Lindsay Ralphs. Picture: FINANCIAL MAIL
Lindsay Ralphs. Picture: FINANCIAL MAIL

Industrial services giant Bidvest has managed to achieve a 9.8% increase in headline earnings for the year ended June, and to generate R7.1bn in cash across its many businesses, despite SA’s limping growth. But the company is keen to direct capital from noncore assets to "internationalising niche services". The FM asked CEO Lindsay Ralphs whether SA’s basket-case economy is an incentive for this strategy.

We have disposed of a whole bunch of noncore assets [but] we’re not specifically redirecting those funds overseas, it’s just part of our basket of funding. Our debt levels are very low, they will reduce a bit further and we have mentioned that something like Comair is not core and we’d like to dispose of that.

Are we doing it because SA’s a basket case? Not specifically, because we are still allocating quite a lot of funds to SA. But we’ve come to a stage where the Competition Commission won’t allow us to make certain big acquisitions in SA any longer.

How do you not come a cropper internationally? SA companies seem to have an inflated view of themselves when it comes to buying assets overseas. Is it a simple formula, or is it simply a case of not being suckered by shiny-suited corporate finance types?

I think you’ve probably hit the nail on the head. These guys you avoid like the plague. But bear in mind that Bidcorp was part of us for 25 years so we did experience that [offshore] growth with Bidvest and Brian [Joffe] and we really saw how it was done, especially if you’re a good player or a specialist player in a certain industry and you’re comfortable to operate in the world market.

We did put our toes in the water with Noonan: it was a pretty significant player in Ireland. It’s a nice economy, they were No 1, with a good management team, and that’s the formula we previously followed with Bidcorp.

We’re kind of carrying on with that mentality. The [deals] we’ve gone on record to say we’d consider would be in hygiene services; we have competed against the biggest player in the world, Rentokil, in SA, and we’ve done a very good job against them and we really understand that market.

It’s not a glossy business: soap dispensers and sanitary bins et cetera, but we honestly think we can play in the world market there. In certain major geographies that could come at a price of £500m [to] £600m. So we would consider that. It would be a little like when Bidcorp bought what became 3663, which they then used as a platform to buy lots of bolt-on businesses.

SA, besides a spate of xenophobic attacks, is witnessing a surge in trucking-related incidents. Is it affecting your operations?

It does affect us a bit. It is very concerning. We do quite a bit in our logistics businesses, as well as trucking, and we noticed it in KwaZulu-Natal on the N3 which is where it started and it appeared to be a lot of social unrest, lack of service delivery in those towns, and it appeared to be purely local communities. But it’s become a great concern to the transport industry, though we don’t see too much else behind it.

Are you tearing your hair out at government inaction over economic policy?

The answer has to be yes: I think the whole country is pulling their hair out, particularly corporate SA. There is an absolute lack of initiative or activity from the public sector. Fortunately for Bidvest, of our total revenue, only 5% is exposed to government, state-owned enterprises and municipalities, which is relatively light. The airport [business] is an example: we don’t have one contract with Acsa [Airports Company SA], every one of our contracts is with the airlines and passengers. We clean airplanes, we move airplanes, look after passengers et cetera; Acsa is purely our landlord. So we’re not that affected directly, but it’s massively affecting GDP growth. We can’t live in a country that’s growing at half a percent.

Do you feel that Bidvest has a voice to say "stuff needs to be done", and do you feel you actually get heard?

I know that Sipho Maseko from Telkom came out quite aggressively on the weekend about the telecoms plan [in finance minister Tito Mboweni’s strategy document]. But that was specific. To give you an example, if they did something in the pharma game I think we would be very vocal if we saw it as being negative or disruptive to that industry [in which Adcock operates]. It’s not that we don’t want to voice our opinion, and we may have to change our view on this, but up to now we’ve used organisations like Business Leadership SA. Mpumi Madisa, who is my successor, is on the main board there. But if we see that that’s not going to work then we’re going to have to become more vocal.