Financial director's review
David Cleasby
Group financial director


  • Return on funds employed up from 36,4% to 38,7%.
  • Net capital expenditure rises 26% to R2,9 billion
  • Reduction of R0,7 billion in working capital
  • Net debt falls to R3,8 billion (2009: R4,1 billion)
  • Cash generated by operation after working capital changes increases by 18,3% to R8,0 billion
  • Net interest paid declines by R270,7 million to R758,5 million


Economic conditions remained challenging in all geographies, though signs of recovery emerged as the year progressed.

The interest rate climate was positive at Group level, though adverse effects were felt by Bidvest businesses that provide funding to clients as part of their business model. Our banking and foreign exchange business was also adversely affected.

The South African Reserve Bank cut rates, dropping its repurchase rate by 5,5% in all. By March 2010, the repo rate stood at 6,5%, the lowest level since 1981. Rates were also low in many international markets as government stimulated economies.

A resilient rand versus the Group's major trading currencies, sterling and euro, had a material impact on the translation of our offshore earnings. The net effect was to reduce headline earnings per share by 4,2%. The Australian dollar versus the rand reflected a stable environment.

Inflation was generally muted in all markets in which Bidvest is active, though some pockets of higher than expected inflation persisted in parts of Asia. South African inflation was higher than the targeted range of 3% to 6% at the beginning of the period. The rate declined steadily, however, and was well within range as our financial year came to an end.

A measure of inflation is normally beneficial for our trading businesses. Steady declines and consequent deflation in some sectors were negative for many of Bidvest's South African businesses.

We continue our policy of taking forward cover on trade-related transactions and our risk management policy of matching our foreign assets against our foreign liabilities in their local currencies was maintained. This policy was reinforced with the raising of long-term Czech koruna debt for the Nowaco acquisition.

Trading environment

Trading performance was mixed as businesses in various geographies had to contend with different rates of recovery by their national economies. Some felt the effects of continuing fiscal stimulation; some were impacted by austerity measures.

Finance is still readily available to creditworthy customers, though nominal rates are somewhat higher. Most businesses faced no exceptional micro challenges but certain restructuring was required. Everyday issues predominated – trading profitably, managing credit and inventory and collecting debts. Generally, Bidvest businesses did well in this "new" normal environment.

Asia Pacific emerged from the financial crisis quicker than most economies, which assisted their good performance.

In the UK, recovery was weak. The major challenge has been to manage the asset base aggressively to maximise cash generation while engaging in strategic investment to create a platform for tomorrow's growth.

The Eurozone downturn impacted the Benelux countries. Our business in the Netherlands did not escape. The Belgium business was not hit as severely due to its particular market exposure. The depressed business climate also affected eastern Europe, though areas of opportunity exist.

South Africa's economic recovery, though better of late, was disappointing. At the beginning of the period the expectation was that recession would be brief and recovery robust. Recovery has been slow and recessionary impacts more severe; especially in key sectors like construction and retail.