WHY HKLM
EXCHANGE
Experienced,
senior team
with  can do
attitude
A 17-year trck
record of multiple
award-winning
projects
A focus on reputation
building through
ecient and
creative stkeholder
communiction
HKLM
EXCHANGE
is a strategic
stakeholder
communication
advisory firm
WHY HKLM EXCHANGE / 1
• Accr, hn
• Addis Abb, Ethiopi
• pe Town, South Afric
• brone, Botswn
• Johnnesburg, South Afric
• Lgos, Nigeri
• Mseru, Lesotho
• Mbbne, Eswtini
• Nirobi, Keny
• Austrli
• Austri
• Bhrin
• Benin Republic
• Botswn
• meroon
• nd
• hin
• Egypt
• Eswtini
• Ethiopi
• ermny
• hn
• ndi
• Keny
• Kuwit
• Lesotho
• Liby
• Mlwi
• Muritius
• Mozmbiue
• Nmibi
• Nigeri
• Pnm
• Qtr
• Russi
• Sudi Arbi
• Seychelles
• South Afric
• Switzerlnd
• Tnzni
• Ugnd
• United Arb
Emirtes
• United Kingdom
• United Sttes
• mbi
• imbbwe
REPRESENTATION
FOOTPRINT
2 / HKLM EXCHANGE
WHERE WE ARE
Cape Town
Maseru
Johannesburg
Accra
Mbabane
Addis Ababa
Nairobi
Lagos
Gaborone
WHY HKLM EXCHANGE / 3
4 / HKLM EXCHANGE
WHAT
WE DO
HKLM
EXCHANGE
is a strategic
stakeholder
communication
advisory firm
4 / HKLM EXCHANGE
WHAT WE DO / 5
6 / HKLM EXCHANGE
* HKLM Exchange is licenced by Relational Analytics Limited to oer Relational Proximity® services in Africa.
6 / HKLM EXCHANGE
• nvestor reltions
• Reputtion mngement
• Stkeholder enggement
• risis communiction
• Strtegic communiction
• Employee/internl
communiction
• Reltionl Anlytics
TM
*
• Stkeholder
perception
surveys
• Event mngement
COMMUNICATION,
PUBLIC RELATIONS AND
POSITIONING
• Report ssessments
nd gp nlysis
• Strtegic dvice nd
best prctice
• Reporting regultions
• opywriting nd content
development
• nformtion design
INTEGRATED
REPORTING
<IR><IR>
• Report ssessments
nd gp nlysis
• Reporting strtegy
• ontent development
• Stkeholder enggement
• Review nd
benchmrking
SUSTAINABILITY
REPORTING
• Socil converstions
• Online nd digitl stkeholder
communiction
DIGITAL
• Brnd strtegy
• orporte identity
• Mrketing communiction
• Employee enggement
BRANDING
ADVISORY
WHAT WE D0 (continued)
* HKLM Exchange is a Tier 1 Workiva partner. Workiva Inc, the leading cloud provider of connected data, reporting and
compliance solutions, is used by thousands of enterprises across 180 countries, including more than 75% of Fortune 500®
companies, and by government agencies. Our customers have linked over five billion data elements to trust their data,
reduce risk and save time. For more information about Workiva (NYSE: WK), please visit www.workiva.com.
Workiva and Wdesk are registered trademarks of Workiva Inc.
• ntegrted reports
• Sustinbility reports
• Results nnouncements
nd nlyst
presenttions
• irculrs
• orporte brochures
• Environmentl grphics
• orporte identity
mnuls
• Promotionl mteril
• nternl communiction
collterl
PRINT
• App-bsed reports
• Wdesk nd other
Workiv solutions*
• SENS conversion
• Web-bsed reports
• Websites
• Digitl bord pcks
• Digitl cmpigns
cross socil medi
• PowerPoint
presenttions
• orporte videos
• XBRL
DIGITAL
• Advertising nd
opinion pieces
• Finncil dvertising
nd medi plcement
MEDIA
WHAT WE DO / 7
REPORTING AND PUBLISHING
LAYOUTPROFESSONAL PROOFREADN
PROOF HEKNDESN & PHOTORAPHYPROJET MANAEMENT
8 / HKLM EXCHANGE
PROCESSES – ADVISORY
REPORT
DESN OMMENES
DESN S UDED BY
REPORT COPY
DETAILED BREFN SESSON IN-DEPTH RESEARH
FRST DRAFT
OF REPORT COPY
LENT REVEWS AND
OMMENTS ON COPY DRAFTS
COPY CHANGES MPLEMENTED
WHAT WE D0 (continued)
REVEW OF ONTENT
PROVIDED BY CLIENT
NTERVEWS WITH
KEY EXECUTIVES
COPY APPROVED
8 / HKLM EXCHANGE
MMERSON SESSON WITH
SENIOR CLIENT TEAM
WHAT WE DO / 9
AP ANALYSS/RTQUE
OF PREVIOUS REPORT
PRESENTATON OF AP
ANALYSS/RTQUE TO CLIENT
PRESENTATION OF SUGGESTED
CONTENT STRUCTURE
DESIGN BRIEF
FROM CLIENT
DESIGN
PRESENTATION
DESN
TWEAKS
DESN
APPROVED
PRODUCTION PHASE
10 / HKLM EXCHANGE
PROJET MANAER
Manages and coordinates project phases from initial brief to delivery of final product
TMN S DEPENDENT ON THE NUMBER OF PAES AND THE NTENSTY OF THE HANES
PROOFREADER’S MARKED-UP PROOF AND INTERNAL CHANGES SENT TO CLIENT
FOR APPROVAL BEFORE IMPLEMENTATION
PROCESSES – PRODUCTION
LENT: SUBMTS OPY FOR TYPESETTN/LAYOUT
(Excel or Word format)
PROOF  (INITIAL SET)
TYPESETTN/MPLEMENTATON
COPY CHANGES AND REFLOW
LENT: SUBMTS ONE OLLATED MARKED-UP HARD OPY PROOF
(Version control for submission)
PROOF  (AUTHORS)
ABOVE PROESS S REPEATED UNTL SEOND LAST PROOF, WHH S
SENT TO A PROOFREADER FOR A QUALTY ONTROL READ
TYPESETTN/MPLEMENTATON
SETTING OF THE RAW COPY/GRAPHS
DELVERY OF PRNTED PRODUT
ON MUTUALLY AREED DATE
PRESS HEKS CONDUCTED
DURING PRINTING PROCESS
WHAT WE D0 (continued)
PROOF  To client with proof number, time stamp and typesetter name
PROOF 2 To client with proof number, time stamp and typesetter name
10 / HKLM EXCHANGE
Repeat process
STRT FLE NAMN ONVENTONS ARE APPLED PER PROOF, DEPENDN ON PHASE N PRODUTON
(For example dropping in of new copy, plotting new graphs,
extensive redesign of diagrams and intensive author’s corrections)
WHAT WE DO / 11
DESN/LAYOUT
APPLY DESIGN CHANGES TO
DIAGRAMS/IMAGES/LAYOUTS
LENT: SUBMTS OPY FOR TYPESETTN/LAYOUT
(Excel or Word format)
LENT: SUBMTS ONE OLLATED MARKED-UP HARD OPY PROOF
(Version control for submission)
DESN/LAYOUT
APPLY DESIGN LOOK AND FEEL
TO DIAGRAMS/LAYOUTS
Proofreader notes inconsistencies, errors and recommendations
Internal quality control also occurs
APPROVED QUALITY CONTROL CHANGES
ARE IMPLEMENTED THEN FNAL PROOF
SENT TO LENT FOR FNAL SN OFF
SNED OFF PROOF PREPARED FOR
PRNT THEN SENT TO PRNTER
PRINTER’S PLOT REVEWED AND APPROVED
BY HKLM AND CLIENT PRIOR TO PRINTING
PROOF HEKN
AGAINST APPROVED STYLESHEET
+ COPY FROM CLIENT
PROOFREADN
AGAINST ONE HARD COPY
FROM CLIENT
Repeat process
12 / HKLM EXCHANGE
WHAT WE D0 (continued)
HKLM Exchnge is  Tier  Workiv prtner. Workiv nc, the leding cloud provider
of connected dt, reporting nd complince solutions, is used by thousnds
of enterprises cross 8 countries, including more thn 5% of Fortune 5®
compnies, nd by government gencies. Our customers hve linked over five billion
dt elements to trust their dt, reduce risk nd sve time.
Workiv’s primry product is Wdesk,  cloud-bsed enterprise softwre-s--service
pltform tht enbles compnies to collect, mnge, report nd nlyse criticl
business dt in rel time. Wdesk lso llows compnies to mnge nd file finncil
nd complince documents to regultory gencies.
TECHNOLOGY PARTNERSHIPS
Unlesh the # reporting
nd complince
cloud pltform
Eliminte risk with
repetble, relible
processes
Mke better decisions
bsed on better dt
CONNECT AUTOMATE TRANSFORM
12 / HKLM EXCHANGE
WHAT WE DO / 13
PEOPLE, GROUPS AND SECURITY
Set ccess nd permissions so tht users see s much or s little s necessry. Security cn
scle to ccommodte the demnds of smll tems or full enterprises.
VERSION CONTROL
Everyone hs ccess to the ltest version. Eliminte checkout systems, emil trils nd
hndwritten notes. Simultneous nd controlled collbortion mens everyone hs the
right informtion.
DATA CONSISTENCY
Dt within Wdesk, whether ntive or imported, is connected cross the pltform. When
chnges occur, numbers nd nrrtive re utomticlly updted without mnul work.
HISTORY AND AUDIT TRAIL
A history tril is utomticlly creted nd sved ny time  chnge is mde. Whether it is n
updte to  single cell or mjor revisions to  project, ll chnges re documented – providing
trnsprency to ll internl nd externl stkeholders.
FLEXIBLE INTEGRATIONS
Structured nd unstructured dt is esily brought into Wdesk to crete  centrl nd
connected set of dt. Use nd reuse tht informtion to provide consistent documents nd
reports to investors, executives nd other stkeholders.
WORKFLOW AND TASKING
Users configure step-by-step workflows in Wdesk. Tsking fetures let users ssign
pprovls, reviews, reuests nd other functions. Wdesk improves eciency, enbling
tems to meet dedlines.
EASY TO USE
Wdesk is designed for business users nd reuires little to no trining. The pltform powers
documents, presenttions, dshbords nd other fmilir content types.
ALWAYS ACCESSIBLE
With the cloud pltform, reports re ccessible nywhere with n internet connection.
Access the informtion you need vi lptop, tblet or mobile phone. Users fit work into their
lives, insted of fitting their lives round work.
For more informtion bout Workiv (NYSE: WK), plese visit www.workiv.com.
Workiv nd Wdesk re registered trdemrks of Workiv nc.
14 / HKLM EXCHANGE
OUR
CLIENTS
HKLM
EXCHANGE
is a strategic
stakeholder
communication
advisory firm
DE VELO PMENT BANK O F SOUTHERN AFRICA
14 / HKLM EXCHANGE
KUMBA IRON ORE
OUR CLIENTS / 15
TOTAL INTEGRATED SERVICES AND
RISK SOLUTIONS PROVIDER
16 / HKLM EXCHANGE
Omni Holdings is  diversified chemicls group tht supplies
chemicls nd specilised services nd solutions for the griculture,
mining nd chemicl ppliction industries. With its vision of leving
 “Better World” the roup’s solutions promote the responsible use
of chemicls for helth, sfety nd  lower environmentl impct,
with n incresing shift towrds clener technologies.
HKLM ssists Omni with  comprehensive rnge of services
tht includes the gp nlysis, content dvisory nd copywriting
services s well s design, lyout, typesetting, proofreding nd
project mngement of the reports.
These services re delivered in the course of producing Omni’s
integrted report, nnul finncil sttements, sustinbility report
s well s other publictions, such s the results nnouncements,
nlyst presenttions nd nnul generl meeting.
OUR
WORK
I 64 I OMNIA INTEGRATED ANNUAL REPORT 2019
OMNIA INTEGRATED ANNUAL REPORT 2019 I 65 I OMNIA INTEGRATED ANNUAL REPORT 2019 I 66 I
OPERATIONAL PERFORMANCE
FINANCIAL PERFORMANCE
AGRICULTURE RSA This segment produces and trades in granular, liquid and speciality fertilizers and humates and value-
added services and solutions to a broad customer base including commercial and small-scale farmers, co-operatives and
wholesalers in South Africa. This business also supplies the Agriculture International, Mining RSA and Mining International
businesses
AGRICULTURE INTERNATIONAL This segment produces and trades in granular, liquid and speciality fertilizers and humates
and value-added services and solutions to a broad customer base outside South Africa
AGRICULTURE TRADING This segment relates to the wholesale and trading of agriculture commodities throughout Africa.
The Agriculture Trading model will be reviewed and realigned to improve the return on net working capital, the generation of
cash and to better leverage the Group’s market position
AGRICULTURE BIOLOGICAL This segment is involved in the research and development, production, distribution and sales of
a unique range of patented agriculture biological (AgriBio) products. The key product ranges include bio-stimulants, adjuvants,
crop protection products, liquid foliar fertilizers and soil conditioners for large-scale agriculture applications, including all row,
stone fruit, pasture and other crop types, as well as smaller pasture, lawn and garden applications
OPERATIONAL PERFORMANCE
AGRICULTURE DIVISION
Commentary
The Agriculture division’s net revenue increased by 2% to
R8 240 million (FY2018: R8 078 million) or decreased by 7%
excluding Agriculture Biological’s revenue of R711 million.
Operating profit decreased by 36% to R370 million
(FY2018: R574 million) or by 54% excluding Agriculture Biological,
predominantly due to challenges in economic activity, liquidity
constraints, regulation, currency fluctuations, cost pressures and
weather patterns.
Agriculture RSA’s net revenue increased to R4 487 million
(FY2018: R4 273 million) or by 5%. The business managed to
retain its customer base. However, due to the financial pressure
on farmers, as well as the competitive pressure by importers
and blenders, the usual margin for Omnia’s value-added products
were not achieved, impacting gross margins. Agriculture RSA
was further negatively impacted by a slowdown in the Mining
segment resulting in lower sales and therefore production
recoveries into that area. Inflated prices for phosphoric acid
continue to be paid which puts further pressure on margins.
However, with the nitrophosphate plant in the process of ramping
up, the Group will have a competitive advantage in the future.
A focus on reducing inventory levels after achieving lower than
planned sales volumes in season, resulted in low production
recoveries during the post season period.
Agriculture International’s net revenue decreased by 20% to
R2 081 million (FY2018: R2 592 million) and operating profit
decreased by 36% to R169 million (FY2018: R263 million). The
decline in the Agriculture International business is as a result of
management’s decision to limit exposure in Zimbabwe following
a further deterioration in the liquidity in that country. This also
translated into excess inventory as the product was rerouted.
Zimbabwe experienced increased economic challenges during
the year which led to a high inflation economic environment
coupled with liquidity problems. The functional currency change
in Zimbabwe resulted in a further reduction of R85 million
in operating profit for FY2019 vs FY2018. South America
experienced political and currency volatility, long droughts and
severe heat waves which resulted in low agriculture commodity
prices, and Zambia experienced general credit pressure which
made investment opportunities less attractive but improved
slightly due to an increase in contract business.
The decline in the Agriculture Trading business is due to a
reduction in sales following a strategy to focus on a higher
margin business.
Agriculture Biological is growing rapidly as planned, supported
by the acquisition of Oro Agri. The investment in Oro Agri has
continued to deliver on the international growth strategy. Even in
the tough South African conditions where most of the businesses
in the sector deteriorated, Oro Agri SA maintained the healthy
growth.
OPERATING CONTEXT
×
Low prices for key agriculture commodities have reduced fertilizer demand
×
Impact of drought and adverse weather patterns on planting patterns
Agriculture earnings profile has also been impacted by ammonia/urea prices
×
US dollar exchange rate
Increasing use of technology to maintain and increase crop yield
Tar get
FY2019 FY2019 % change FY2018
Revenue R million 8 240 2
8 078
Operating profit R million 370 36 574
Operating margin % 6 – 8 4.5 7.1
Profit before taxation R million 158 62 419
Segment assets R million 6 631 15 5 781
Net working capital R million 2 539 3 2 463
Net working capital ratio % 30.8 0.3 30.5
Return on net controlled assets % 4.0 3 7.0
FY2019 % change FY2018
Recordable c ase rate 0.28 55 0.62
Volume (tonnes) 1 210 606 15 1 420 817
Number of staf f 2 232 11 2 008
Number of retail outlets (Agriculture International business) 83 28 65
FINANCIAL PERFORMANCE
6 500
6 900
7 300
7 700
8 100
8 500
FY2019FY2018FY2017FY2016FY2015
REVENUE AND OPERATING PROFIT
(R million)
Revenue
Revenue
Operating profit
Operating profit
300
400
500
600
700
800
0
1 000
2 000
3 000
4 000
5 000
BiologicalTradingInternationalSouth Africa
REVENUE MIX
(R million)
FY2017
FY2018
FY2019
Initiatives and outlook
Initiatives Outlook
• Additional volumes
– K-humate (high margin and low working capital) increased production
capacity (Australia)
– Oro Agri (high margin and low working capital) full year contribution,
registration of new products, extended labels for increased market reach
and new distribution channels into high growth markets for organic
products, supported by a general market transition to environmentally
friendly and health-promoting products and the high cost of developing
and registering traditional molecules
– Cross -selling of Omnia and Oro Agri products across a growing
distribution platform and leveraging Oro Agri’s proven track record in
patents and trademark registrations and research and development
– Trade sales to fertilizer and explosives market resulting in higher volumes
through factories and the resultant reduction in unit cost
– Leveraging Oro Agri’s proven track record in patents and trademark
registrations and R&D
• Impact of nitrophosphate
– The reduction of input costs attributable to the nitrophosphate plant will
provide Omnia with a fundamental ad vantage over competitors from a
price and market dif ferentiation perspective
• Capital light model
– Focus on growing capital light business which leverages off existing
marketing and distribution channels and Omnia’s intellectual property
• South Africa
– Customer base remains stable
– Exiting capex investment cycle
– Largest South Afric an nitric acid
manufacturer with a competitive advantage
as a result of investment in abatement
technology and upgrade of manufacturing
facilities to meet world class standards:
° Negligible exposure to carbon tax
° Spare capacity allows for grow th when
market returns and expected reduction
in South African supply
° Youngest plants resulting in ef ficient
conversion and lower cost per tonne
produced
– Forecasted ammonia and urea price ratio is
expected to support margins
• International
– Portugal platform creates lower friction
R&D and registrations, low cost entry point
into EU and reduced cost of production
– Reduction in Zimbabwean volumes
expected. Agile approach with focus on
liquidating cash from Zimbabwe
– Positive outlook for AgriBio market
16 / HKLM EXCHANGE
OUR WORK / 17
I 6 I OMNIA INTEGRATED ANNUAL REPORT 2019 OMNIA INTEGRATED ANNUAL REPORT 2019 I 7 I
GEOGRAPHICAL OVERVIEW
MAJOR MANUFACTURING SITES
DISTRIBUTION
South Africa 32
International 19
Group total: 51
GROUP TOTAL MANUFACTURING
MINING
RSA: 9
International: 12
Total: 21
CHEMICALS
RSA: 6
INTERNATIONAL: 1
Total: 7
AGRICULTURE
RSA: 17
INTERNATIONAL: 6
Total: 23
South Africa 32
International 17
Group total: 49
GROUP TOTAL DISTRIBUTION
MINING
RSA: 21
International: 7
Total: 28
CHEMICALS
RSA: 5
INTERNATIONAL: 2
Total: 7
DISTRIBUTION INCLUDING
UMONGO PETROLEUM
AGRICULTURE
RSA: 6
INTERNATIONAL: 8
Total: 14
1 South Africa
South Africa
2 Southern Africa
Angola
Botswana
Lesotho
Mozambique
Namibia
Swaziland
Zimbabwe
3 East Africa
Kenya
1 Mauritius
1 Tanzania
4 Central Africa
DRC
Zambia
5 West Africa
Burkina Faso
Guinea
Mali
Mauritania
Senegal
Sierra Leone
Côte d’Ivoire
6 Australasia
Australia
New Zealand
7 Asia Pacific
China
India
Indonesia
Malaysia
Vietnam
Myanmar
Singapore
8 South America
Brazil
Paraguay
Chile
9 North America
Cayman Islands
Canada
Mexico
United States of America
10 Central America
Guatemala
11 Europe
Czech Republic
France
Italy
Germany
Netherlands
Portugal
Spain
United Kingdom
Greece
Turkey
Pakistan
* Romania
Agriculture Mining: BME Mining: Protea
Mining Chemicals
KEY
Chemicals Oro Agri
1
2
4 7
5
11
6
3
8
10
9
* Romania added after year-end.
