Annual Integrated Report 2019

transparently present our numbers in constant currency as well. Currently, 95% of revenues are external to South Africa and 92% of earnings are non-South African rand denominated. Group revenue totalled R129,3 billion, up 9,8% from last year’s R117,7 billion, while in constant currency there was revenue growth of 4,7%. The gross profit percentage increased to 23,9% from 23,3%, which reflects the freetrade growth. Freetrade provides a higher margin in the customer mix, rebalancing the customer portfolio which has enabled the group to trade through the higher cost base. Value-over-volume While penetration varies across regions, freetrade remains important to our business and we continue to assess measures to enhance this element. We took a risk some years back as we became very aware of shifting customers dynamics and started a process of exiting lower- margin contracts. There was a significant, but important internal debate about this strategy, considering certain contracts were volume based and not mutually beneficial and disproportionate in the risk-reward profile. Others were smaller but operated at better margin. Over time, and as these dynamics change more regularly and rapidly, it is pleasing that our value- over-volume strategy has gained traction, and it is building a stronger, more resilient, more sustainable business. Our results absolutely reflect that across multiple geographies. Because of the higher sales and distribution activity, a larger invested operational base and the greater focus on freetrade customers, our overall cost of doing business (operating costs) increased to 18,7% from 18,3%. Group trading profit margin increased slightly to a very respectable 5,2%. Growth through acquisition continues In comparison to a normal (Bidcorp) acquisition year, the past year’s activity was subdued. This was as a result of our ongoing financial discipline and the intention to focus on bolstering the platforms from recent acquisitions in Germany, Iberia and Australia. Despite this, investment activity amounted to R847,1 million from R1,2 billion last year. Certain bolt-on acquisitions were made, the most significant of which included the remaining minority of the D&D business in Italy, 100% of Igartza in Spain and Punjab Kitchen, rebranded Simply Food Solutions, in the United Kingdom. Regional roundup and review One of the important benefits of the diversified model is the significant synergy that is derived among group entities. While decentralised, management teams are still able to share tremendous amounts of data and information about what has, and what has not, worked in certain regions. Coupled with our competitive nature and being naturally supportive of each other, especially after having worked together to achieve a common purpose, it results in a group-enhancing sharing and further diversification of successful business process and talent. We share numerous benchmarks and many other aspects of the business, some of which include measures of excellence and innovation, the cost of technology, customer trends, cost and efficiency “secrets”, and distribution dynamics. Our rebranding to Bidfood for the global operating units is progressing exceptionally well. Most of our global operations are now identified as “Bidfood” in all livery and it is this moniker that will continue to be the driver and deliverer of the quality offering, and superior service provider, for which we have become well known. While there is ever-increasing collaboration across the group, an absolute focus, of course, remains on the individual businesses. Australasia The Australasia region is one of the areas where, overall, group leadership is benefiting from the focus and passion of its management team, pertaining largely to maintaining an appropriate customer base, as well as procurement and manufacturing opportunities, and technological innovations. Over recent years, we have made a larger than normal investment into Australia and New Zealand in infrastructure, specifically aimed at future growth. In Australia, the business continues to perform satisfactorily, growing profitability (for the twenty-second consecutive year), notwithstanding a very sluggish economy. One of our large, low margin In the three short years since our stock exchange listing, the group is positioned as a strong, independent and successful foodservice entity. Ultimately, it is the entrepreneurial and decentralised business model, the depth and experience of our management teams and the strength of the group’s culture that will deliver a sustained future of growth. Leadership review Bid Corporation Limited Annual integrated report 2019 / 21