Annual Integrated Report 2019

Chief executive’s report Our business has delivered another good performance, with real organic growth in group trading profit of R6,7 billion, a 7,1% increase in constant currency. The established businesses are trading well with a balance of contribution ensuring no single region remains dominant: Australasia contributed 32% of the profits, the United Kingdom delivered 25%, Europe provided 28% and 15% was derived from Emerging Markets. Food inflation was minimal throughout the group, meaning that real trading profit growth was over 6%, which is commendable in these challenging economic times. Notable macro- challenges exist in several territories, but these are beyond our control and we tend to rather focus on our own priorities and strategic imperatives, and where we can influence our own future. We have continued our exceptional growth trajectory, but we are not complacent. Over the past year, as a group we spent R718 million on acquisitions, using cash of R449 million, and we invested an additional R3 billion on property, plant and capital equipment expenditure. Our considered imperative to invest ahead of the growth curve remains a recurring theme throughout the group, with new capacity driving new business volumes in regions where we see potential. Our strategy is firm and intact, but that does not mean we do not manage change and advance or adjust certain elements. Conditions change and we always remain alert to external circumstances, ready to adapt to a continued and collaborative customer-centric offering, such as the continued re-balancing of our customer portfolio and finding new and innovative solutions for our consumer base. We are, for example, ensuring a fit-for- purpose solution through the application of different technological touchpoints. These include digitisation, ecommerce, data analytics, and modern facilities, deploying the latest and most efficient techniques and equipment. As our customer needs and purchasing habits become more complex, Bidcorp’s key imperative will be to ensure the flexibility to deliver speedily across different temperatures, at differing quantities, and varying locations. We see this as a true partnership that is collaborative in nature and unified in common purpose. Wage and salary inflation is a reality in the current global socio-economic climate and provides an impetus for Bidcorp to do things more productively. Similarly, our customers are experiencing the same pressures and challenges. Therefore, we have considered and introduced developments and advancements to improve the value-add offering that enables our customers to reduce their processing time while optimising sales and profitability. The traditional foodservice focus is increasingly being complemented by own brand products and light in-house processing. We are actively pursuing various opportunities in key regions and good progress has been made. Another exciting achievement is the new generation metro strategy we have adopted. In many regions around the world, it is clear that customers are finding skills replacement a challenge, while expensive and less suitable, cost effective, property options are impacting their businesses. This provides us with an opportunity to provide more conveniently located warehousing solutions, specifically, to enable a faster, better last-mile quick response execution of customer orders. These are more often than not being processed through our ecommerce systems. This strategy will also be introduced in other regions where relevant and appropriate. Bidcorp operates on a truly diversified basis across many different geographies and we touch many lives every single day. But, ultimately, we are all about the food, all about the service, and we are all about the technology. It is the successful interface and equilibrium between those three that will determine our continued future success. Sound and solid results Despite volatile economic conditions in many of our operating geographies, we have delivered a solid performance for the year. Trading in most geographies remained positive despite the persistent low food inflation and moderate economic growth. Good revenue growth and better gross margins helped offset cost pressures, particularly labour, energy and fuel. As a South African (JSE) listed entity for the last three years, but which has 30-years of maturity, the vast majority of Bidcorp’s operations are outside South Africa. Bidcorp reports in rand, and it remains a core fundamental for us to Exceptional growth trajectory Group revenue of R129,3 billion, up 9,8% A balance of contribution ensuring no single region dominance Our value-over-volume strategy gained traction The customer, always at the forefront of everything we do Own brand Babicky, Bidfood Czech. 20 / Bid Corporation Limited Annual integrated report 2019