FY2019
R million Revenue Operating profit
Total Agriculture 8 240 370
Total Mining 4 885 169
Total Chemicals 5 301 10
Head Office and elimination* – (525)
Reconciling items 202 –
Total 18 628 24
PHYSICAL PRESENCE IN 48 COUNTRIES
WITH 4 755 EMPLOYEES
CREATING SUSTAINABLE VALUE CONTINUED
* Includes the impairment of goodwill in Protea Chemicals
I 64 I OMNIA INTEGRATED ANNUAL REPORT 2019
OMNIA INTEGRATED ANNUAL REPORT 2019 I 65 I OMNIA INTEGRATED ANNUAL REPORT 2019 I 66 I
OPERATIONAL PERFORMANCE
FINANCIAL PERFORMANCE
AGRICULTURE RSA This segment produces and trades in granular, liquid and speciality fertilizers and humates and value-
added services and solutions to a broad customer base including commercial and small-scale farmers, co-operatives and
wholesalers in South Africa. This business also supplies the Agriculture International, Mining RSA and Mining International
businesses
AGRICULTURE INTERNATIONAL This segment produces and trades in granular, liquid and speciality fertilizers and humates
and value-added services and solutions to a broad customer base outside South Africa
AGRICULTURE TRADING This segment relates to the wholesale and trading of agriculture commodities throughout Africa.
The Agriculture Trading model will be reviewed and realigned to improve the return on net working capital, the generation of
cash and to better leverage the Group’s market position
AGRICULTURE BIOLOGICAL This segment is involved in the research and development, production, distribution and sales of
a unique range of patented agriculture biological (AgriBio) products. The key product ranges include bio-stimulants, adjuvants,
crop protection products, liquid foliar fertilizers and soil conditioners for large-scale agriculture applications, including all row,
stone fruit, pasture and other crop types, as well as smaller pasture, lawn and garden applications
OPERATIONAL PERFORMANCE
AGRICULTURE DIVISION
Commentary
The Agriculture division’s net revenue increased by 2% to
R8 240 million (FY2018: R8 078 million) or decreased by 7%
excluding Agriculture Biological’s revenue of R711 million.
Operating profit decreased by 36% to R370 million
(FY2018: R574 million) or by 54% excluding Agriculture Biological,
predominantly due to challenges in economic activity, liquidity
constraints, regulation, currency fluctuations, cost pressures and
weather patterns.
Agriculture RSA’s net revenue increased to R4 487 million
(FY2018: R4 273 million) or by 5%. The business managed to
retain its customer base. However, due to the financial pressure
on farmers, as well as the competitive pressure by importers
and blenders, the usual margin for Omnia’s value-added products
were not achieved, impacting gross margins. Agriculture RSA
was further negatively impacted by a slowdown in the Mining
segment resulting in lower sales and therefore production
recoveries into that area. Inflated prices for phosphoric acid
continue to be paid which puts further pressure on margins.
However, with the nitrophosphate plant in the process of ramping
up, the Group will have a competitive advantage in the future.
A focus on reducing inventory levels after achieving lower than
planned sales volumes in season, resulted in low production
recoveries during the post season period.
Agriculture International’s net revenue decreased by 20% to
R2 081 million (FY2018: R2 592 million) and operating profit
decreased by 36% to R169 million (FY2018: R263 million). The
decline in the Agriculture International business is as a result of
management’s decision to limit exposure in Zimbabwe following
a further deterioration in the liquidity in that country. This also
translated into excess inventory as the product was rerouted.
Zimbabwe experienced increased economic challenges during
the year which led to a high inflation economic environment
coupled with liquidity problems. The functional currency change
in Zimbabwe resulted in a further reduction of R85 million
in operating profit for FY2019 vs FY2018. South America
experienced political and currency volatility, long droughts and
severe heat waves which resulted in low agriculture commodity
prices, and Zambia experienced general credit pressure which
made investment opportunities less attractive but improved
slightly due to an increase in contract business.
The decline in the Agriculture Trading business is due to a
reduction in sales following a strategy to focus on a higher
margin business.
Agriculture Biological is growing rapidly as planned, supported
by the acquisition of Oro Agri. The investment in Oro Agri has
continued to deliver on the international growth strategy. Even in
the tough South African conditions where most of the businesses
in the sector deteriorated, Oro Agri SA maintained the healthy
growth.
OPERATING CONTEXT
×
Low prices for key agriculture commodities have reduced fertilizer demand
×
Impact of drought and adverse weather patterns on planting patterns
Agriculture earnings profile has also been impacted by ammonia/urea prices
×
US dollar exchange rate
Increasing use of technology to maintain and increase crop yield
Tar get
FY2019 FY2019 % change FY2018
Revenue R million 8 240 2
8 078
Operating profit R million 370 36
574
Operating margin % 6 – 8 4.5
7.1
Profit before taxation R million 158 62
419
Segment assets R million 6 631 15
5 781
Net working capital R million 2 539 3
2 463
Net working capital ratio % 30.8 0.3
30.5
Return on net controlled assets % 4.0 3
7.0
FY2019 % change FY2018
Recordable c ase rate 0.28 55
0.62
Volume (tonnes) 1 210 606 15
1 420 817
Number of staf f 2 232 11
2 008
Number of retail outlets (Agriculture International business) 83 28
65
FINANCIAL PERFORMANCE
6 500
6 900
7 300
7 700
8 100
8 500
FY2019FY2018FY2017FY2016FY2015
REVENUE AND OPERATING PROFIT
(R million)
Revenue
Revenue
Operating profit
Operating profit
300
400
500
600
700
800
0
1 000
2 000
3 000
4 000
5 000
BiologicalTradingInternationalSouth Africa
REVENUE MIX
(R million)
FY2017
FY2018
FY2019
Initiatives and outlook
Initiatives Outlook
• Additional volumes
– K-humate (high margin and low working capital) increased production
capacity (Australia)
– Oro Agri (high margin and low working capital) full year contribution,
registration of new products, extended labels for increased market reach
and new distribution channels into high growth markets for organic
products, supported by a general market transition to environmentally
friendly and health-promoting products and the high cost of developing
and registering traditional molecules
– Cross -selling of Omnia and Oro Agri products across a growing
distribution platform and leveraging Oro Agri’s proven track record in
patents and trademark registrations and research and development
– Trade sales to fertilizer and explosives market resulting in higher volumes
through factories and the resultant reduction in unit cost
– Leveraging Oro Agri’s proven track record in patents and trademark
registrations and R&D
• Impact of nitrophosphate
– The reduction of input costs attributable to the nitrophosphate plant will
provide Omnia with a fundamental ad vantage over competitors from a
price and market dif ferentiation perspective
• Capital light model
– Focus on growing capital light business which leverages off existing
marketing and distribution channels and Omnia’s intellectual property
• South Africa
– Customer base remains stable
– Exiting capex investment cycle
– Largest South Afric an nitric acid
manufacturer with a competitive advantage
as a result of investment in abatement
technology and upgrade of manufacturing
facilities to meet world class standards:
° Negligible exposure to carbon tax
° Spare capacity allows for grow th when
market returns and expected reduction
in South African supply
° Youngest plants resulting in ef ficient
conversion and lower cost per tonne
produced
– Forecasted ammonia and urea price ratio is
expected to support margins
• International
– Portugal platform creates lower friction
R&D and registrations, low cost entry point
into EU and reduced cost of production
– Reduction in Zimbabwean volumes
expected. Agile approach with focus on
liquidating cash from Zimbabwe
– Positive outlook for AgriBio market
18 / HKLM EXCHANGE
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3
Leveraging our distribution network to ensure the
safe and cost-effective delivery of products.
4
Offering managed services and solutions to
our customers.
1
Commodity procurement: Sourcing of raw
chemicals and material in bulk from across
the world.
2
Applying intellectual capital and technologies in
the production of innovative value-added products
and services.
CREATING VALUE FOR ALL STAKEHOLDERS THAT
IS SUSTAINABLE IN THE LONG TERM
Shareholders and investment community
Net loss after tax of R407 million
609 cents
loss per share
Credit rating
During July 2019 Global Credit Rating issued a debt rating of
BBB- (which is defined as “average credit quality relative to other
issuers or obligations in the same country”) and A3 (which is
defined as “average certainty of timely payment of short-term
obligations relative to other issuers or obligations in the same
country”) in the long and short term respectively.
Omnia does not have any listed debt securities and the amended
rating does not impact the restructuring of Omnia’s debt facilities
which was announced with the results on 25 June 2019, or the
implementation of the proposed R2 billion underwritten rights
offer, the proceeds of which will be used to reduce the Group’s
present debt levels.
Employees and trade unions
R2.0 billion in salaries and benefits
R30.9 million invested in training
71.8% black staff in South Africa
20% female representation
RCR of
0.36
Suppliers
R11 million supplier development spend*
R12 million enterprise development spend*
Communities
R2.8 million socio-economic spend
Government and regulators
BBBEE rating: Level 3
R169 million
paid in taxes
CREATING VALUE THROUGH THE
SIX CAPITAL MODEL
OMNIA RELIES ON VARIOUS RELATIONSHIPS
AND RESOURCES TO CREATE VALUE (INPUTS)
Financial capital
Financial capital, used to sustain and grow the
business, consists of funds generated from
operations, equity financing and debt financing.
Human capital
Developing passionate, enabled and engaged
employees plays a critical role in attaining
Omnia’s vision and delivering on the defined
strategy.
Intellectual capital
The Group’s research, development, technology
and digital capabilities, which is considered a
competitive advantage, supports the development
of innovative products and solutions, efficient use
of natural resources, lowering the impact to the
environment, and improved safety for all.
Manufacturing capital
The Group continues to invest in modern
technologies and the upgrading of manufacturing
plants and equipment, to ensure that they are
world-class, safe to operate and conform to the
relevant regulations and standards.
Natural capital
Omnia requires a wide variety of minerals, water,
energy and air as raw materials to convert into
value-adding products and services.
Social and relationship capital
The operations are intricately linked to the
community where offices/plants are located and
hence Omnia nurtures the community and the
people around it.
APPLIED THROUGHOUT THE GLOBALLY
INTEGRATED VALUE CHAIN
PROVIDING HIGH-QUALITY PRODUCTS AND
SERVICES, FOCUSING ON NICHE AREAS
Agriculture
• Fertilizer – approximately 250 products including dry, liquid,
specialities (including humic acids and biological products)
and directly applied ammonia
• Nutriology™ research, development, laboratory services,
field services and advice
• Co-generation and re-use of resources
• Axioteq™ data services, advisory and data platform for the
development of commercialised solutions for customers
across the value chain
• Oro Agri – approximately 30 products with over
100 product registrations in various jurisdictions
Mining
• BME – approximately 44 products including
explosives, initiating systems (electronic and
non-electronic), blasting emulsions, blasting
software and other blasting accessories
• BME – on-mine blasting services
• Protea Mining Chemicals – approximately
150 products including a wide range of chemical-
based solutions used in mine processing plants
to enhance the recovery rates from ore and
concentrate
• Protea Process™ – advising on or managing the
logistics for the safe and efficient handling of
hazardous chemicals for clients on a full end-to-
end basis
Chemicals
• Protea Chemicals – approximately 1 200 products including
a wide range of liquid, dry and gas chemicals that are
packaged, transported, blended or manufactured for clients
• Formulated chemicals to customer specifications
• Protea Process™ – advising on or managing the logistics for
the safe and efficient handling of hazardous chemicals for
clients on a full end-to-end basis
• Umongo Petroleum – approximately 350 products including a
wide range of additive, base oils and speciality products that
are sourced, stored, packaged and transported for clients.
• Orbichem Petrochemicals – approximately 80 products
including a wide range of additive, base oils and speciality
products that are sourced, stored, packaged and
transported for clients.
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CREATING SUSTAINABLE VALUE CONTINUED
CAPITALS (INCORPORATED CROSS REFERENCE)
UNDERPINNED BY OPERATING FRAMEWORK:
Culture Leadership People Skills Governance Systems Processes Innovation Structure Ways of working SHERQ Performance management
Financial Refer to the A FS for more information
Human Refer to pages 2 6 to 30 in the ESG repor t for more information
Intellectual Refer to pages 41 and 42 in the IAR for more information
Manufactured Refer to pages 16 to 19 in the I AR for more information
Natural Refer to pages 44 to 49 in the ESG for more information
Social and relationship Refer to pages 31 to 38 in the ESG report for more information
* Based on unaudited fi gures (current BBBEE certifi cate is valid until
13 September 2019)
Value is created by applying intellectual property and advanced technologies in the research, development, manufacturing,
distribution of products and provision of advisory services in the agriculture, mining and chemicals sectors.
SIX CAPITAL OUTCOMES AND
TRADE-OFFS IN CAPITAL
KEY INPUTS
Financial capital
Debt raised during the year of R1.7 billion
Share capital and reserves of R7 225 million
Cash and cash equivalent of R644 million
Human capital
Total workforce of 4 755
Strong core belief systems and a high-performance culture
Engagement with unionised and non-unionised workforce
Intellectual capital
291 pending trademark applications
1 317 registered trade marks
37 pending patent applications
238 registered patents
Nil pending design applications
9 registered designs
Direct investment of
R22 million into research and
development
174 agronomists and scientists
20
IT programmers for Axioteq
TM
/DigiAg
TM
(commercial
agriculture digital platform), Nutriology™/OAP
(an in-house specialist agriculture digital platform) and
Nutriology™ Manufacturing Execution System/(MES) (an
in-house software system built on the Microsoft platform)
o 2 software developers for AXXIS
TM
o 1 software developer for BLASTMAP
TM
o 3 software developers for XPLOLOG
TM
Manufacturing capital
32
manufacturing plants in South Africa and
19
internationally
49 distribution centres across the world
70 engineers
Property, plant and equipment of
R5.4 billion
Natural capital
72 052 MhW electricity consumed
1 696 million litres of water used
Social and relationship capital
Active participation in public policy forums
Ongoing engagement with government and regulators
OUTCOMES PER CAPITAL
FY2019 FY2018
Human capital
outcomes
Amounts paid in salaries,
wages and benefits R2.0 billion R1.8 billion
Employee turnover rate × 25.9% 9.6%
Number of retrenchments × 115 40
Number of work-related
employee and service provider
fatalities – 2
Recordable case rate (RCR) 0.36 0.47
Direct ownership by Sakhile 1
and Sakhile 2 in Omnia Group
(Pty) Ltd 13.5% 13.5%
Investment in training and
staff welfare R30.9 million R34 million
Training – average number of
days per employee per annum 11.4 d ay s 12.0 d ay s
Actions to enhance outcomes
• Rollout of the Omnia culture programme
• Continue to focus on employee development, safety and wellbeing
CREATING SUSTAINABLE VALUE CONTINUED
FY2019 F Y2018
Intellectual capital
outcomes
Carrying amount of trademarks,
patents and distribution
contracts R1.3 billion R453 million
Additions to goodwill and
intangible assets R1.4 billion R811 million
Impairments to goodwill × R324 million –
Amortisation expenditure × R197 million R62 million
Number of ex ternal bursaries
awarded 6 7
Number of employees
suppor ted with bursaries /in
part-time studying 186 128
Number of employees in
work-integrated learning
programme 364 402
Number of employees in
artisans, learnerships and
PIVOTA L programmes 286 268
Actions to enhance outcomes
• Continued investing in research, development and par tnerships to
develop new technologies
• Seeking new technologies through acquisition opportunities over
the medium - to long -term
FY2019 FY2018
Manufacturing capital
outcomes
Capital expenditure (total) R1.1 billion R887 million
Depreciation × R418 million R384 million
Impairment of plant × R16 million –
Actions to enhance outcomes
• Bringing new nitrophosphate plant to full capacit y
• Omnia has reached the end of its recent capex programme
• Maintenance capex is expected to continue in the medium-term,
mainly at Sasolburg manufacturing facilities
UNDERSTANDING THE KEY TRADE-OFFS IN
CAPITAL IN THE YEAR
Acquisition of Oro Agri
On 1 May 2018, Omnia effectively acquired 100% of
the ordinary shares of Oro Agri SEZC Limited and its
subsidiaries (Oro Agri) for a purchase consideration of
$100 million, funded from a combination of cash and
debt. Oro Agri is an international company involved in the
research and development, production, distribution and
sales of a unique range of patented AgriBio products. The
key product ranges include bio-pesticides, bio-stimulants
and bio-fertilizers as well as adjuvants, crop protection
products, liquid foliar fertilizers and soil conditioners. Clients
include farmers with large-scale agriculture applications
across all row, stone fruit, pasture and other crop types, as
well as smaller pastures, lawn and garden applications.
