Annual integrated report 2018

BF delivered excellent results. First contribution of newly acquired fruit and veg distributor, Famous Fresh, was recorded from February. Sales into the independent channel continued to grow. National Accounts business declined marginally while business with industrial caterers ticked higher. Online orders via the “myBidfood” platform account for more than 60% of revenue. CFG ’s results were impacted by the listeria outbreak, with ingredients for processed meat products hard hit. The lost sales impact was material while stock on hand rose, impacting working capital. CFG entered the wholesale channel to support its brands and own manufactured products. The “Crown 247” ecommerce platform was implemented. CP made excellent progress. Introductions of its unique brands began in January. Changes to manufacturing processes are underway. Upskilling continues (indicating potential for synergies in human capital support and relationship capital development) while the Puratos influence is starting to manifest itself in terms of quality and innovation. Angliss Asia saw profits dip, impacted by a tough second half. Sales were up on prior year, but lagged expectations. Hong Kong failed to meet budget, hit by a slowdown in the foodservice market and the global dairy crisis. Fierce competition at the upper end of the market created added pressure. Him Kee dry goods did relatively well. A good performance at Miumi, the Japanese foods specialist, was underpinned by increasing sales of frozen fish products. Our new seafood business, Linson Global Seafood Trading, did well. Macau was impacted by price cutting by market entrants. Hong Kong plans a series of new brand introductions in the new period. The attention paid to relationship capital is showcased by these ongoing efforts to refresh and renew the product mix in line with changing market dynamics and shifts in consumer tastes. Mainland China recorded a fall in sales and experienced strong margin pressure. Competition in the dairy category was intense. Work continued on the development of the product mix and brand portfolio. To reduce dependence on dairy, major subsidiaries in Beijing, Shanghai and Guangzhou redoubled efforts to build sales across a broader product range. Renewed growth will be sought through strong focus on hotels and restaurants, meat imports and the provision of chilled and processed meats to the foodservice channel. A strong sales push is planned in second tier cities such as Shandong, Qingdao, Nanjing, Yunnan, Xiamen, Nanning and Jilin. Singapore secured continued improvements in revenue and trading profit as economic growth moderated, but remained generally robust. Foodservice again grew sales and margins were well managed. Sales at the Miumi division grew strongly. The marine, international trading and consumer operations were under pressure, though a consumer turnaround was evident following new brand introductions. Gourmet Partner sales rose and Food Pride surpassed expectations. Bidfood Malaysia (formerly Aeroshield) performed in line with budget in an economy that continues to achieve significant growth. Brazil secured revenue growth on the prior year, but volumes fell short of plan. Margins were under pressure in challenging socio- political conditions. However, profits were maintained. Fourth quarter results were impacted by the Soccer World Cup (which kept patrons out of restaurants) and a nationwide truck strike. Work has begun to standardise systems used by the core Irmãos Avelino business and Mariusso, the distribution business acquired in the previous period. Relationship capital is a key area in a challenging economy and the annual sales promotion has become an important tool for growing the number and quality of our suppliers. Human capital is another growth area as we continue to grow sales jobs while reinforcing our geographic reach. Chile performed strongly in an economy that is only in the first stages of recovery. Revenue growth was highly satisfactory. Launch of the Viña del Mar branch boosted volumes. The processed meat and particularly the seafood category showed good growth, though at lower margins. Internal controls and debtor collections improved. Late in the year, the “myBidfood” ecommerce platform was launched. Further sales growth is projected on the back of continued deployment of intellectual capital. Middle East achieved second half gains following the implementation of a recovery plan, with sales approaching the levels of the prior year. Margin improved and steps to contain expenses proved successful. Horeca UAE faced sales challenges as several poor performing brands were discontinued. The business put renewed focus on social and relationship capital by stepping up corporate social responsibility efforts and forming a relationship with the Manzil Centre of Special Needs in Sharjah. In addition, Horeca’s Iftar meal collaboration initiative creates an ongoing partnership with Taste Studios and the Red Crescent. Relationship capital often goes to work in the marketing field as the business increasingly helps major customers widen their regional footprint. Al Diyafa in Saudi Arabia, delivered good revenue and trading profit growth. Intellectual capital innovations included work to strengthen Al Diyafa’s digital presence through constant website updates while exploring social media’s potential for lead generation. Horeca Oman, recorded consistent growth and Bahrain’s results were outstanding. Early progress by Horeca Jordan was encouraging. Aktaes Turkey registered further sales gains and the level of loss was contained. Distribution costs rose on the back of the weak Turkish lira. The purchase of the Efe distribution firm in Izmir and its nine- month contribution helped Aktaes maintain momentum. Despite economic and political uncertainty, management remains optimistic about local market prospects. Managing sustainability in our emerging markets is as diverse as the regions in which we operate. From the sustainable sourcing of product to the social projects we invest in, each region faces unique opportunities. Natural capital Due to volatile availability and price, fuel conservation is critical to the successful functioning of our fleets. Despite the significant increase in our revenue and profit, our diesel and petrol consumption increased only marginally, indicating improved distribution efficiency. Reported fuel consumption in this division decreased by 14% year-on-year, mostly attributable to the exclusion of CP following the Puratos JV restructure and being equity accounted from April 1 2017. Emerging Markets continued 42 Bid Corporation Limited Annual integrated report 2018