Annual integrated report 2018

Chief financial officer’s report Bidcorp remains well capitalised, with ample capacity to fund further organic and acquisitive growth. However, management is well aware of the necessity for balancing debt capacity with the need to assure appropriate returns to our investors. This key consideration underpins a generally cautious approach to debt. Overview Financial performance over the 2018 financial year was highly satisfactory, reinforced by a strong balance sheet, a factor of growing importance in view of volatile global markets and indications that interest rates may well strengthen as central banks become less accommodative in their approach to money supply. Our performance was largely driven by market-share growth and innovation in new categories. Contributions from newly acquired businesses came on stream in several regions but were relatively modest and organic growth remained the principal driver in a year when almost all teams achieved solid gains in local currencies. The reporting currency of our JSE-listed group remains the South African rand, though 91% of trading profit is earned outside of South Africa and international investors hold approximately 52% of our shares. In line with our group philosophy, individual businesses are managed and measured in local currencies. In our 2018 year, the rand experienced bouts of volatility, but over the 12-month term the effect of currency shifts on our results was not material. Macro factors Internationally, the macro environment was largely supportive, especially in Eastern and Western Europe, Australasia and the UK, but headwinds were encountered in China because of the consequences arising out of the world dairy crisis. The Middle East and Africa also faced uncertain trading conditions at various stages of the year. In recent years, several geographies have enjoyed consistently good economic growth, taking unemployment to extremely low levels. As a result, employers are under growing pressure to find the labour needed to drive their own growth. For instance, tight labour markets in the UK and New Zealand create a growing recruitment challenge for our local management Strong balance sheet, group well positioned Net debt of R3,6 billion after infrastructure spending and new acquisitions World class trading margin at 5,0% Bidcorp well capitalised with ample capacity for further growth Free cash flow positive at R1,0 billion after investments of R3,1 billion Cash generated by operations before working capital up 10,6% to R6,9 billion Maintaining appropriate returns a priority 20 Bid Corporation Limited Annual integrated report 2018 David Cleasby Chief financial officer