Notwithstanding a robust due diligence process, the
acquisition has impacted cash flows, financing charges and
debt ratios negatively in the short term. The products and
services offered by Oro Agri will support Omnia in positioning
itself with the next generation of agriculture products to
further enhance yield and optimise crop performance whilst
lowering the environmental impact of crop production.
Restructuring of Protea Chemicals
Protea Chemicals embarked on an organic growth strategy
over the past two years. Growth was sought through
organic growth in South Africa, with the addition of certain
product lines and through entering new territories. While
growth was achieved in parts of Africa, the growth and
margin aspirations were not achieved in South Africa. The
economic conditions in the region and severe competitive
pressure further impacted the business negatively and
margins deteriorated to the point that the current business
model and growth strategy is not considered appropriate in
the current economic environment.
Consequently, the Protea Chemicals’ strategy and business
model was reviewed and realigned to create a more
focused business for the future. Part of the process led
to the unavoidable retrenchment of 115 employees. It is
estimated that the associated restructuring costs amounted
to R35 million.
It is envisaged that the benefits, estimated at R75 million
per annum, of the restructuring process will only be realised
in the next financial year. Phase two of the process has
commenced which will result in additional annual savings
and improved quality of business as part of its newly
developed strategy.
Outcome key
Positive outcome
≈ Neutral outcome
× Negative outcome
FY2019 FY2018
Social and relationship
capital outcomes
Spending on social investment
(including emerging farmer
programme) R25.3 million R55.1 million
Broad-Based Black Economic
Empowerment status Level 3 Level 3
Workdays lost due to industrial
action Nil days Nil days
Actions to enhance outcomes
• Continued engagement with communities, industry and government
bodies
• Continued engagement with staff at all levels about strategic and
cultural matters
FY2019 FY2018
Financial capital
outcomes
Operating profit × R24 million R1 156 million
(Loss)/ profit after tax × (R407 million) R664 million
Cash generated from/(utilised in)
operating activities R998 million (R133 million)
Net interest-bearing borrowings × R4 403 million R2 542 million
Headline earnings per share × ( R1.12) R9.91
Dividends paid to shareholders
(including prior year final dividend
paid in the current year) × R153 million R262 million
Dividends per share × R0.75 R3.50
Net asset value per share × R105 R10 8
Closing share price at year-end × R50.90 R149.00
Actions to enhance outcomes
•
R2 billion new capital injection (rights offer) to bring the company’s
debt levels within capacity, provide the Group with adequate
headroom in its debt facilities, ensure capital structure is more closely
aligned to peers and improve cost of capital
• Improve operating leverage – seek cost savings across the Group
• Reduce working capital – Fertilizer RSA will reduce working capital
through sales and operations planning, inventory reduction across
Agriculture International, Innofert and Protea Chemicals; focus on
debtor collection and terms; and renegotiation of creditor terms
where possible
• Fertilizer RSA will enter into trade sales with distributors to utilise
excess capacity from Sasolburg
OUR WORK (continued)
18 / HKLM EXCHANGE
OUR WORK / 19
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3
Leveraging our distribution network to ensure the
safe and cost-effective delivery of products.
4
Offering managed services and solutions to
our customers.
1
Commodity procurement: Sourcing of raw
chemicals and material in bulk from across
the world.
2
Applying intellectual capital and technologies in
the production of innovative value-added products
and services.
CREATING VALUE FOR ALL STAKEHOLDERS THAT
IS SUSTAINABLE IN THE LONG TERM
Shareholders and investment community
Net loss after tax of R407 million
609 cents
loss per share
Credit rating
During July 2019 Global Credit Rating issued a debt rating of
BBB- (which is defined as “average credit quality relative to other
issuers or obligations in the same country”) and A3 (which is
defined as “average certainty of timely payment of short-term
obligations relative to other issuers or obligations in the same
country”) in the long and short term respectively.
Omnia does not have any listed debt securities and the amended
rating does not impact the restructuring of Omnia’s debt facilities
which was announced with the results on 25 June 2019, or the
implementation of the proposed R2 billion underwritten rights
offer, the proceeds of which will be used to reduce the Group’s
present debt levels.
Employees and trade unions
R2.0 billion in salaries and benefits
R30.9 million invested in training
71.8% black staff in South Africa
20% female representation
RCR of
0.36
Suppliers
R11 million supplier development spend*
R12 million enterprise development spend*
Communities
R2.8 million socio-economic spend
Government and regulators
BBBEE rating: Level 3
R169 million
paid in taxes
CREATING VALUE THROUGH THE
SIX CAPITAL MODEL
OMNIA RELIES ON VARIOUS RELATIONSHIPS
AND RESOURCES TO CREATE VALUE (INPUTS)
Financial capital
Financial capital, used to sustain and grow the
business, consists of funds generated from
operations, equity financing and debt financing.
Human capital
Developing passionate, enabled and engaged
employees plays a critical role in attaining
Omnia’s vision and delivering on the defined
strategy.
Intellectual capital
The Group’s research, development, technology
and digital capabilities, which is considered a
competitive advantage, supports the development
of innovative products and solutions, efficient use
of natural resources, lowering the impact to the
environment, and improved safety for all.
Manufacturing capital
The Group continues to invest in modern
technologies and the upgrading of manufacturing
plants and equipment, to ensure that they are
world-class, safe to operate and conform to the
relevant regulations and standards.
Natural capital
Omnia requires a wide variety of minerals, water,
energy and air as raw materials to convert into
value-adding products and services.
Social and relationship capital
The operations are intricately linked to the
community where offices/plants are located and
hence Omnia nurtures the community and the
people around it.
APPLIED THROUGHOUT THE GLOBALLY
INTEGRATED VALUE CHAIN
PROVIDING HIGH-QUALITY PRODUCTS AND
SERVICES, FOCUSING ON NICHE AREAS
Agriculture
• Fertilizer – approximately 250 products including dry, liquid,
specialities (including humic acids and biological products)
and directly applied ammonia
• Nutriology™ research, development, laboratory services,
field services and advice
• Co-generation and re-use of resources
• Axioteq™ data services, advisory and data platform for the
development of commercialised solutions for customers
across the value chain
• Oro Agri – approximately 30 products with over
100 product registrations in various jurisdictions
Mining
• BME – approximately 44 products including
explosives, initiating systems (electronic and
non-electronic), blasting emulsions, blasting
software and other blasting accessories
• BME – on-mine blasting services
• Protea Mining Chemicals – approximately
150 products including a wide range of chemical-
based solutions used in mine processing plants
to enhance the recovery rates from ore and
concentrate
• Protea Process™ – advising on or managing the
logistics for the safe and efficient handling of
hazardous chemicals for clients on a full end-to-
end basis
Chemicals
• Protea Chemicals – approximately 1 200 products including
a wide range of liquid, dry and gas chemicals that are
packaged, transported, blended or manufactured for clients
• Formulated chemicals to customer specifications
• Protea Process™ – advising on or managing the logistics for
the safe and efficient handling of hazardous chemicals for
clients on a full end-to-end basis
• Umongo Petroleum – approximately 350 products including a
wide range of additive, base oils and speciality products that
are sourced, stored, packaged and transported for clients.
• Orbichem Petrochemicals – approximately 80 products
including a wide range of additive, base oils and speciality
products that are sourced, stored, packaged and
transported for clients.
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CREATING SUSTAINABLE VALUE CONTINUED
CAPITALS (INCORPORATED CROSS REFERENCE)
UNDERPINNED BY OPERATING FRAMEWORK:
Culture Leadership People Skills Governance Systems Processes Innovation Structure Ways of working SHERQ Performance management
Financial Refer to the A FS for more information
Human Refer to pages 2 6 to 30 in the ESG repor t for more information
Intellectual Refer to pages 41 and 42 in the IAR for more information
Manufactured Refer to pages 16 to 19 in the I AR for more information
Natural Refer to pages 44 to 49 in the ESG for more information
Social and relationship Refer to pages 31 to 38 in the ESG report for more information
* Based on unaudited fi gures (current BBBEE certifi cate is valid until
13 September 2019)
Value is created by applying intellectual property and advanced technologies in the research, development, manufacturing,
distribution of products and provision of advisory services in the agriculture, mining and chemicals sectors.
SIX CAPITAL OUTCOMES AND
TRADE-OFFS IN CAPITAL
KEY INPUTS
Financial capital
Debt raised during the year of R1.7 billion
Share capital and reserves of R7 225 million
Cash and cash equivalent of R644 million
Human capital
Total workforce of 4 755
Strong core belief systems and a high-performance culture
Engagement with unionised and non-unionised workforce
Intellectual capital
291 pending trademark applications
1 317 registered trade marks
37 pending patent applications
238 registered patents
Nil pending design applications
9 registered designs
Direct investment of
R22 million into research and
development
174 agronomists and scientists
20
IT programmers for Axioteq
TM
/DigiAg
TM
(commercial
agriculture digital platform), Nutriology™/OAP
(an in-house specialist agriculture digital platform) and
Nutriology™ Manufacturing Execution System/(MES) (an
in-house software system built on the Microsoft platform)
o 2 software developers for AXXIS
TM
o 1 software developer for BLASTMAP
TM
o 3 software developers for XPLOLOG
TM
Manufacturing capital
32
manufacturing plants in South Africa and
19
internationally
49 distribution centres across the world
70 engineers
Property, plant and equipment of
R5.4 billion
Natural capital
72 052 MhW electricity consumed
1 696 million litres of water used
Social and relationship capital
Active participation in public policy forums
Ongoing engagement with government and regulators
OUTCOMES PER CAPITAL
FY2019 FY2018
Human capital
outcomes
Amounts paid in salaries,
wages and benefits R2.0 billion R1.8 billion
Employee turnover rate × 25.9% 9.6%
Number of retrenchments × 115 40
Number of work-related
employee and service provider
fatalities – 2
Recordable case rate (RCR) 0.36 0.47
Direct ownership by Sakhile 1
and Sakhile 2 in Omnia Group
(Pty) Ltd 13.5% 13.5%
Investment in training and
staff welfare R30.9 million R34 million
Training – average number of
days per employee per annum 11.4 d ay s 12.0 d ay s
Actions to enhance outcomes
• Rollout of the Omnia culture programme
• Continue to focus on employee development, safety and wellbeing
CREATING SUSTAINABLE VALUE CONTINUED
FY2019 F Y2018
Intellectual capital
outcomes
Carrying amount of trademarks,
patents and distribution
contracts R1.3 billion R 453 million
Additions to goodwill and
intangible assets R1.4 billion R811 million
Impairments to goodwill × R324 million –
Amortisation expenditure × R197 million R62 million
Number of ex ternal bursaries
awarded 6 7
Number of employees
suppor ted with bursaries /in
part-time studying 186 128
Number of employees in
work-integrated learning
programme 364 402
Number of employees in
artisans, learnerships and
PIVOTA L programmes 286 268
Actions to enhance outcomes
• Continued investing in research, development and par tnerships to
develop new technologies
• Seeking new technologies through acquisition opportunities over
the medium - to long -term
FY2019 FY2018
Manufacturing capital
outcomes
Capital expenditure (total) R1.1 billion R887 million
Depreciation × R418 million R38 4 million
Impairment of plant × R16 million –
Actions to enhance outcomes
• Bringing new nitrophosphate plant to full capacit y
• Omnia has reached the end of its recent capex programme
• Maintenance capex is expected to continue in the medium-term,
mainly at Sasolburg manufacturing facilities
UNDERSTANDING THE KEY TRADE-OFFS IN
CAPITAL IN THE YEAR
Acquisition of Oro Agri
On 1 May 2018, Omnia effectively acquired 100% of
the ordinary shares of Oro Agri SEZC Limited and its
subsidiaries (Oro Agri) for a purchase consideration of
$100 million, funded from a combination of cash and
debt. Oro Agri is an international company involved in the
research and development, production, distribution and
sales of a unique range of patented AgriBio products. The
key product ranges include bio-pesticides, bio-stimulants
and bio-fertilizers as well as adjuvants, crop protection
products, liquid foliar fertilizers and soil conditioners. Clients
include farmers with large-scale agriculture applications
across all row, stone fruit, pasture and other crop types, as
well as smaller pastures, lawn and garden applications.
Notwithstanding a robust due diligence process, the
acquisition has impacted cash flows, financing charges and
debt ratios negatively in the short term. The products and
services offered by Oro Agri will support Omnia in positioning
itself with the next generation of agriculture products to
further enhance yield and optimise crop performance whilst
lowering the environmental impact of crop production.
Restructuring of Protea Chemicals
Protea Chemicals embarked on an organic growth strategy
over the past two years. Growth was sought through
organic growth in South Africa, with the addition of certain
product lines and through entering new territories. While
growth was achieved in parts of Africa, the growth and
margin aspirations were not achieved in South Africa. The
economic conditions in the region and severe competitive
pressure further impacted the business negatively and
margins deteriorated to the point that the current business
model and growth strategy is not considered appropriate in
the current economic environment.
Consequently, the Protea Chemicals’ strategy and business
model was reviewed and realigned to create a more
focused business for the future. Part of the process led
to the unavoidable retrenchment of 115 employees. It is
estimated that the associated restructuring costs amounted
to R35 million.
It is envisaged that the benefits, estimated at R75 million
per annum, of the restructuring process will only be realised
in the next financial year. Phase two of the process has
commenced which will result in additional annual savings
and improved quality of business as part of its newly
developed strategy.
Outcome key
Positive outcome
≈ Neutral outcome
× Negative outcome
FY2019 FY2018
Social and relationship
capital outcomes
Spending on social investment
(including emerging farmer
programme) R25.3 million R55.1 million
Broad-Based Black Economic
Empowerment status Level 3 Level 3
Workdays lost due to industrial
action Nil days Nil days
Actions to enhance outcomes
• Continued engagement with communities, industry and government
bodies
• Continued engagement with staff at all levels about strategic and
cultural matters
FY2019 FY2018
Financial capital
outcomes
Operating profit × R24 million R1 156 million
(Loss)/ profit after tax × (R407 million) R664 million
Cash generated from/(utilised in)
operating activities R998 million (R133 million)
Net interest-bearing borrowings × R4 403 million R2 542 million
Headline earnings per share × ( R1.12) R9.91
Dividends paid to shareholders
(including prior year final dividend
paid in the current year) × R153 million R262 million
Dividends per share × R0.75 R3.50
Net asset value per share × R105 R10 8
Closing share price at year-end × R50.90 R149.00
Actions to enhance outcomes
•
R2 billion new capital injection (rights offer) to bring the company’s
debt levels within capacity, provide the Group with adequate
headroom in its debt facilities, ensure capital structure is more closely
aligned to peers and improve cost of capital
• Improve operating leverage – seek cost savings across the Group
• Reduce working capital – Fertilizer RSA will reduce working capital
through sales and operations planning, inventory reduction across
Agriculture International, Innofert and Protea Chemicals; focus on
debtor collection and terms; and renegotiation of creditor terms
where possible
• Fertilizer RSA will enter into trade sales with distributors to utilise
excess capacity from Sasolburg
20 / HKLM EXCHANGE
Fidelity Services roup is southern Afric’s lrgest
integrted security solutions provider nd the
industry leder in protection innovtion. By keeping
brest of the ltest trends nd technologicl
developments globlly, nd continuously evolving
nd innovting, the group remins  front runner in
the security solutions mrket.
HKLM ws engged to produce the 2 integrted
report for Fidelity Services roup, with the im of
providing our client with  report tht reflected their
commitment to ulity integrted reporting. Prt of
FIDELITY SERVICES GROUP INTEGRATED ANNUAL REPORT 2019
KEEPING YOU SAFE | SECURING YOUR ASSETS
S E R V I C E S G R O U P
INTEGRATED
ANNUAL REPORT 2019
TOTAL INTEGRATED SERVICES AND
RISK SOLUTIONS PROVIDER
OUR WORK (continued)
20 / HKLM EXCHANGE
the brief ws for the gency to guide our client through the
process, structure, design nd copy.
A ulity report ws produced tht reflected Fidelity’s first steps
nd commitment to, integrted reporting. The report lso fulfilled
the brief of providing the compny with n ttrctive, esy-to-
nvigte corporte reporting sset tht ccurtely portrys
Fidelity’s integrted thinking with regrd to ll its divisionl,
dministrtive, governnce nd sustinbility inititives.
Fidelity’s integrted report ws the unlisted compny ctegory
winner in 2 t the hrtered Secretries Southern Afric 2
ntegrted Reporting Awrds.
OUR WORK / 21
22 / HKLM EXCHANGE
Our integrated facilities management services are offered through six operating divisions.
WHO WE ARE CONTINUED
CASH MANAGEMENT
SERVICES
• Banks and financial institutions
• Cash in transit (CIT)
• Integrated cash solutions
• ATM management
• Cash processing
• Cash acceptance devices
• Insurance
CLEANING
SERVICES
Professionally trained staff, using
environmentally-friendly products,
providing:
• Contract cleaning
• Hygiene services
• Pest control services
• Landscaping services
• Job safety analysis
• Critical emergencies control with ER24
TECHNOLOGY, ARMED RESPONSE,
ASSET TRACKING AND FIRE
SOLUTIONS
Technology and armed response
• Monitoring and armed response
• Electronic article surveillance
• Technical installations
• Commercial
• Fence solutions
Asset tracking
In partnership with Amber Connect, state-of-the-art
technology that is:
• Applications-based, scalable, dynamic data
insights-driven platform
• Customised user-friendly interfaces with
AI for enhanced functionality
Fire solutions
• Total integrated fire solutions
• Design and implementation
• Service, installation and maintenance
• Specialised and portable fire products
• SANS-compliant systems
• ATEX-compliant detection systems
SPECIALISED
SERVICES
• Tactical air and ground support
• VIP and event management
• Parking management
• National Command Centre
• Mining services
• Unrest and riot squad
• Private investigations
• Private prosecution assistance
and case management
• Rhino protection
SECURITY SERVICES
• Residential and golf estates
• Shopping centres and retail
• Banks and financial institutions
• Casino and gaming
• Commercial and industry
• Government and state-owned entities
• Health and education
• Hospitality
• Oil and gas
• Ports and airports
• Armed escorts
O
U
R
S
I
X
O
P
E
R
A
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I
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I
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N
S
INTEGRATED FINANCIAL
SERVICES
• Micro loans
• Insurance for employees
• Insurance for customers
• Credit Life policy
• Financial counselling and advisory ser vices
For more on how our serie s and business offerings form the outp uts of our business processes, s ee our value-creating b usiness plan on page 26 .
O
U
R
O
P
E
R
A
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FIDELITY Integrated Annual Report 2019 76 FIDELITY Integrated Annual Report 2019
WHO WE ARE CONTINUED
ABOUT OUR SHAREHOLDERS
SUPPORTED BY
Group Business Processes and Synergies
As at 28 February 2019, the relative stakes of our shareholders were as shown in the diagram below.
