happens with technology. We see increasing cooperation in the development of own brands and product sourcing. Knowledge is foodservice industry while reducing our exposure to low-margin delivery contracts for third parties. We honour contracts and will not let down our logistics customers. At the same time, we have made no secret of the fact – in the UK and elsewhere – that our focus is on foodservice rather than logistics. Discontinued business In the UK, we are committed to the exit of our UK Contract Distribution (CD) business. We have treated CD as a discontinued operation since the end of calendar 2017 and this year reported its performance separately. The business has been making losses for some time. What’s more, in the review period, it lost a substantial contract, resulting in the closure of a major distribution centre and more than 400 redundancies. We do not like to see people lose jobs and as a responsible employer, we fulfilled our obligations to the affected people. The remaining UK businesses are in good shape and are well positioned for continued success. The CD exit is the last piece of the puzzle in the rebalancing of UK operations. With these legacy issues contained, we look forward to further successes in a British market that made a big contribution to our bottom line in 2018. ESG framework As an international foodservice enterprise, we are acutely aware of our environmental, social and governance (ESG) responsibilities. Bidcorp touches countless lives. It is our job to ensure this interaction is mutually beneficial. Doing no harm is a good start. It is much better to go further by doing well by all stakeholders and the communities in which you conduct business. We operate successfully in some of the world’s most rigorously regulated jurisdictions. Compliance with sometimes complex regulations imposes a cost, but failure to meet these obligations can incur even higher costs in the form of reputational damage. We therefore take all our obligations seriously. The commitment goes beyond regulatory compliance. Wholehearted involvement is often apparent, notably the effort to reduce, reuse and recycle on the environmental front. Knock-on benefits also tend to accrue as our operations are increasingly characterised by collaboration, including the sharing of world best-practice in an ESG context. In this way, we ensure teams operate to the highest standards, even in countries Chief executive’s report 18 Bid Corporation Limited Annual integrated report 2018