Operational overview

Bull Brand Foods

Bull Brand Foods has established itself as a vertically integrated red meat company with a reputation for export quality fresh beef and superior grade, well priced canned meals. Bull Brand provides a full basket of fresh red meat product and supplies the greater Gauteng market including its halaal and kosher customers. Despite the strong Rand, the company has increased exports of high quality beef to Europe and has significantly grown domestic sales to large supermarket chains and independent butchers across South Africa.

Bull Brand's canned meals (with its portfolio of well known trade names such as Bull Brand, Spekenam, Gants, Apex and house brands) have continued their strong domestic growth and have also secured significant exports to the UK, Botswana and the rest of Africa.

The Hurland and Taaiboschbult feedlots outside Magaliesburg and Potchefstroom respectively stock in excess of 40 000 cattle (approximately 8% of the standing head of cattle in South Africa), producing young high grade beef which is sold under the Bull Brand Grainfed, SAMS Tender Beef and Bull Brand Tender brands. The Krugersdorp facility encompasses an abattoir, production, canning, retail and wholesale operations and is the main distribution hub.

Operating results for 2004 were substantially up on previous years. The improvement was achieved through cost cutting, an improvement in the meat price, benefits from economies of scale and significant improvement in motivation and staff morale. Both the cannery and fresh meat divisions showed good growth. Emphasis has also been placed on providing the correct resources for the business to effectively achieve the desired economies of scale. For example, at Hurland, the adjacent farm land was acquired to secure water access and other resources.

Water access is critical to ensure continuity of supply of drinking water for the cattle. A structured capital expenditure programme was initiated to improve or replace old equipment and vehicles. Further capital expenditure will be incurred to improve processes, technology and competitiveness.

During the year, both feedlots achieved an ISO 14001 certification. The Krugersdorp operation, which has an overall EU export status, also achieved a HACCP re-certification and the coveted British Retail Consortium certification. These environmental, process and food safety certifications reinforce Bull Brand Foods' ongoing commitment to customers and ultimate consumers of the highest standards of quality and hygiene.

During 2005, the company will intensify its drive to supply an increased range of branded value added products to make consumers' lives easier and provide them with convenience under a Bull Brand guarantee of quality and safety. The current outlook is for meat price stability to remain in the market. Maize prices have declined substantially, which should benefit the feedlot industry.

We believe that consumer demand should remain strong. The drive for improved production efficiencies, especially at the feedlots, strict cost control, the introduction of more value added convenience products and marketing support for a powerful brand will allow Bull Brand Foods to generate further profit growth in 2005.

Bull Brand Foods - Krugersdorp