6(59,&(6 *5283
CASH
MANAGEMENT
SERVICES
(CMS)
SECURITY
SERVICES
TECHNOLOGY,
ARMED
RESPONSE, ASSET
TRACKING
AND FIRE
SOLUTIONS
New Seasons (31.08%)
The New Seasons group was founded in 1995. The directors
have significant and diversified business experience and a
proven track record with black economic empowerment
(BEE) investments. New Seasons Equity Fund enhanced its
shareholding in the Group in the past year through its merger
with Nodus Equity, thereby combining their interests into
one holding company controlled by New Seasons.
Dickerson Investments (11.00%)
Dickerson Investments Proprietar y Limited is a privately-
owned investment company. Mr Robert Dickerson was
the former Chief Executive Officer of the Fidelity Services
Group, until the unbundling of the Group in 2006. His wealth
of experience in the securit y and related ser vice industries
enables him to provide an invaluable contribution as a
non-executive director of the current FSG Board.
Employees and Management, including The
Guarding Trust, Eagle Creek Investments 393
and Holdco-Guarding Share Participation Trust
Selected employees and management participate in an
equity scheme in recognition of their commitment, loyalty
and performance. The employee share scheme functions
on an ongoing basis, supporting employee motivation by
providing wealth creation as part of the Group’s employee
valuation strategy. The outcome is a prosperous investment
management company that drives a sustainable business
and delivers investor value.
Shalamuka Security (19.96%)
Shalamuka Security is a broad-based black economic
empowerment (B-BBEE) private equity company which
invests in unlisted established businesses across all sectors.
Operating as a BEE investment vehicle, Shalamuka Capital
was started in 2008 when the Shalamuka Foundation
was looking to invest in private equity and partnered with
RMBCorvest.
31.08
%
19.96
12.25
11.00
15.86
9.85
Corvest 6 (12.25%)
RMB Corvest is a private
equity company and is a
member of the FirstRand
Group. RMB Corvest has
remained invested in the
Fidelity Group for over
25years.
New Seasons
Shalamuka Security
Eagle Creek
Corvest 6
Dickerson Investments
Employees and
Management
INTEGRATED
FINANCIAL
SERVICES
CORPORATE
SUPPORT AND
ADMINISTRATION
CLEANING
SERVICES
OUR BUSINESS DIVISIONAL STRUCTURE
FIDELITY Integrated Annual Report 2019 98 FIDELITY Integrated Annual Report 2019
TOTAL INTEGRATED SERVICES AND
RISK SOLUTIONS PROVIDER
OUR WORK (continued)
22 / HKLM EXCHANGE
OUR WORK / 23OUR WORK / 23
CREATING VALUE CONTINUED
OUR VALUE-CREATING BUSINESS MODEL
Fidelity creates value mainly through the sustainable provision of a variety of security services in guarding, cash solutions, armed
response, fire detection and suppression, cleaning and hygiene and integrated technology services across Southern Africa.
Our six capital INPUTS
LEADING TO THE CREATION OF VALUE
THROUGH OUTCOMES FOR OUR
STAKEHOLDERS
IMPLEMENTED THROUGH
AN ENTREPRENEURIAL
CULTURE OF:
• Unique training and systems
• Proprietar y posting and deployment of guards and crews
• Support processes and systems
• Profitability by sector, branch, site, route, security officer
• Business intelligence
• Research and development, registered patents
• Innovative technology
• Acquisitions
• Manufacturing
SECURITY
SERVICES
ASSET TRACKING
– FIDELITY
SECUREDRIVE
CASH
MANAGEMENT
SOLUTIONS
FIRE
SOLUTIONS
I
N
T
E
G
R
A
T
I
N
G
S
U
P
P
O
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T
,
S
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V
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E
S
,
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S
A
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C
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N
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O
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T
O
D
E
L
I
V
E
R
O
U
T
P
U
T
S
*
(For more on our services a nd business offerings,
see Our operating structure on page 6 .*)
CLEANING
SERVICES
INTEGRATED
FINANCIAL
SERVICES
SPECIALISED
SERVICES
TECHNOLOGY
AND ARMED
RESPONSE
National Command Centre
• Operating 24/7, the first of its kind in South
Africa; the centre specialises in remote risk
management
• Tracking assets and vehicles countrywide
• Expert monitoring teams
• Fully equipped disaster recovery site with a
comprehensive business continuity plan
• Infrastructure standards that exceed the
minimum South African Intruder Detection
Services Association requirements
Training and Development
As a pioneer of training in South Africa, the
Group developed:
• The first learnership programme for
security officers with SASSETA
(NQF Level 3)
• Its own comprehensive firearm training
programmes
• Extensive accreditations
It also revamped Mutango Lodge.
CSI
The objective is to create a sustainable
environment outside of the business that
provides for:
• Long-term physically and socially
sustainable improvement in the
environment
• Care Fund
• The Fidelity Foundation
• Environmental sustenance
• Enterprise and supplier development
• Sponsors/joint CSI projects
IN TERMS OF TRADE-OFFS, CREATING
VALUE IN THE MEDIUM TO LONG TERM
Investment reduces our financial
capital, but our:
Social and relationship capital, through learnerships, Fidelity
Foundation, Care Fund, Tax benefits, Industry leadership
Human capital, through the promotion and acquisition of skills
learnerships Mutango Lodge
Manufactured capital, through proprietary devices, learnerships
software and added-value product and service offering
Intellectual capital, through innovative technology, systems and services
Natural capital, through beneficial measures reducing our impact
on the environment
Manufactured capital – fleet, buildings,
firearms, hardware, devices utilised in
the provision of services
Human capital – our employees,
bringing with them skills, experience
and expertise
Financial capital – revenues flowing
from services we provide
R
Intellectual capital – skills, experience,
expertise, software, systems, training
and procedures supporting the provision
of services
Social and relationship capital –
embodied in the relationships we have
with our shareholders and stakeholders,
and our commitment to corporate social
investment (CSI)
Natural capital – the measures we take
to lessen the impact on the environment
in the areas and communities in which
we operate
SHAREHOLDERS
13.43%
l Equity growth
R9.43 billion l Revenue
R398 million l PBIT
REGULATORS
Full compliance with relevant legislation, governance
frameworks and industry standards
STRATEGIC PARTNERS
Innovative technology
and proprietary manufacturing
SUPPLIERS
B-BBEE level 1 rating, global best-of-breed services,
technology and equipment
CUSTOMERS
Tailored end-to-end, cost-efficient, value-added
comprehensive solutions
EMPLOYEES
Skills advancement, meritocratic workplace environment,
superior training, insurance, wellness and assistance
FIDELITY Integrated Annual Report 2019 3130 FIDELITY Integrated Annual Report 2 019
GROUP FINANCIAL
DIRECTOR’S REPORT
GROUP PERFORMANCE
The year under review was characterised by a strong trading
performance, albeit in a challenging business environment.
This was backed by a strong management team and
staff complement, and supported by synergies extracted
from acquisitions.
Despite the reduction in revenue, and ultimately profit
margins by non-compliant competitors, we experienced
continued resilience in the Guarding business.
STRATEGY
Our financial strategy during the year under review is founded on five key objectives:
FINANCIAL PERFORMANCE HIGHLIGHTS
GROUP REVENUE INCREASED OF
12.4% to R9.43 billion
ADJUSTED OPERATIONAL PERFORMANCE UP
41.3% to R755.77 million
ADJUSTED EBITDA UP
23.8% to R1.15 billion
CAPITAL EXPENDITURE OF
R470.2 million, within the revised budget
of R492 million
The Cash Management Solutions business experienced
robust growth in the year under review, despite the
burgeoning onslaught of crime.
We also achieved 78% of FADT synergies, combined with
the synergies from acquisitions of smaller companies within
the Guarding, Armed Response and Cash in Transit space.
In addition, casual work played an important role in the
Group’s achievement of its performance goals.
Revenue enhancement and
client retention, on which we
achieved:
• Retention of existing
profitable business
• Fee increases when due
• Minimised lost business
• Increased strike revenues
reflected in the Guarding
business
• SAPO casual work
1
Managing the effects of
economic and market
conditions, on which we
achieved:
• Optimisation of our long-term
business strategy/profitability
• Cost cont ainment
• Innovation and technology for
integrated solutions
4
Operating costs, on which we
achieved:
• Enhanced operational
efficiency and the
management of costs in all
areas of control
• Optimisation of the labour
force to achieve profitability
targets
• Tight control over vehicle
costs
2
Maintain strict corporate
governance regulations within
the new group structure, on
which we achieved:
• The continued identification
and application of appropriate
procedures by shareholders
and Board members
• The inclusion of in the
Integrated Report appropriate
clauses of King III and King IV
with an “adopt and explain”
approach
5
Implementation of FADT
synergies, on which we
achieved the implementation
of:
• All synergies as contemplated
in the financial model
• The localisation strategies,
asappropriate
3
The year under review constitutes our second year of
trading after our R2.1 billion acquisition of ADT, the largest
recorded transaction in the South African security industry.
The loss we reported in year one of that acquisition was
largely due to the transaction costs and the historical
FADT structure. It is therefore very gratifying to note that
in FY2019 we have seen a substantial improvement in our
results. With Group synergies making themselves felt, and
by eliminating duplication during the year, we have also
been able to make substantial cost savings. These excellent
results were achieved despite the ongoing challenges
posed by the trading environment.
FIDELITY Integrated Annual Report 2019 5352 FIDELITY Integrated Annual Report 2 019
24 / HKLM EXCHANGE
Wilson Byly Holmes-Ovcon Limited is  leding South-
Africn construction group, with opertions cross Afric,
s well s in Austrli nd the United Kingdom. WBHO is 
long-stnding HKLM client, nd we ssist them with  rnge
of services tht include:
• p nlysis nd content dvisory services
• Design, lyout nd project mngement of the reports
• Typesetting nd production of reports, including visuls,
grphs nd infogrphics
• PowerPoint presenttions
• Finncil dvertising, cutionry nnouncements, circulrs
nd SENS nnouncements
• opywriting, proofreding nd sub-editing services
• Audited nd interim finncil results
WBHO’s 2 integrted report benefited from n improved
depiction of their business model, nd the use of infogrphics to
help the reder understnd the connectivity of the orgnistion’s
strtegy with vrious other spects of the business, which mde
this report stnd out. t ws produced in  user-friendly formt
with superb project photogrphy tht served to tell WBHO’s vlue
cretion story in  concise but interesting mnner.
OUR WORK (continued)
10 WBHO Integrated Report 2019
AFRICA
REVENUE
R13,2 BILLION
OPERATING PROFIT
R668,5 MILLION
NUMBER OF EMPLOYEES
9 855
BUILDING AND CIVIL
ENGINEERING
ROADS AND EARTHWORKS
BUILDING
INFRASTRUCTURE AND
CIVIL ENGINEERING
GEOGRAPHIC
PRESENCE
10 WBHO Integrated Report 2019
SOUTH AFRICA
LESOTHO
SWAZIL AND
ZAMBIA
GHANA
SIERRA LEONE
GUINEA
BURKINA FASO
NAMIBIA
BOTSWANA
MOZAMBIQUE
WBHO Integrated Report 2019 11
UNITED KINGDOM
REVENUE
R5,7 BILLION
OPERATING PROFIT
R228,0 MILLION
NUMBER OF EMPLOYEES
1 127
AUSTRALIA
REVENUE
R21,7 BILLION
OPERATING PROFIT
R335,2 MILLION LOSS
NUMBER OF EMPLOYEES
1 139
UNDERSTANDING WBHO I CREATING VALUE I DELIVERING VALUE I PROTECTING VALUE
WBHO Integrated Report 2019 11
LONDON
MANCHESTER
MELBOURNE (VICTORIA)
PERTH (WESTERN AUSTRALIA)
SYDNEY (NEW SOUTH WALES)
BRISBANE (QUEENSL AND)
EASTERN REGION
WESTERN REGION
1 WBHO Integrated Report 2019WBHO Integrated Report 2019 F
The following icons are applied throughout the
report to improve usability and to highlight
integration between relevant content elements:
NAVIGATIONAL ICONS
Clients
Investors
Employees
Suppli ers and
subcontractors
Financial
institutions
Government
Communities
STAKEHOLDERS
MATERIAL ISSUES
Market dynamics
Skills s hort ages and
capacity constraints
Labour unrest
Safety a nd envir onment al
management
Reputa tion and
culture
Transformation
Community unrest
and business forums
Compliance
CAPITALS
Manufactured capital
Natural capital
Social and relationship
capital
Financial capital
Human capital
Intellectual capital
STRATEGIC OBJECTIVES
SO1
Flexibility and
diversification
SO2
Procurement and
execution excellence
SO3
Reputation and
relationships
SO4
Capaci ty and ta lent
management
SO5
Safety a nd envir onment al
management
SO6
Locali sation a nd
transformation
NAVIGATION
Indica tes a refere nce
for information available
online a t www.wbho.co.za
WWW.WBHO.CO.ZA
CONTRIBUTION BY SEGMENT (Rm)
REVENUE
Building and civil engineering
Road s and ear thworks
Australia
United Kingdom
Construction materials
0
5 000 10 000 15 000 20 000 25 000
2018
2019
OPERATING PROFIT
(400) (300) (200) (100)
0
100 200 300 400
South Africa
Rest of Afric a
CONTRIBUTION BY GEOGRAPHY (Rm)
REVENUE
OPERATING PROFIT
(400) (300)(200)(100) 0 100 200 300 400 500 600
2018
2019
0 5 000 10 000 15 000 20 000 25 000
2018
2019
Australia
United Kingdom
Indica tes a page or n ote refere nce
of inform ation wh ich can be f ound
elsewh ere in the re port
1 Performance highlights
2 About our integrated report
3 Board responsibility
3 Statement of compliance by
Company Secretary
4 Message from the Chairman
8 Understanding WBHO
9 Quick facts
9 Vision
9 The WBHO Way
10 Geographic presence
12 What differentiates WBHO?
13 Creating value
14 Value creating business model
18 Material issues and operating context
32 Engaging and creating value for
stakeholders
38 Strategic objectives
46 Risk management
52 Delivering value
53 Message from the
Chief Executive Officer
58 Operational reports
76 Order book and outlook
82 Message from the
Chief Financial Officer
94 Protecting value
95 Message from the
Lead independent director
96 Board of directors
98 Governance report
101 Audit committee report
104 Remuneration committee report
105 Remuneration and implementation
report
116 Reference information
116 Abbreviations and acronyms
116 Financial definitions
117 Shareholders’ diary
IBC Statutory information
CONTENTS
WWW.WBHO.CO.ZA
CONTRIBUTION BY SEGMENT (R
m
)
REVENUE
Building and civil engineering
Road s and ear thworks
Australia
United Kingdom
Construction materials
0
5 000
10 000
15 000
20 000
25 000
2018
2019
OPERATING PROFIT
(400)
(300)
(200)
(100)
0
100
200
300
400
2018
2019
South Africa
Rest of Afric a
CONTRIBUTION BY GEOGRAPHY (R
m
)
REVENUE
OPERATING PROFIT
(
40
(40(
0
)
(
3
0
0
)
(
2
0
0
)
(
1
0
0
)
0
100
200
300
400
500
600
2018
2019
0
5 000
10 000
15 000
20 000
25 000
2018
2019
Australia
United Kingdom
WBHO Integrated Report 2019
1
PERFORMANCE
HIGHLIGHTS
EARNINGS
PER SHARE
DIVIDEND
CASH
ORDER BOOK
OPERATING
MARGIN
CASH GENERATED
FROM OPERATIONS
REVENUE
2018: 1 534 cents
2018: 475 cents
2018: R5,9 billion
2018: R49 billion
2018: 3,1%
2018: R1,4 billion
2018: R35,0 billion
939 cents
190 cents
R5,9 billion
R47 billion
1,4%
R1,5 billion
R41 billion
2019
OUR WORK / 25
26 / HKLM EXCHANGE
WBHO Integrated Report 2019 15 WBHO Integrated Report 2019 16
14 WBHO Integrated Report 2019
UNDERSTANDING WBHO I
CREATING VALUE I DELIVERING VALUE I PROTECTING VALUE
VALUE-CREATING BUSINESS MODEL
The construction business model
consists of the simultaneous, continuous
and inter-linked processes of project
procurement and execution.
SOCIAL AND
RELATIONSHIP CAPITAL
Strategic partnerships with clients,
subcontractors andsuppliers
Order book of
R47,3 billion at the
end of the year
Continuous engagement with our
communities, governments and
regulators
ISO 9001 and OHSAS 18001
compliant
INTELLECTUAL CAPITAL
Skilled, experienced and technically
qualified employees, industry
thought leaders and experts
Business processes and
management systems
NATURAL CAPITAL
Member of Green Building Council
of South Africa
ISO 14 0 01 compliant
HUMAN CAPITAL
An engaged and productive
workforce of
12121 people with
relevant skills, knowledge and
experience
A strong culture of performance
embedded – The WBHO Way
FINANCIAL CAPITAL
R5,9 billion in capital and reserves
Long-term funding of
R193 million
R6,0 billion
in cash resources
R15,1 billion of guarantee facilities available
SERVICES OR PRODUCTS SECTORS
BUILDING
AND CIVIL
ENGINEERING
• Retail
• Residential
• Commercial
• Healthcare
• Hotels and
entertainment
• Civil works and
mining infrastructure
• Industrial
• Energy infrastructure
ROADS AND
EARTHWORKS
• Road works
• Mining infrastructure
• Rail infrastructure
• Energy infrastructure
• Water infrastructure
• Oil and gas
PROJECTS
• Concession
arrangements
• Turnkey projects
• Design and construct
projects
• Engineer, procure,
construct projects
• Public-private
partnerships
CONSTRUCTION
MATERIALS
• Reinforced steel
products
Strategic planning, supported by risk management and
strong governance, is integral to the procurement
process. The group leverages its knowledge, skills and
expertise, brand equity, reputational strength and
financial health to secure projects in the furtherance of
its strategic objectives.
It is during the execution or operational phase that the
brand and reputation of the group is created and
reinforced. Our reliability, delivery and quality, as well as our
competence to establish and nurture relationships, support
our motto of being “a pleasure to do business with”.
HUMAN
RESOURCES
QUALITY
HEALTH AND
SAFETY
ENVIRONMENTAL
MANAGEMENT
FINANCE AND
TREASURY
RISK
MANAGEMENT
COMPLIANCE
AND LEGAL
INFORMATION
TECHNOLOGY
2019 2018
CLIENTS
Number of projects completed in the year 158 122
Total value of projects completed in the year R22 billion R16 billion
Value of order book R47,3 billion R49,2 billion
Client satisfaction with quality of work delivered 88% 89%
Number of quality audits conducted 223 159
Capital expenditure R374 million R316 million
INVESTORS AND FINANCIAL INSTITUTIONS
Operating profit R0,5 billion R1,0 billion
Cash retained by operating activities R1,1 billion R928 million
Headline earnings per share (cents) 932,2 1 414,6
Dividend per share (cents) 190,0 475,0
Return on capital employed 12,4% 19,8%
Gearing ratio 2,7% 2,9%
EMPLOYEES
Amount paid in salaries, wages and benefits R5,8 billion R4,7 billion
Number of work-related employee fatalities 1 1
Number of retrenchments 634 332
Recordable case rate (RCR) 0,28 0,93
Person-days production lost 22 379 19 835
Investment in employee learning R91,2 million R85,7 million
Investment in bursary schemes R6,8 million R7,0 million
Number of bursaries 118 95
SUPPLIERS AND SUBCONTRACTORS
Total procurement spend with black businesses R4,5 billion R3,7 billion
Procurement spend with black women-owned businesses R1,7 billion R1,2 billion
Number of work-related subcontractor fatalities 2 2
Supplier inspections 106 173
Supplier audits 58 89
GOVERNMENT AND COMMUNITIES
Taxes (direct and indirect) paid to South African government R2,9 billion R2,4 billion
Broad-Based Black Economic Empowerment status Level 1 Level 1
Spending on socio-economic development R3,6 million R5,3 million
Total carbon emissions (CO
2
e equivalent) (tCO
2
e) 58 737 47 968
Waste recycled (tonnes) 62 215 11 0 0 3
Number of reportable environmental incidents – –
MANUFACTURED CAPITAL
Plant and equipment of
R1,9 billion (carrying amount)
Presence in
13 countries
OUTPUTS AND ACTIVITIES CREATING VALUE FOR OUR STAKEHOLDERS
SUPPORT PROCESSES
SUPPORT PROCESSES
P
E
R
F
O
R
M
A
N
C
E
S
T
R
A
T
E
G
Y
RELATIONSHIPS QUALITY
FLEXIBILITY RELIABILITY
PEOPLE
E
X
E
C
U
T
I
O
N
P
H
A
S
E
P
R
O
C
U
R
E
M
E
N
T
P
H
A
S
E
M
A
N
A
G
E
M
E
N
T
DELIVERY
P
E
O
P
L
E
BRAND, REPUTATION AND
PERFORMANCE IMPACT
ON PROCUREMENT
A PIPELINE FOR
OPERATIONS AND IMPACTS
ON PERFORMANCE
G
O
V
E
R
N
A
N
C
E
L
E
A
D
E
R
S
H
I
P
INPUTS
OUR WORK (continued)
26 / HKLM EXCHANGE
OUR WORK / 27
WBHO Integrated Report 2019 15 WBHO Integrated Report 2019 16
14 WBHO Integrated Report 2019
UNDERSTANDING WBHO I CREATING VALUE
I DELIVERING VALUE I PROTECTING VALUE
VALUE-CREATING BUSINESS MODEL
The construction business model
consists of the simultaneous, continuous
and inter-linked processes of project
procurement and execution.
SOCIAL AND
RELATIONSHIP CAPITAL
Strategic partnerships with clients,
subcontractors andsuppliers
Order book of
R47,3 billion at the
end of the year
Continuous engagement with our
communities, governments and
regulators
ISO 9001 and OHSAS 18001
compliant
INTELLECTUAL CAPITAL
Skilled, experienced and technically
qualified employees, industry
thought leaders and experts
Business processes and
management systems
NATURAL CAPITAL
Member of Green Building Council
of South Africa
ISO 14 0 01 compliant
HUMAN CAPITAL
An engaged and productive
workforce of
12121 people with
relevant skills, knowledge and
experience
A strong culture of performance
embedded – The WBHO Way
FINANCIAL CAPITAL
R5,9 billion in capital and reserves
Long-term funding of
R193 million
R6,0 billion
in cash resources
R15,1 billion of guarantee facilities available
SERVICES OR PRODUCTS SECTORS
BUILDING
AND CIVIL
ENGINEERING
• Retail
• Residential
• Commercial
• Healthcare
• Hotels and
entertainment
• Civil works and
mining infrastructure
• Industrial
• Energy infrastructure
ROADS AND
EARTHWORKS
• Road works
• Mining infrastructure
• Rail infrastructure
• Energy infrastructure
• Water infrastructure
• Oil and gas
PROJECTS
• Concession
arrangements
• Turnkey projects
• Design and construct
projects
• Engineer, procure,
construct projects
• Public-private
partnerships
CONSTRUCTION
MATERIALS
• Reinforced steel
products
Strategic planning, supported by risk management and
strong governance, is integral to the procurement
process. The group leverages its knowledge, skills and
expertise, brand equity, reputational strength and
financial health to secure projects in the furtherance of
its strategic objectives.
It is during the execution or operational phase that the
brand and reputation of the group is created and
reinforced. Our reliability, delivery and quality, as well as our
competence to establish and nurture relationships, support
our motto of being “a pleasure to do business with”.
HUMAN
RESOURCES
QUALITY
HEALTH AND
SAFETY
ENVIRONMENTAL
MANAGEMENT
FINANCE AND
TREASURY
RISK
MANAGEMENT
COMPLIANCE
AND LEGAL
INFORMATION
TECHNOLOGY
2019 2018
CLIENTS
Number of projects completed in the year 158 122
Total value of projects completed in the year R22 billion R16 billion
Value of order book R47,3 billion R49,2 billion
Client satisfaction with quality of work delivered 88% 89%
Number of quality audits conducted 223 159
Capital expenditure R374 million R316 million
INVESTORS AND FINANCIAL INSTITUTIONS
Operating profit R0,5 billion R1,0 billion
Cash retained by operating activities R1,1 billion R928 million
Headline earnings per share (cents) 932,2 1 414,6
Dividend per share (cents) 190,0 475,0
Return on capital employed 12,4% 19,8%
Gearing ratio 2,7% 2,9%
EMPLOYEES
Amount paid in salaries, wages and benefits R5,8 billion R4,7 billion
Number of work-related employee fatalities 1 1
Number of retrenchments 634 332
Recordable case rate (RCR) 0,28 0,93
Person-days production lost 22 379 19 835
Investment in employee learning R91,2 million R85,7 million
Investment in bursary schemes R6,8 million R7,0 million
Number of bursaries 118 95
SUPPLIERS AND SUBCONTRACTORS
Total procurement spend with black businesses R4,5 billion R3,7 billion
Procurement spend with black women-owned businesses R1,7 billion R1,2 billion
Number of work-related subcontractor fatalities 2 2
Supplier inspections 106 173
Supplier audits 58 89
GOVERNMENT AND COMMUNITIES
Taxes (direct and indirect) paid to South African government R2,9 billion R2,4 billion
Broad-Based Black Economic Empowerment status Level 1 Level 1
Spending on socio-economic development R3,6 million R5,3 million
Total carbon emissions (CO
2
e equivalent) (tCO
2
e) 58 737 47 968
Waste recycled (tonnes) 62 215 11 0 0 3
Number of reportable environmental incidents – –
MANUFACTURED CAPITAL
Plant and equipment of
R1,9 billion (carrying amount)
Presence in
13 countries
OUTPUTS AND ACTIVITIES CREATING VALUE FOR OUR STAKEHOLDERS
SUPPORT PROCESSES
SUPPORT PROCESSES
P
E
R
F
O
R
M
A
N
C
E
S
T
R
A
T
E
G
Y
RELATIONSHIPS QUALITY
FLEXIBILITY RELIABILITY
PEOPLE
E
X
E
C
U
T
I
O
N
P
H
A
S
E
P
R
O
C
U
R
E
M
E
N
T
P
H
A
S
E
M
A
N
A
G
E
M
E
N
T
DELIVERY
P
E
O
P
L
E
BRAND, REPUTATION AND
PERFORMANCE IMPACT
ON PROCUREMENT
A PIPELINE FOR
OPERATIONS AND IMPACTS
ON PERFORMANCE
G
O
V
E
R
N
A
N
C
E
L
E
A
D
E
R
S
H
I
P
INPUTS
28 / HKLM EXCHANGE
Ubnk is  well-estblished finncil services provider
tht hs grown over the yers, nd hs mnged to
entrench itself primrily within the gold nd pltinum
mining communities.
Ubnk engged HKLM, who hd lso produced its 28
report, to identify res for dvncement in the bnk’s
integrted reporting nd to produce  plpbly improved
2 report tht reflected progress in the orgnistion’s
integrted thinking nd reporting output.
An integrted report ws produced tht provided Ubnk
with  substntilly improved document, representing 
positive step in the bnk’s integrted reporting journey.
The engging nd ttrctive design ccurtely reflected
Ubnk’s modern, pprochble ethos, while t the
sme time conveying to stkeholders its commitment to
trnsprent, constructive nd respectful enggement.
Ubnk’s 28 nd 2 integrted reports were wrded
merit wrds in the unlisted compny ctegory t
the hrtered Secretries Southern Afric ntegrted
Reporting Awrds. n 2, the joint Ubnk nd
HKLM tem set out to further improve this report by,
mongst other things, vstly improving the depiction
nd explntion of the business model, improving
nd expnding the use of infogrphics, nd enhncing
connectivity nd conciseness.
OUR WORK (continued)
28 / HKLM EXCHANGE
4
UBANK Integrated Report 2019
5
UBANK Integrated Report 2019
This report, with its theme of Building a strong foundation with you, is our second integrated
report, and with it we endeavour to present a full, coherent, consistent and transparent
description of the ways in which we create value for our shareholders in the short, medium
and long term, as well as to reflect the material interests of all our stakeholders.
About our report
Reporting boundary
This report covers the financial year 1 March 2018 to 28 February 2019
and focuses on the material matters relating to our strategy, business
model, operating context, performance, governance, and the material risks
and opportunities arising from them, that we have identified in line with
best practice, and which we outline on pages 6 to 64. It is an explanation of
how we create value in the short, medium and long term, which we define
as 12 months, one to five years, and five to ten years respectively.
Reporting frameworks
The report was prepare d with regard to t he aspirations and idea ls set
out in the principle s of the King IV Code on Corporate Governance
(King IV) and is also guided by t he principles and requirem ents of the
International Integrated Reporting Council (IIRC) <IR> fra mework.
Our annual financial st atements on p
ages 66 to 129 were
prepared in
accordance with t he International Financial Reporting St andards
(IFRS), t he requirements of the Banks Act , 94 of 1990 (Banks Ac t) and
the Companies Ac t of South Afric a, 71 of 2008 (Companies Act ),
where appropriate.
Materiality
We consider an issue to be material if it has the potential to have a
substantial impact on our ability to exist and continue to do business,
our social relevance and our relationships with our stakeholders.
An issue is also considered to be material if it has the potential to
substantially impact our ability to create value. Our material issues are
informed by the expectations and concerns of our stakeholders, as well
as the social, economic and environmental context in which we operate.
Our material matters, as described on pages 27 to 29, are linked to our
value dri vers to direct the way we plan our strateg y and the prior ities of
our management. We view the proce ss in which we determine our
materiality a s a business tool that facilitates integrated think ing, as well
as improvements to enhance the input of our st akeholders. Th e material
matters include d in th is report were deter mined through a str uctured
process involving key ma nagement and executives and are endorsed by
our Board.
For more on our control and risk management strategy see pages 26 and 27.
Directors’ statement of responsibility
The Board of Directors (the Board), supported by the Audit Committee, acknowledges its responsibility for overseeing and ensuring the integrity of
this integrated report. Executive management, assisted by the reporting team, was responsible for the preparation of this report. It has applied its
collective mind to the report’s presentation and preparation, and believes it fairly represents the matters that have a material effect on our ability
to create value. The Board accordingly approved this integrated report, which is signed on its behalf, on 30 July 2019:
JH de Villiers Botha
Chairman
Forward-looking statements
This report contains certain forward-looking statements, particularly
with regard to the potential of diversifying our markets, and the effect
of global and domestic economic conditions on the Bank’s strategy,
performance and operations. These forward-looking statements thus
involve both known and as yet unknown risks, uncertainties and other
important factors that could cause our actual results, performance or
achievements to be materially different from the future results,
performance or achievements expressed or implied by such forward-
looking statements.
Ubank undertakes no obligation to update publicly or release any
revisions to these forward-looking statements to reflect events or
circumstances after the date of this document, or to reflect the
occurrence of anticipated events. The forward-looking statements have
not been reviewed or reported on by the auditors.
Feedback
Ubank understands the importance and values the process of integrated
reporting. Your feedback is therefore important to us and we welcome
your input to improve the quality and relevance of our reports.
Please visit our website www.ubank.co.za or alternatively email us at
investorenquiries@ubank.co.za.
OUR FOOTPRINT
GAUTENG
MPUMALANGA
FREE STATE
EASTERN CAPE
LIMPOPO
NORTH WEST
NORTH REGION
Points of presence
16 branches 10 Teba outlets
46 ATMs
5
3
6
1
GAUTENG REGION
Points of presence
10 branches 4 Teba outlets (KwaZulu-Natal)
22 ATMs
EASTERN CAPE REGION
Points of presence
12 branches 6 Teba outlets
17 ATMs
FREE STATE REGION
Points of presence
10 branches 3 Teba outlets
14 ATMs
2
4
5
1 4
Teba outlets (non-RSA)
Points of presence
9 Lesotho 6 Mozambique
2 Botswana 2 Eswatini
3
62
2
1
UBANK Integrated Report 2019
Contents
THE UBANK STORY IFC
Our approach 2
Our footprint 4
ABOUT OUR REPORT
4
Directors’ statement of responsibility 5
CHAIRMAN’S MESSAGE 6
COMPANY 8
Our value-creating business model 9
Our operating context 12
Our short-, medium- and long-term strategies 15
Target achievement 16
Our stakeholders and their needs 18
Our business projects 22
The road ahead 24
CONTROL 26
CHIEF EXECUTIVE OFFICER’S MESSAGE 30
CHIEF FINANCIAL OFFICER’S REPORT 32
CUSTOMERS 38
COMMUNITIES 44
COLLEAGUES 50
CONDUCT 52
APPENDICES 65
Annual financial statements 66
Glossary of terms and definitions 130
Navigational icons
The following icons are applied throughout the report to
improve usability and to highlight integration between relevant
content elements:
For more information see
pages of this report
For further information visit
our website www.ubank.co.za
1
UBANK
Integrated Report
2019
Ubank’s positioning in the market is unique. Founded and built upon the deposits of
our original mineworker customers, the Bank has consolidated that base, expanding its
strategic intent to embrace and serve all workers. Our primary stakeholders are our
customers and the communities in which they live and work, and in which we operate.
The Ubank story
Building a strong foundation with you
Our values have always driven our efforts and reflect the
essence of our brand:
Our brand differentiators
enable us to be
» Community-immersed
» Nurturing of relationships
» Educating and empowering
Our brand promise reflects our
commitment to Growing with You
Real
In 1975 Teba Cash Financial Services is formed to
provide mineworkers with basic financial
services, helping with remittances to their
families and dependants in the rural and
labour-sending areas
Spirited
In the early 1990s, South Africa changes forever,
and we change too, from a savings fund into the
commercial Teba Bank
Partnerships
In June 2000, Teba Bank is granted a banking
licence. Owned by a Trust whose beneficiaries are
our customers, the Bank operates under the
stewardship of trustees elected by the National
Union of Mineworkers (NUM) and the South
African Chamber of Mines, now the Minerals
Council South Africa
Ubank at a glance
ROE | 25.6%
(FY2018: 9.2%)
ROA | 3.5%
(FY2018: 1.0%)
Profit before tax | R257.4 million
(FY2018: R78.7 million)
Gross customer assets | R737.5 million
(FY2018: R832.7 million)
Deposit book | R4.7 billion
(FY2018: R4.8 billion)
Number of physical channels | 48
(FY2018: 66)
Number of Ubank ATMs | 99
(FY2018: 92)
Number of other channels | 43
(FY2018: 38)
Permanent employees | 766
(FY2018: 705)
Brand affinity rating | 9.17/10
(FY2018: 9.35/10)
Customer satisfaction rating | 8.33/10
(FY2018: 8.58/10)
Our mission
is to be a provider of sustainable and
affordable financial services to workers
and their families, and uplift and develop
their communities
Our vision
is to be the Bank of choice for
workers, their families and
communities
Our aspiration
to be the Workers’ Bank of
Choice is founded on
our values, our actions,
and our growth
Our logo
reflects our history and the
close relationships we maintain
with our customers – their
fingerprints inspired the design
and are literally and figuratively
present throughout the Bank
Our values
Passion
Empowering
Excellence
Respect
Sincerity
Empowering
In 2008, we rejuvenate our brand, and articulate
a new vision, mission, set of values and strategy
that drives our passion to truly become the
Workers’ Bank of Choice
Excellence
In October 2010, we become Ubank and launch
our new identity
Passion, Respect, Sincerity
We are driven by a strategy for the future to
expand into the open market and to attract a
younger, technologically active segment of our
society. We are energised with a commitment to
our customers and their communities. We
continue to meet and exceed their expectations
with the understanding and value we place on
each individual with whom we work and for whom
we provide our services
We are proud of our long association with the mining industry,
embracing mineworkers, mining companies and other
stakeholders who continue to play a significant role in our
development.
Our customers are our owners and we exist to serve them
through the provision of financial services that meet their
changing needs and improve their lives.
We are committed to Building a strong
foundation with you
OUR WORK / 29
30 / HKLM EXCHANGE
9
UBANK Integrated Report 2019
OUR VALUE-CREATING BUSINESS MODEL
– our products
Savings and deposit products with
competitive yields to help our customers
make the most of their money
Lending products designed around our
customers’ needs
Offer our customers peace of mind
with our funeral policies and credit life
assurance
Providing safe and easy access to our
customers’ money by facilitating
payments and transactions through our
various channels
– our key value drivers
Affordability
We offer competitively priced products within
our customers’ means
Accessibility
We are available where our customers and
communities work and live, through our branch
networks, mobile services and ATMs
Partnerships
Ubank works together with its communities,
uplifting and creating value in their lives
Efficiency
Our product offering is provided with service
excellence
Reliability
Our customers can trust us with their money
Needs-based innovation
We constantly engage our communities in order
to determine our customers’ needs and offer
suitable solutions
– our promise to our colleagues
We use our real-spirited partnerships to nurture, uplift and
empower our colleagues
– our brand essence
» We connect with and touch our stakeholders on a
personal level
» Maintain a vibrant, dynamic and thriving offering
» We create value together with our customers and
nurture strong bonds
1
Capital risk
2
People risk
3
Customer risk
4
Concentration risk
5
IT risk
6
Fraud risk
7
Regulatory and compliance risk
8
Strategic risk
9
Reputational risk
10
Outsourcing risk
For more information on our risks and risk management see
pages 26 to 29.
Communities
Outcomes
» New social media strategy
» Nurturing partnerships with our communities
» 78% of total waste recycled at Head Office
Target achieved
√
√
√
Trade-offs
Increased brand awareness through new social media
strategy necessitate us to be more than meticulous to retain
our excellent reputation.
Actions to enhance outcomes
Build awareness and credibility in targeted communities
Related risks
Reputational risk
Related strategic objectives:
SO I 4
See pages 44 to 49.
Value created for our stakeholders in terms of our scorecard
– our key outcomes and related trade-offs
Value-adding activities
– our key outputs
The capitals
– our key inputs
Managing risks
– our top 10 risks
10
UBANK
Integrated Report 2019
11
UBANK Integrated Report 2019
Colleagues
Outcomes
» Exceeded EE targets
» 32 graduates and 14 BankSeta learners appointed
» Employee turnover of 8.6% below industry benchmark
» 3.06% of TGP invested in training and development
Target achieved
√
√
√
√
Trade-offs
The closure of some branches led to the redeployment of
employees to nearby branches or the direct sales force.
The planned direct sales team was not appointed that led to the
current inbound sales team acting in capacity as outbound sales
consultants.
Actions to enhance outcomes
Continue to enable the business through human resource capacitation and explore the use of strategic partnership models and focused
delivery teams.
Empower talent through continued focus on the employee value proposition and people development.
Related risks
People risk
Related strategic objectives:
See pages 50 to 51.
Company
Outcomes
» 49.9% decrease in profit before tax (normalised)
» 1.9% decline in total assets (normalised)
» 16.2% decrease in net loan book
» 72.3% increase in strategic funding
Target achieved
X
X
X
√
Trade-offs
Total income structure continues to be skewed mostly
towards interest income, increasing reliance on the
performance of the loan book.
Actions to enhance outcomes
Customer-centric and focused approach to diversify revenue streams through digital transformation and open-market entry.
Recapitalise the Bank and implement optimal balance sheet management strategy.
Related risks
Capital risk, strategic risk, concentration risk, customer risk, IT risk
Related strategic objectives:
SO I 1 SO I 6
See pages 8 to 25.
Control and conduct
Outcomes
» Capital adequacy ratio of 25.3%
» Successful IFRS 9 implementation
» Positive Board appraisal report
Target achieved
√
√
√
Trade-offs
Balance sheet management to optimise capital reserves impacted
strategic spend.
Actions to enhance outcomes
Recapitalise the Bank and implement an optimal balance sheet management strategy.
Compliance with all regulatory requirements.
Related risks
Capital risk, strategic risk, regulatory and compliance risk
Related strategic objectives:
SO I 3 SO I 6
See pages 26 to 29 and 52 to 64.
Natural capital
» Sustainable initiatives
For more information see page 11.
Social and relationship capital
» Nurturing relationships that are built on
listening, action and communication
» Partnering with communities every step
of the way
» Educating and empowering customers
to achieve financial success
For more information see pages 44 to 49.
Human capital
» 766 employees
» Our values and behaviours
» Employment equity status
» Investment in training and development
» Employee value proposition
For more information see pages 50 to 51.
Intellectual capital
» Prominent brand in the gold and
platinum mining communities
» Strong brand affinity
» Key partnerships
For more information see pages 38 to 43.
Manufactured capital
» Points of presence
» New channels
» IT systems and infrastructure
For more information see page 36.
Financial capital
» R596.5 million in equity (normalised)
» R4.7 billion deposit book
» CMM investment recovery
» R168.7 million in project funding
For more information see pages 32 to 37.
SO I 2
Customers
Outcomes
» Active customer base improved by 4.1%
» 39.2% increase in gross new customers
» Digital transformation of customer base
» New channels deployed
Target achieved
X
X
X
√
Trade-offs
The book-to-card migration has resulted in a decline in the
net fees and commission income due to pricing differences.
Actions to enhance outcomes
Activate compelling customer value proposition (CVP) for open market customers to aggressively grow primary customer base by leveraging
strategic partnerships and digital capabilities.
Partner to extend non-branch physical footprint.
Related risks
Customer risk, reputational risk, concentration risk
Related strategic objectives:
SO I 1 SO I 4
See pages 38 to 43.
9
UBANK Integrated Report 2019
OUR VALUE-CREATING BUSINESS MODEL
– our products
Savings and deposit products with
competitive yields to help our customers
make the most of their money
Lending products designed around our
customers’ needs
Offer our customers peace of mind
with our funeral policies and credit life
assurance
Providing safe and easy access to our
customers’ money by facilitating
payments and transactions through our
various channels
– our key value drivers
Affordability
We offer competitively priced products within
our customers’ means
Accessibility
We are available where our customers and
communities work and live, through our branch
networks, mobile services and ATMs
Partnerships
Ubank works together with its communities,
uplifting and creating value in their lives
Efficiency
Our product offering is provided with service
excellence
Reliability
Our customers can trust us with their money
Needs-based innovation
We constantly engage our communities in order
to determine our customers’ needs and offer
suitable solutions
– our promise to our colleagues
We use our real-spirited partnerships to nurture, uplift and
empower our colleagues
– our brand essence
» We connect with and touch our stakeholders on a
personal level
» Maintain a vibrant, dynamic and thriving offering
» We create value together with our customers and
nurture strong bonds
1
Capital risk
2
People risk
3
Customer risk
4
Concentration risk
5
IT risk
6
Fraud risk
7
Regulatory and compliance risk
8
Strategic risk
9
Reputational risk
10
Outsourcing risk
For more information on our risks and risk management see
pages 26 to 29.
Communities
Outcomes
» New social media strategy
» Nurturing partnerships with our communities
» 78% of total waste recycled at Head Office
Target achieved
√
√
√
Trade-offs
Increased brand awareness through new social media
strategy necessitate us to be more than meticulous to retain
our excellent reputation.
Actions to enhance outcomes
Build awareness and credibility in targeted communities
Related risks
Reputational risk
Related strategic objectives:
SO I 4
See pages 44 to 49.
Value created for our stakeholders in terms of our scorecard
– our key outcomes and related trade-offs
Value-adding activities
– our key outputs
The capitals
– our key inputs
Managing risks
– our top 10 risks
10
UBANK Integrated Report 2019
11
UBANK Integrated Report 2019
Colleagues
Outcomes
» Exceeded EE targets
» 32 graduates and 14 BankSeta learners appointed
» Employee turnover of 8.6% below industry benchmark
» 3.06% of TGP invested in training and development
Target achieved
√
√
√
√
Trade-offs
The closure of some branches led to the redeployment of
employees to nearby branches or the direct sales force.
The planned direct sales team was not appointed that led to the
current inbound sales team acting in capacity as outbound sales
consultants.
Actions to enhance outcomes
Continue to enable the business through human resource capacitation and explore the use of strategic partnership models and focused
delivery teams.
Empower talent through continued focus on the employee value proposition and people development.
Related risks
People risk
Related strategic objectives:
See pages 50 to 51.
Company
Outcomes
» 49.9% decrease in profit before tax (normalised)
» 1.9% decline in total assets (normalised)
» 16.2% decrease in net loan book
» 72.3% increase in strategic funding
Target achieved
X
X
X
√
Trade-offs
Total income structure continues to be skewed mostly
towards interest income, increasing reliance on the
performance of the loan book.
Actions to enhance outcomes
Customer-centric and focused approach to diversify revenue streams through digital transformation and open-market entry.
Recapitalise the Bank and implement optimal balance sheet management strategy.
Related risks
Capital risk, strategic risk, concentration risk, customer risk, IT risk
Related strategic objectives:
SO I 1 SO I 6
See pages 8 to 25.
Control and conduct
Outcomes
» Capital adequacy ratio of 25.3%
» Successful IFRS 9 implementation
» Positive Board appraisal report
Target achieved
√
√
√
Trade-offs
Balance sheet management to optimise capital reserves impacted
strategic spend.
Actions to enhance outcomes
Recapitalise the Bank and implement an optimal balance sheet management strategy.
Compliance with all regulatory requirements.
Related risks
Capital risk, strategic risk, regulatory and compliance risk
Related strategic objectives:
SO I 3 SO I 6
See pages 26 to 29 and 52 to 64.
Natural capital
» Sustainable initiatives
For more information see page 11.
Social and relationship capital
» Nurturing relationships that are built on
listening, action and communication
» Partnering with communities every step
of the way
» Educating and empowering customers
to achieve financial success
For more information see pages 44 to 49.
Human capital
» 766 employees
» Our values and behaviours
» Employment equity status
» Investment in training and development
» Employee value proposition
For more information see pages 50 to 51.
Intellectual capital
» Prominent brand in the gold and
platinum mining communities
» Strong brand affinity
» Key partnerships
For more information see pages 38 to 43.
Manufactured capital
» Points of presence
» New channels
» IT systems and infrastructure
For more information see page 36.
Financial capital
» R596.5 million in equity (normalised)
» R4.7 billion deposit book
» CMM investment recovery
» R168.7 million in project funding
For more information see pages 32 to 37.
SO I 2
Customers
Outcomes
» Active customer base improved by 4.1%
» 39.2% increase in gross new customers
» Digital transformation of customer base
» New channels deployed
Target achieved
X
X
X
√
Trade-offs
The book-to-card migration has resulted in a decline in the
net fees and commission income due to pricing differences.
Actions to enhance outcomes
Activate compelling customer value proposition (CVP) for open market customers to aggressively grow primary customer base by leveraging
strategic partnerships and digital capabilities.
Partner to extend non-branch physical footprint.
Related risks
Customer risk, reputational risk, concentration risk
Related strategic objectives:
SO I 1 SO I 4
See pages 38 to 43.
OUR WORK (continued)
30 / HKLM EXCHANGE
OUR WORK / 31
9
UBANK Integrated Report 2019
OUR VALUE-CREATING BUSINESS MODEL
– our products
Savings and deposit products with
competitive yields to help our customers
make the most of their money
Lending products designed around our
customers’ needs
Offer our customers peace of mind
with our funeral policies and credit life
assurance
Providing safe and easy access to our
customers’ money by facilitating
payments and transactions through our
various channels
– our key value drivers
Affordability
We offer competitively priced products within
our customers’ means
Accessibility
We are available where our customers and
communities work and live, through our branch
networks, mobile services and ATMs
Partnerships
Ubank works together with its communities,
uplifting and creating value in their lives
Efficiency
Our product offering is provided with service
excellence
Reliability
Our customers can trust us with their money
Needs-based innovation
We constantly engage our communities in order
to determine our customers’ needs and offer
suitable solutions
– our promise to our colleagues
We use our real-spirited partnerships to nurture, uplift and
empower our colleagues
– our brand essence
» We connect with and touch our stakeholders on a
personal level
» Maintain a vibrant, dynamic and thriving offering
» We create value together with our customers and
nurture strong bonds
1
Capital risk
2
People risk
3
Customer risk
4
Concentration risk
5
IT risk
6
Fraud risk
7
Regulatory and compliance risk
8
Strategic risk
9
Reputational risk
10
Outsourcing risk
For more information on our risks and risk management see
pages 26 to 29.
Communities
Outcomes
» New social media strategy
» Nurturing partnerships with our communities
» 78% of total waste recycled at Head Office
Target achieved
√
√
√
Trade-offs
Increased brand awareness through new social media
strategy necessitate us to be more than meticulous to retain
our excellent reputation.
Actions to enhance outcomes
Build awareness and credibility in targeted communities
Related risks
Reputational risk
Related strategic objectives:
SO I 4
See pages 44 to 49.
Value created for our stakeholders in terms of our scorecard
– our key outcomes and related trade-offs
Value-adding activities
– our key outputs
The capitals
– our key inputs
Managing risks
– our top 10 risks
10
UBANK Integrated Report
2019
11
UBANK Integrated Report 2019
Colleagues
Outcomes
» Exceeded EE targets
» 32 graduates and 14 BankSeta learners appointed
» Employee turnover of 8.6% below industry benchmark
» 3.06% of TGP invested in training and development
Target achieved
√
√
√
√
Trade-offs
The closure of some branches led to the redeployment of
employees to nearby branches or the direct sales force.
The planned direct sales team was not appointed that led to the
current inbound sales team acting in capacity as outbound sales
consultants.
Actions to enhance outcomes
Continue to enable the business through human resource capacitation and explore the use of strategic partnership models and focused
delivery teams.
Empower talent through continued focus on the employee value proposition and people development.
Related risks
People risk
Related strategic objectives:
See pages 50 to 51.
Company
Outcomes
» 49.9% decrease in profit before tax (normalised)
» 1.9% decline in total assets (normalised)
» 16.2% decrease in net loan book
» 72.3% increase in strategic funding
Target achieved
X
X
X
√
Trade-offs
Total income structure continues to be skewed mostly
towards interest income, increasing reliance on the
performance of the loan book.
Actions to enhance outcomes
Customer-centric and focused approach to diversify revenue streams through digital transformation and open-market entry.
Recapitalise the Bank and implement optimal balance sheet management strategy.
Related risks
Capital risk, strategic risk, concentration risk, customer risk, IT risk
Related strategic objectives:
SO I 1 SO I 6
See pages 8 to 25.
Control and conduct
Outcomes
» Capital adequacy ratio of 25.3%
» Successful IFRS 9 implementation
» Positive Board appraisal report
Target achieved
√
√
√
Trade-offs
Balance sheet management to optimise capital reserves impacted
strategic spend.
Actions to enhance outcomes
Recapitalise the Bank and implement an optimal balance sheet management strategy.
Compliance with all regulatory requirements.
Related risks
Capital risk, strategic risk, regulatory and compliance risk
Related strategic objectives:
SO I 3 SO I 6
See pages 26 to 29 and 52 to 64.
Natural capital
» Sustainable initiatives
For more information see page 11.
Social and relationship capital
» Nurturing relationships that are built on
listening, action and communication
» Partnering with communities every step
of the way
» Educating and empowering customers
to achieve financial success
For more information see pages 44 to 49.
Human capital
» 766 employees
» Our values and behaviours
» Employment equity status
» Investment in training and development
» Employee value proposition
For more information see pages 50 to 51.
Intellectual capital
» Prominent brand in the gold and
platinum mining communities
» Strong brand affinity
» Key partnerships
For more information see pages 38 to 43.
Manufactured capital
» Points of presence
» New channels
» IT systems and infrastructure
For more information see page 36.
Financial capital
» R596.5 million in equity (normalised)
» R4.7 billion deposit book
» CMM investment recovery
» R168.7 million in project funding
For more information see pages 32 to 37.
SO I 2
Customers
Outcomes
» Active customer base improved by 4.1%
» 39.2% increase in gross new customers
» Digital transformation of customer base
» New channels deployed
Target achieved
X
X
X
√
Trade-offs
The book-to-card migration has resulted in a decline in the
net fees and commission income due to pricing differences.
Actions to enhance outcomes
Activate compelling customer value proposition (CVP) for open market customers to aggressively grow primary customer base by leveraging
strategic partnerships and digital capabilities.
Partner to extend non-branch physical footprint.
Related risks
Customer risk, reputational risk, concentration risk
Related strategic objectives:
SO I 1 SO I 4
See pages 38 to 43.
9
UBANK Integrated Report 2019
OUR VALUE-CREATING BUSINESS MODEL
– our products
Savings and deposit products with
competitive yields to help our customers
make the most of their money
Lending products designed around our
customers’ needs
Offer our customers peace of mind
with our funeral policies and credit life
assurance
Providing safe and easy access to our
customers’ money by facilitating
payments and transactions through our
various channels
– our key value drivers
Affordability
We offer competitively priced products within
our customers’ means
Accessibility
We are available where our customers and
communities work and live, through our branch
networks, mobile services and ATMs
Partnerships
Ubank works together with its communities,
uplifting and creating value in their lives
Efficiency
Our product offering is provided with service
excellence
Reliability
Our customers can trust us with their money
Needs-based innovation
We constantly engage our communities in order
to determine our customers’ needs and offer
suitable solutions
– our promise to our colleagues
We use our real-spirited partnerships to nurture, uplift and
empower our colleagues
– our brand essence
» We connect with and touch our stakeholders on a
personal level
» Maintain a vibrant, dynamic and thriving offering
» We create value together with our customers and
nurture strong bonds
1
Capital risk
2
People risk
3
Customer risk
4
Concentration risk
5
IT risk
6
Fraud risk
7
Regulatory and compliance risk
8
Strategic risk
9
Reputational risk
10
Outsourcing risk
For more information on our risks and risk management see
pages 26 to 29.
Communities
Outcomes
» New social media strategy
» Nurturing partnerships with our communities
» 78% of total waste recycled at Head Office
Target achieved
√
√
√
Trade-offs
Increased brand awareness through new social media
strategy necessitate us to be more than meticulous to retain
our excellent reputation.
Actions to enhance outcomes
Build awareness and credibility in targeted communities
Related risks
Reputational risk
Related strategic objectives:
SO I 4
See pages 44 to 49.
Value created for our stakeholders in terms of our scorecard
– our key outcomes and related trade-offs
Value-adding activities
– our key outputs
The capitals
– our key inputs
Managing risks
– our top 10 risks
10
UBANK Integrated Report 2019
11
UBANK Integrated Report 2019
Colleagues
Outcomes
» Exceeded EE targets
» 32 graduates and 14 BankSeta learners appointed
» Employee turnover of 8.6% below industry benchmark
» 3.06% of TGP invested in training and development
Target achieved
√
√
√
√
Trade-offs
The closure of some branches led to the redeployment of
employees to nearby branches or the direct sales force.
The planned direct sales team was not appointed that led to the
current inbound sales team acting in capacity as outbound sales
consultants.
Actions to enhance outcomes
Continue to enable the business through human resource capacitation and explore the use of strategic partnership models and focused
delivery teams.
Empower talent through continued focus on the employee value proposition and people development.
Related risks
People risk
Related strategic objectives:
See pages 50 to 51.
Company
Outcomes
» 49.9% decrease in profit before tax (normalised)
» 1.9% decline in total assets (normalised)
» 16.2% decrease in net loan book
» 72.3% increase in strategic funding
Target achieved
X
X
X
√
Trade-offs
Total income structure continues to be skewed mostly
towards interest income, increasing reliance on the
performance of the loan book.
Actions to enhance outcomes
Customer-centric and focused approach to diversify revenue streams through digital transformation and open-market entry.
Recapitalise the Bank and implement optimal balance sheet management strategy.
Related risks
Capital risk, strategic risk, concentration risk, customer risk, IT risk
Related strategic objectives:
SO I 1 SO I 6
See pages 8 to 25.
Control and conduct
Outcomes
» Capital adequacy ratio of 25.3%
» Successful IFRS 9 implementation
» Positive Board appraisal report
Target achieved
√
√
√
Trade-offs
Balance sheet management to optimise capital reserves impacted
strategic spend.
Actions to enhance outcomes
Recapitalise the Bank and implement an optimal balance sheet management strategy.
Compliance with all regulatory requirements.
Related risks
Capital risk, strategic risk, regulatory and compliance risk
Related strategic objectives:
SO I 3 SO I 6
See pages 26 to 29 and 52 to 64.
Natural capital
» Sustainable initiatives
For more information see page 11.
Social and relationship capital
» Nurturing relationships that are built on
listening, action and communication
» Partnering with communities every step
of the way
» Educating and empowering customers
to achieve financial success
For more information see pages 44 to 49.
Human capital
» 766 employees
» Our values and behaviours
» Employment equity status
» Investment in training and development
» Employee value proposition
For more information see pages 50 to 51.
Intellectual capital
» Prominent brand in the gold and
platinum mining communities
» Strong brand affinity
» Key partnerships
For more information see pages 38 to 43.
Manufactured capital
» Points of presence
» New channels
» IT systems and infrastructure
For more information see page 36.
Financial capital
» R596.5 million in equity (normalised)
» R4.7 billion deposit book
» CMM investment recovery
» R168.7 million in project funding
For more information see pages 32 to 37.
SO I 2
Customers
Outcomes
» Active customer base improved by 4.1%
» 39.2% increase in gross new customers
» Digital transformation of customer base
» New channels deployed
Target achieved
X
X
X
√
Trade-offs
The book-to-card migration has resulted in a decline in the
net fees and commission income due to pricing differences.
Actions to enhance outcomes
Activate compelling customer value proposition (CVP) for open market customers to aggressively grow primary customer base by leveraging
strategic partnerships and digital capabilities.
Partner to extend non-branch physical footprint.
Related risks
Customer risk, reputational risk, concentration risk
Related strategic objectives:
SO I 1 SO I 4
See pages 38 to 43.
32 / HKLM EXCHANGE
Vibrnt, multiculturl nd dynmic, the University of
Johnnesburg (UJ) shres the pce nd energy of cosmopolitn
Johnnesburg, the city whose nme it crries. Proudly South
Africn, the university is live down to its Africn roots, nd
well prepred for its role in ctulising the potentil tht higher
eduction holds for the continent’s development.
UJ engged HKLM for the second consecutive yer to produce 
summrised nd encpsulted 28 nnul stkeholder report.
The tsk ws to refresh the look nd feel of the previous yer,
nd to ccurtely convey the key elements of the nrrtive while
t the sme time reducing the copy to  mngeble 5 pges.
An ttrctive, redble nd engging stkeholder report ws
produced with n energetic design. The refreshed look nd feel
dded grphic nd illustrtive life to the document, nd reflected
the university’s vitl nd expressive chrcter s n cdemic
leder in Afric.
OUR WORK (continued)
32 / HKLM EXCHANGE
8988 UJ 2018 | STAKEHOLDER REPORTUJ 2018 | STAKEHOLDER REPORT
Student A airs (continued)
STUDENT GOVERNANCE
Election of the 2019 SRC took place from 10 to
12October 2018, with leadership structures
elections in September/October.
STRATEGIC OBJECTIVE FIVE: NATIONAL AND
GLOBAL REPUTATION MANAGEMENT
Five SRC members and other student society
leaders, and four members of staff, participated in
the Africa-by-Bus tours organised by the Division.
COMMUNITY SERVICE, STAKEHOLDER
ENGAGEMENT AND REPUTATION MANAGEMENT
Participation in outreach projects, such as donating
food and clothing, providing toiletries to children
from orphanages, renovating and painting homes,
and providing learning materials to area pupils;
Engagement continued with both internal UJ, and
external, stakeholders.
MONITORING STUDENT EXPERIENCE AND
EMPLOYABILITY
UG Student Experience Survey refined and
gathered information on students’ demographic
background, perceived lecture experiences,
lecturers, tutorials, tutors, learning outcomes and
student support services; PG Student Experience
Survey, like the UG, yielded positive responses.
THE WAY FORWARD
Student Aff airs will ensure:
• Monitoring of privately-owned student
accommodation
• Finalisation of the electoral process reform of
student governing bodies;
• Provision of meals and other important basic
needs to students, such as sanitary towels
to students not funded by any other means
including NSFAS
• Integration of student development
interventions
• Responsiveness to the changing needs of
students.
RESEARCH
OVERVIEW
TEACHING AND
LEARNING OVERVIEW
FACULTY
HIGHLIGHTS
STUDENT
EXPERIENCE
FINANCIAL
OVERVIEW
4948 UJ 2018 | STAKEHOLDER REPORTUJ 2018 | STAKEHOLDER REPORT
Academic Development and Support (continued)
ACADEMIC DEVELOPMENT AND INNOVATION
(ADI)
ADI comprises UJ’s English Language Programme
(UJELP) and the Learning Development (LD) Unit.
During 2018, some staff taught in Mastering
Academic and Professional Skills (MAPS) Eco, in the
College of Business and Economics (CBE), and MAPS
Hum, off ered in the Faculty of Humanities, with 535
students attaining pass rates of over 90%.
ADI led several interventions in FYE, SSE, and ISSI,
as well as coordinating the student-mentoring
programme, with 6 549 students attending.
In a new Faculty of Humanities Reading in the
Discipline (RID) initiative about 430 students
attended workshops, with an additional
235 students reached individually or in group
consultations. The testing component of UJELP
assessed 308 international students in language
profi ciency, with 30 completing the UJELP
programme from A1 to C2 level.
DEPARTMENT OF ACADEMIC LITERACIES
The Department of Academic Literacies continued
teaching and learning contribution with English for
Law (EFL), Language and Skills for Science (LSS), and
Language for the Economic Sciences, and
5 575 consultations completed, and 10 282 students
seen at the UJ writing centres. There was also a
refocusing of seven areas of the FYE/SSE initiative
for 2019-2020.
The South African National Resource Centre for the
First Year Experience and Students in Transition
(SANRC) made signifi cant progress on several key
projects, including eliciting inputs and insights
from orientation professionals to shape national
guidelines for good practice in orientation. A SANRC
guest-edited edition Journal of Student Aff airs in
Africa (JSAA) was released, and the National FYE
Good Practice Guide featuring UJ FYE was published
online. A national FYE conference was held in Durban
in May 2018.
CENTRE FOR PSYCHOLOGICAL SERVICES AND
CAREER DEVELOPMENT (PSYCAD)
PsyCaD continues to off er interventions and
programmes that focus on the students’ holistic
development, with 13 327 requesting counselling
services in 2018.
PsyCaD also has a 24-hour crisis line, and there were
54 suicide-related calls. In 2018 46 staff members also
called the line.
PsyCaD is constantly fi nding more innovative
ways to assist students, including the use of LMS
as a platform, and created a uLink Bb module for
Psychological, Career and Disability Services, and
liaison with the residences and faculties remained a
priority in 2018. The PsyCaD Career Services Unit also
pursued a number of enhancements to its services.
SPECIAL PROJECTS
ADS was also responsible for a number of additional
special projects, including:
• The DHET University Capacity Development
Grant (UCDG), with R49 480 200 made available to
UJ during 2018. ADC represented UJ at the Centre
for Research on Evaluation, Science and Technology
Monitoring and Evaluation (M and E) Development
workshops, and was responsible for the R40 128 000
Foundation Grant.
• UJenius Club, which celebrates students who have
achieved an annual average of 75% with no module
below 70% in the year preceding their membership.
In 2018, 561 students were accepted into the
UJenius Club. Through UJenius, UJ participated in
the Undergraduate Awards for the third year, the
only African institution in Africa to do so.
• African Insights, a fully online module, compulsory
for all fi rst-time entering fi rst-year UJ students,
exposing students to the great works of African
literature, the ideals of the Freedom Charter and
the South African Constitution, with 7 473 students
enrolled in 2018, of whom 1 383 were registered
for a BEngTech in the Faculty of Engineering
and the Built Environment, the only faculty to
incorporate the module into its curriculum.
• UJ Winter School, a two-week enrichment period,
held on three campuses. A proposal to create a
Winter School focused on 4IR was approved at the
last STLC meeting of 2018.
RESEARCH
OVERVIEW
TEACHING AND
LEARNING OVERVIEW
FACULTY
HIGHLIGHTS
STUDENT
EXPERIENCE
FINANCIAL
OVERVIEW
OUR WORK / 33
34 / HKLM EXCHANGE
OUR WORK (continued)
34 / HKLM EXCHANGE
OUR WORK / 35
3332 UJ 2018 | STAKEHOLDER REPORTUJ 2018 | STAKEHOLDER REPORT
2. Internationalisation
The Division comprises three Directorates:
• Study Abroad and International Student Services
• Academic Services
• Corporate Services
With the objectives of enriching students’
experience, promoting UJ’s excellence in scholarship,
and the enhancement of UJ’s international profi le,
the Division’s work entails:
• The cultivation of an international environment on
campus, with students and staff from around the
globe recruited and fully integrated into UJ life
• Internationalisation of the academic curriculum,
including dialogue with the international
community on issues of national-global
importance
• The development of international partnerships
and implementation of international collaboration
involving research, student and staff mobility.
The work of UJ’s Division for Internationalisation,
aligned with the university’s Global Excellence
and Stature 2025 Strategy, and informed by its
mission of inspiring transformation through the
collaborative pursuit of knowledge, supports
both intra-university, and international partner
collaboration.
In line with UJ’s 2025 Strategic Objective Six: Fitness
for global excellence and stature, the Division also
sets fi nancial targets.
In 2018, most of the targets for the year were
exceeded. Particularly signifi cant was the
continued work with Times Higher Education (THE),
Universitas 21 (U21) and BRICS networks, enhancing
global reputation and assuring leadership in the
development and governance of global higher
education with special reference to Africa. Strides
were made in various rankings, refl ected by a climb
of 60 places in the Best Global Universities Rankings
(BGUR), and THE World University Rankings in:
Business and Economics, Education, Law, and Social
Sciences.
The year 2018 was a challenging, tumultuous year
for leadership in internationalisation. It began with
an Acting Senior Director until May 2018, with the
appointed Senior Director starting at the beginning
of June 2018, only to resign and vacated the position
by the end of November, when an Acting Senior
Director: Internationalisation was appointed. The
Director: Corporate Services, appointed in June,
resigned at the end of October. This leadership
disruption created challenges in maintaining staff
morale and increasing output. Despite these
challenges, all targets were met.
INTERNATIONAL STAFF, STUDENT RECRUITMENT
AND ADMISSIONS
Together with the Division for
Human Resources, a draft Policy for
Recruitment of International Staff
was fi nalised. The International
Recruitment and Admissions Offi ce,
conducted international student
recruitment drives in 20 countries,
meeting and exceeding targets with
1 250 postgraduate students and
2 372 undergraduates.
UJ has one director on the management council at
the International Education Association of South
Africa (IEASA), and is represented at BRICS, THE,
U21, the Asia-Pacifi c Association for International
Education (APAIE), the Association of International
Educators (NAFSA), the Association of International
Education Administrators (AIEA), the European
Association for International Education (EAIE), the
Southern African-Nordic Centre (SANORD), and at
recruitment platforms across Africa, as well as in
Far Eastern, and other Asian countries. The Division
further enhanced the effi ciency of international
admissions processes, enforcing the fi ve-day
turnaround time.
Key strategic targets and indicators are:
20% international permanent
academic staff by 2020
10% international students by 2020
with two thirds in UG programmes
Priority focus on Africa; increased
partnerships with BRIC countries,
the US and Europe
3 000 students per annum in study
abroad programmes by 2025
RESEARCH
OVERVIEW
TEACHING AND
LEARNING OVERVIEW
FACULTY
HIGHLIGHTS
STUDENT
EXPERIENCE
FINANCIAL
OVERVIEW
2322 UJ 2018 | STAKEHOLDER REPORTUJ 2018 | STAKEHOLDER REPORT
2018 Highlights
A record number of 40 awards and forms of
recognition have been recorded this year, which is
an outstanding achievement – almost 43% more
than in 2017.
RESEARCH
OVERVIEW
TEACHING AND
LEARNING OVERVIEW
FACULTY
HIGHLIGHTS
STUDENT
EXPERIENCE
FINANCIAL
OVERVIEW
STUDENTS
40
Number of national,
international and
prestigious awards
STAFF
44,24%
Percentage of black permanent and xed-term
academic sta
(2017: 41,8%)
48,53%
Percentage of permanent and xed-term academic
sta with doctorates
(2017: 47,04%)
17,47%
Percentage of international permanent and xed-
term academic sta
(2017: 15,1%)
20,92%
Percentage and number of black associate professors
and professors
(2017: 18,0%)
4 162
Number of international
students
(2017: 3 343)
9 969
Undergraduate output
(2017: 9 791)
1 494
Number of study abroad students
(inbound and outbound)
(2017: 991)
50 687
Total headcount
enrolment
(2017: 50 366)
3 035
Total postgraduate outputs
(2017: 2 979)
66,6%
Percentage UG programmes incorporating
foundations of decolonisation
(2017: 44,7%)
34,51%
Percentage students enrolled in science, engineering
and technology (SET) programmes
(2017: 33,2%)
87%
Overall UG and PG student satisfaction as
determined by student experience surveys
(2017: 86,2%)
RESEARCH
12 006
Annual citations in Scopus
(2017: 8 865)
45
Number of
distinguished visiting
professors
(2017: 48)
195
NRF-rated
researchers
(2017: 189)
17
Number of SARChI Chairs
1 741.41
Accredited
research
output units
(2017: 1 560)
275
Number of Postdoctoral
Research Fellows
(PDRFs)
(2017: 266)
36 / HKLM EXCHANGE
Eskom is South Afric’s primry electricity supplier, generting
more thn % of the electricity in South Afric, nd bout 4%
of tht in Afric.
Eskom is  long-stnding HKLM client, nd we ssist them
with the production of their integrted report, nnul finncil
sttements, fctor report, interim results nd udited results by
delivering the following services:
• Design, lyout nd project mngement of the reports
• Typesetting, proofreding nd production of reports, including
visuls, grphs nd infogrphics
• PowerPoint presenttions
• Finncil dvertising
CONTENTS
THE YE AR AT A GLANCE IFC
ABOUT THIS REPORT 1
OUR SUITE OF R EPORTS 2
LEADERSHIP AND ETHICS 3
Chairman's statement 4
Ethics and progress on governance clean-up 8
King IV
TM
application 15
Composition of our top leadership 20
OUR BU SIN ESS AND STRATEGY 24
What we do and our impact 25
How the macro environment affects us 34
Our strategy and outlook 41
Stakeholder engagement and material matters 44
Risks and opportunities, assurance and controls 49
OUR GOVERNANCE 61
Governance fr amework 62
Feedback on Board activities 63
Exco update 70
Executive remuneration and benets 72
FINANCIAL REVIEW 76
Chief Financial Ofcer’s repor t 77
Condensed annual nancial statements 81
Financial value added 84
Our nances 85
OPERATING PERFORMANCE 102
Chief E xecutive’s review 103
Our infrastructure 108
Our interaction with the environment 120
Our people 130
Our role in communities 140
Our know-how 145
SUPPLEMENTARY INFORMATION 156
Abbreviations and glossary of terms 157
Independent sustainability assurance report 160
Leadership qualications and directorships 164
Board and Exco meeting attendance 167
Statistical tables: technical and non-technical 168
Environmental implications of using electricity 176
Plant and customer information 177
Contact details 184
The following navigation icons are used to link
our strategy and resources to material matters,
strategic risks, key performance indicators and
performance:
Throughout this integrated report, performance
against target is indicated as follows:
Actual performance met or exceeded target
Actual performance almost met target
(within a5% threshold)
Actual performance did not meet target
SC
Indicates that a key performance indicator is
included in the shareholder compact
NAVIGATION ICONS
Our finances
(financial capital)
Our infrastructure
(manufactured capital)
Our interaction with the environment
(natural capital)
Our people
(human capital)
Our role in communities
(social and relationship capital)
Our know-how
(intellectual capital)
MC
FC
IC
NC
HC
SRC
A list of abbreviations and glossary of terms
areavailable on pages 157 to 159
REQUEST FOR FEEDBACK
We want to ensure that our report continues
to provide relevant information to stakeholders.
We welcome your feedback on ways in which we
could improve our report in future. Please send
your suggestions to IRfeedback@eskom.co.za
Additional information
in the integrated
report
Supplementary
information provided
in a fact sheet
Information
available online
Information block
or case study
OUR WORK (continued)
36 / HKLM EXCHANGE
BOARD OF
DIRECTORS
Membership of Board committees
Audit and Risk Committee
Investment and Finance Committee
People and Governance Committee
Social, Ethics and Sustainability Committee
Board Tender Committee
C
Denotes chairmanship of a committee
AT 31 MARCH 2019
DR ROD CROMPTON (66)
Independent non-executive director
BA Hons (Universit y of Natal)
Ph D Hum aniti es (Un iversity of N atal )
MR JABU MABUZA (61)
Chairman
Effective Leadership Program
(Pennsylvania University)
Executive Development Program
(University of California)
C
MR PHAKAMANI HADEBE (51)
Group Chief Executive
MA Economic s
(University of Durban-Westville)
MA Rura l Developmen t
(Sussex University)
Executive Leadership Program
(Wh arton Busi ness S chool )
MR SIFISO DABENGWA (60)
Independent non-executive director
B Sc (Hons) Engineeri ng
(University of Zimbabwe)
MBA (University of Witwatersrand)
Executive Program (University of Michigan)
MR CALIB CASSIM (47)
Chief F inanc ial Of fic er
B Accounting Sciences (Unisa)
Chartered Accountant (SA)
Mast er of Bu sines s Lead ershi p (Uni sa)
MS SINDI MABASO-KOYANA (49)
Independent non-executive director
Chartered Accountant (SA)
Diplo ma in Introdu ction to Mini ng
(University of Witwatersrand)
C
Director classification
Executive
Independent non-executive
C
20 | INTEGRATED REPO RT | 31 MARCH 2019
Qualifications liste d above are not exhausti ve. Refer to pages 164 to 165 for f ull de tail s of directo rs’ qu alif ica tions and ac tive d irec tor ship s
17%
Executive
83%
Independent
non-executive
Ages ar e show n at 31 March 2019.
Only active dire ctorships are ref lected.
Note that the B oar d Tender Co mmittee was dissolved on 31 Dece mber 2018.
MS NELISIWE MAGUBAN E (53)
Independent non-executive director
B Sc Ele ctrical Enginee ring – Heavy Cu rrent
(University of Natal)
Postg raduate Dip loma in B usin ess
Administration (University of West London)
MBA (M ilpar k Busi ness S chool)
MS BUSISIWE MAVU SO (40)
Independent non-executive director
B Compt ( Unis a)
Postg raduate Dip loma in M anagemen t (GIBS)
Mast er of Bu sines s Lead ershi p (Uni sa)
Association of Cha rtered Cer tif ied
Accountants (ACCA)
PROF. MALEGAPURU
MAKGOBA (66)
Independent non-executive director
MB ChB ( Unive rsit y of Nat al)
D Phil (University of Oxford)
Fellowship of the Roya l Colle ge of Physicians
of Lond on
Advan ced Ma nagement Program ( INS EAD)
C
DR PULANE MOLOKWANE (42)
Independent non-executive director
B Sc Physics and C hemis try
(University of North Wes t)
M Sc App lied Ra diati on Science and
Technology (University of North West)
Ph D Chemical Technology (Environmental)
(University of Pretoria)
C
DR BANOTHILE
MAKHUBELA (34)
Independent non-executive director
M Sc (Un iversity of C ape Town)
Ph D (University of C ape Town)
PROF. TSHEPO MONGALO (45)
Independent non-executive director
LLM Com merci al Law
(University of Cambridge)
Ph D Comm ercial Law
(University of Cape Town)
Racial diversity Gender diversity Age diversity
ACI
White
Female
Male
30-39
40-49
50-59
60-69
Leadership and ethics
ESKOM HOLDINGS SOC LTD | 21
8% White
92% ACI
58% Male 42% 40-49
8% 30-3933% 60- 69
17% 5 0-59
42% Female
THE YEAR AT A GLANCE
THE YEAR AT A GLANCE
THE YEAR AT A GLANCE
THE YEAR AT A GLANCE
THE YEAR AT A GLANCE
THE YEAR AT A GLANCE
THE YEAR AT A GLANCE
Chief Executive,
CFO and COO
appointed
Governance
clean-up
progressing well
Plant availability dropped
below
70%
Strategy review
culminated in
turnaround plan
Total OCGT expenditure of
R6.5 billion to minimise
loadshedding
Industrial action
impacted operations
and finance
Generation nine-point
recovery programme
introduced
Government
financial support
announced
Rotational loadshedding
implemented on
30 days
Environmental
performance
deteriorated
Net loss after tax of
R20.7 billion
Municipal arrear debt
rose to R19.9 billion
ESKOM HOLDINGS SOC LTD | 1
ABOUT THIS REPORT
Reporting boundary and frameworks
The information in this report refers to the performance
of the group, which includes the business of Eskom
Holdings SOC Ltd, operating in South Africa, and
its major operating subsidiaries, unless otherwise
stated. For a comprehensive overview of our financial
performance, the integrated repor t should be read in
conjunction with our full set of consolidated annual
financial statements.
Our consolidated annual financial state ments are available at
www.eskom.co.za/IR2019
Material events up to the date of approval have been
included. Unless otherwise indicated, the information
presented is comparable to that of prior years, with no
significant restatements.
Basis of preparation
Our integrated report is based on the principles
contained in the International <IR> Framework,
published by the International Integrated Reporting
Council (IIRC). The report seeks to provide a balanced
and transparent account of how we create value through
our use of and impact on the various capitals.
Our value creation process is d epic ted in our busines s mode l on
pages28 to 29
This is our primary report to stakeholders, and provides
information of interest to all stakeholders. As far as
possible, we aim to address material matters, both
positive and negative, by considering qualitative and
quantitative matters material to our operations and
strategic objectives, which may influence stakeholders’
decision-making. Our strategic risks are considered as
part of this process.
The determination of material m atters is set ou t on pages 46 to 48, while
our strategic r isk s are d iscussed on pages 52 to 54
Building on issues covered in the 2018 report, we
have endeavoured to provide a comprehensive update
on governance-related concerns; we always strive to
improve the conciseness of the report. However, there
were a number of significant issues which had to be
addressed, which have negatively impacted conciseness.
The content is guided by legal and regulatory
requirements, such as the Companies Act, 2008 and the
King IV Report on Corporate Governance for South
Africa, 2016 (King IV
TM
), as well as global best practice.
Assurance approach
Our combined assurance model relies on several lines
of defence, including supervisory oversight, review by
management, as well as internal and external assurance.
The Audit and Risk Committee and the Board rely on
combined assurance in assessing the adequacy of our risk
management and internal controls.
The results of the internal a nd ex ter nal assur ance of our suite of repor ts
is set out on page 60
Our Assurance and Forensic Department provided
reasonable assurance on certain aspects of the report.
The sustainability KPIs cont ained in the shareholder
compact were subject to external assurance; eight did
not receive reasonable assurance.
The independen t sustainability a ssur ance report is inclu ded fr om page 160
The consolidated annual financial statements have
been audited by the group’s independent auditors,
SizweNtsalubaGobodo Grant Thornton Inc, who issued
a modif ied opinion relating to the completeness of
amounts disclosed in terms of the PFMA. Except for this
modification, the consolidated annual financial statements
are fairly presented in terms of IFRS.
Refer to the annual f ina ncial stateme nts for the indepe nden t audi t opin ion
Board responsibility and approval
The Board is accountable for the integrity and
completeness of the integrated repor t and any
supplementary information, and is assisted by the
Audit and Risk Commit tee and the Social, Ethics and
Sustainability Committee.
The Board has applied its collective mind to the
preparation and presentation of the integrated report
and has concluded that it is presented in accordance
with the International <IR> Framework. Considering
the completeness of the material items dealt with and
the reliability of information presented, based on the
combined assurance process followed, the Board approved
the 2019 integrated repor t, annual financial statements and
supplementary information on 18 July 2019.
Mr Jabu Ms Sindi Prof. Malegapuru
Mabuza Mabaso-Koyana Makgoba
Chairman Audit and R isk Social, Ethics and
Committee Sustainability Committee
This integrated report reviews our financial, operational, environmental, social and governance
performance for the year from 1 April 2018 to 31 March 2019, and follows our 2018 integrated
repor t. It examines our use of and impact on the six capitals, and our performance in relation
to our strategy.
CONTENTS
THE YE AR AT A GLANCE IFC
ABOUT THIS REPORT 1
OUR SUITE OF R EPORTS 2
LEADERSHIP AND ETHICS 3
Chairman's statement 4
Ethics and progress on governance clean-up 8
King IV
TM
application 15
Composition of our top leadership 20
OUR BU SIN ESS AND STRATEGY 24
What we do and our impact 25
How the macro environment affects us 34
Our strategy and outlook 41
Stakeholder engagement and material matters 44
Risks and opportunities, assurance and controls 49
OUR GOVERNANCE 61
Governance fr amework 62
Feedback on Board activities 63
Exco update 70
Executive remuneration and benets 72
FINANCIAL REVIEW 76
Chief Financial Ofcer’s repor t 77
Condensed annual nancial statements 81
Financial value added 84
Our nances 85
OPERATING PERFORMANCE 102
Chief E xecutive’s review 103
Our infrastructure 108
Our interaction with the environment 120
Our people 130
Our role in communities 140
Our know-how 145
SUPPLEMENTARY INFORMATION 156
Abbreviations and glossary of terms 157
Independent sustainability assurance report 160
Leadership qualications and directorships 164
Board and Exco meeting attendance 167
Statistical tables: technical and non-technical 168
Environmental implications of using electricity 176
Plant and customer information 177
Contact details 184
The following navigation icons are used to link
our strategy and resources to material matters,
strategic risks, key performance indicators and
performance:
Throughout this integrated report, performance
against target is indicated as follows:
Actual performance met or exceeded target
Actual performance almost met target
(within a5% threshold)
Actual performance did not meet target
SC
Indicates that a key performance indicator is
included in the shareholder compact
NAVIGATION ICONS
Our finances
(financial capital)
Our infrastructure
(manufactured capital)
Our interaction with the environment
(natural capital)
Our people
(human capital)
Our role in communities
(social and relationship capital)
Our know-how
(intellectual capital)
MC
FC
IC
NC
HC
SRC
A list of abbreviations and glossary of terms
areavailable on pages 157 to 159
REQUEST FOR FEEDBACK
We want to ensure that our report continues
to provide relevant information to stakeholders.
We welcome your feedback on ways in which we
could improve our report in future. Please send
your suggestions to IRfeedback@eskom.co.za
Additional information
in the integrated
report
Supplementary
information provided
in a fact sheet
Information
available online
Information block
or case study
OUR WORK / 37
38 / HKLM EXCHANGE
OUR WORK (continued)
38 / HKLM EXCHANGE
Acsion Limited is  property mnger, rel estte
developer nd owner. Their investment portfolio consists
of nine well-estblished, strtegiclly locted retil
properties including two regionl shopping centres. Acsion
unlocks development profits nd then genertes nnuity
income nd further cpitl growth for its shreholders
through the mngement of its developed property
portfolio which genertes rentl income.
HKLM provides Acsion with  rnge of services tht include:
• p nlysis nd content dvisory services
• Design, lyout nd project mngement of the reports
• Typesetting nd production of reports, including
visuls, grphs nd infogrphics
• PowerPoint presenttions
• Finncil dvertising, cutionry nnouncements,
circulrs nd SENS nnouncements
• Proofreding nd sub-editing services
ACSION INTEGRATED REPORT 2019 1
This is Acsion Limited’s fi fth integrated report as a listed
company. The report has been prepared to provide the reader
with an overview of the business since the previous fi nancial
year. Acsion (“Acsion”, “the company”, “the Group”) is listed
on the Johannesburg Stock Exchange (“JSE”) in the Real Estate
Holdings and Development sector as a proper ty development
company. The share code is “ACS”.
Scope and boundaries
This repor t provides the read er with an overview of t he business
since the pre vious fi na ncial year. The report is pr oduced by
Acsion Li mited. All the proper ties are individua lly held in separate
companie s that are subsidiarie s and are all managed intern ally by
Souther n Palace Investment s 108 P roprietary Limi ted (T/A Ana prop
Proper ty Management), one of t he subsidiaries of Ac sion Limited.
Frameworks applied
This integr ated report has bee n compiled in line with th e
guideline s, frameworks and r egulation s as detaile d below:
• International Integrated Reporting Council’s (“IIRC”) Integrated
Reporting Framework
• South African Companies Act 71 of 2008 (asamended)
• JSE Listings Requirements
• International Financial Reporting Standards (“IFRS”)
• The King IV Code of Corporate Governance for South Africa
November 2016 (King IV)
Board responsibility and approval of the
integrated report
The Board of di rector s acknowl edges it s responsibility to e nsure
the integr ity of the in tegrated re port as required by th e
International Integrated Reporting Council’s Integrated Repor ting
IIRC’S Framework.
The Board has a ccordingl y applied its mind to the preparation and
presentation of this report and believes that it is a balanced and fair
represen tation of the p erformance of the Gr oup.
CONTENTS
Forward-looking statements
This repor t contains forw ard-look ing statements. T here are a
number of ri sks, uncertain ties and othe r factors that are
associa ted with the se forward-loo king statements wh ere actual
results a nd developments co uld materiall y differ f rom those wh ich
are presented in this rep ort.
We used words s uch as “beli eve”, ”anticipate”, “intend”,
“s ee k”, “e nde av ou r”, ”w ill ”, “pl an”, “ pr oje ct ”, “co uld ”, “ma y”,
“estimate”, “expect”, “forecast”, “envision” and other sim ilar
expres sions which a re intended to identif y these forward -looking
stateme nts, but are not an exclusi ve means for ide ntifying such
statements.
We are not under a ny obligatio n (and expres sly disclaim any such
obligatio n) to update or alte r our forward-loo king information,
whether a s a result of new information, future even ts or other wise.
Investor s and stakeh olders are caution ed not to place un due
reliance on th e forward-look ing statem ents contained here in, as
they have not be en reviewed o r reported on by Acsio n’s
independent external auditors.
Materiality
The matte rs addressed in thi s report are consid ered by the Boa rd
and execut ive commit tee to be material in quanti tative and
qualitat ive terms. A s the readers of this rep ort are primarily
investor s and providers of capi tal, more focus has been placed on
these items than some of t he other capitals ref erred to in the
Integrate d Reporting Framew ork issue d by the IIRC International
Integrated Reporting Council in 2013.
This repor t will cover the
period from 1 March 2018
to 28 Februar y 2019 during
which Acsion traded ver y
successfully, despite tough
economic conditions.
ABOUT ACSION
Who we are F r o n t fl a p
What we do F r o n t fl a p
Our values F r o n t fl a p
About th is report IFC
ACSION STRATEGY
Strategy a nd key milestones 2
OUR DEVELOPMENTS
Our develo pments 4
OUR LEADERSHIP REPORTS
Chairman’s re port 12
Chief execu tive offi cer’s repor t 14
MATERIAL RISKS AND OPPORTUNITIES
Top 5 risks 18
CORPORATE GOVERNANCE
Corporate governance report 20
Board of dire ctors 26
ANNUAL FINANCIAL STATEMENTS
Audit and Ri sk Committee Rep ort 30
Directors’ Responsibilities and Approval 34
Group Secretary’s Confi rmation 34
Independent Auditor’s Report 35
Directo rs’ Report 40
Statements of Financial Position 44
Statemen ts of Profi t or Loss and Ot her Comprehensi ve Income 45
Statemen ts of Changes in Equit y 46
Statemen ts of Cash Flows 47
Accounting Policies 48
Notes to the Annual Financial Statements 60
NOTICE OF THE ANNUAL GENERAL MEETING
Notice of the a nnual general meet ing 99
Form of prox y 105
Notes to the fo rm of proxy 106
CORPORATE INFORMATION
Corporate information IBC
ABOUT
THIS REPORT
The name
Acsion derives
from the greek
word “axia”
which means
“value”.
For further information
visit our w ebsite:
www.acsionsa.co.za
NAVIGATIONAL
ICONS
For more information
see pages o f report
Stakeholder feedback
We welcome and appreciate any constructive input and
feedback from stakeholders with regard to the content of
this report.
• Email: info@acsionsa.co.za
• Mail: PO Box 569, Wierda Park 0149
• Website:
www.acsionsa.co.za
ACSION INTEGRATED REPORT 2019 1
This is Acsion Limited’s fi fth integrated report as a listed
company. The report has been prepared to provide the reader
with an overview of the business since the previous fi nancial
year. Acsion (“Acsion”, “the company”, “the Group”) is listed
on the Johannesburg Stock Exchange (“JSE”) in the Real Estate
Holdings and Development sector as a proper ty development
company. The share code is “ACS”.
Scope and boundaries
This repor t provides the read er with an overview of t he business
since the pre vious fi na ncial year. The report is pr oduced by
Acsion Li mited. All the proper ties are individua lly held in separate
companie s that are subsidiarie s and are all managed intern ally by
Souther n Palace Investment s 108 P roprietary Limi ted (T/A Ana prop
Proper ty Management), one of t he subsidiaries of Ac sion Limited.
Frameworks applied
This integr ated report has bee n compiled in line with th e
guideline s, frameworks and r egulation s as detaile d below:
• International Integrated Reporting Council’s (“IIRC”) Integrated
Reporting Framework
• South African Companies Act 71 of 2008 (asamended)
• JSE Listings Requirements
• International Financial Reporting Standards (“IFRS”)
• The King IV Code of Corporate Governance for South Africa
November 2016 (King IV)
Board responsibility and approval of the
integrated report
The Board of di rector s acknowl edges it s responsibility to e nsure
the integr ity of the in tegrated re port as required by th e
International Integrated Reporting Council’s Integrated Repor ting
IIRC’S Framework.
The Board has a ccordingl y applied its mind to the preparation and
presentation of this report and believes that it is a balanced and fair
represen tation of the p erformance of the Gr oup.
CONTENTS
Forward-looking statements
This repor t contains forw ard-look ing statements. T here are a
number of ri sks, uncertain ties and othe r factors that are
associa ted with the se forward-loo king statements wh ere actual
results a nd developments co uld materiall y differ f rom those wh ich
are presented in this rep ort.
We used words s uch as “beli eve”, ”anticipate”, “intend”,
“s ee k”, “e nde av ou r”, ”w ill ”, “pl an”, “ pr oje ct ”, “co uld ”, “ma y”,
“estimate”, “expect”, “forecast”, “envision” and other sim ilar
expres sions which a re intended to identif y these forward -looking
stateme nts, but are not an exclusi ve means for ide ntifying such
statements.
We are not under a ny obligatio n (and expres sly disclaim any such
obligatio n) to update or alte r our forward-loo king information,
whether a s a result of new information, future even ts or other wise.
Investor s and stakeh olders are caution ed not to place un due
reliance on th e forward-look ing statem ents contained here in, as
they have not be en reviewed o r reported on by Acsio n’s
independent external auditors.
Materiality
The matte rs addressed in thi s report are consid ered by the Boa rd
and execut ive commit tee to be material in quanti tative and
qualitat ive terms. A s the readers of this rep ort are primarily
investor s and providers of capi tal, more focus has been placed on
these items than some of t he other capitals ref erred to in the
Integrate d Reporting Framew ork issue d by the IIRC International
Integrated Reporting Council in 2013.
This repor t will cover the
period from 1 March 2018
to 28 Februar y 2019 during
which Acsion traded ver y
successfully, despite tough
economic conditions.
ABOUT ACSION
Who we are F r o n t fl a p
What we do F r o n t fl a p
Our values F r o n t fl a p
About th is report IFC
ACSION STRATEGY
Strategy a nd key milestones 2
OUR DEVELOPMENTS
Our develo pments 4
OUR LEADERSHIP REPORTS
Chairman’s re port 12
Chief execu tive offi cer’s repor t 14
MATERIAL RISKS AND OPPORTUNITIES
Top 5 risks 18
CORPORATE GOVERNANCE
Corporate governance report 20
Board of dire ctors 26
ANNUAL FINANCIAL STATEMENTS
Audit and Ri sk Committee Rep ort 30
Directors’ Responsibilities and Approval 34
Group Secretary’s Confi rmation 34
Independent Auditor’s Report 35
Directo rs’ Report 40
Statements of Financial Position 44
Statemen ts of Profi t or Loss and Ot her Comprehensi ve Income 45
Statemen ts of Changes in Equit y 46
Statemen ts of Cash Flows 47
Accounting Policies 48
Notes to the Annual Financial Statements 60
NOTICE OF THE ANNUAL GENERAL MEETING
Notice of the a nnual general meet ing 99
Form of prox y 105
Notes to the fo rm of proxy 106
CORPORATE INFORMATION
Corporate information IBC
ABOUT
THIS REPORT
The name
Acsion derives
from the greek
word “axia”
which means
“value”.
For further information
visit our w ebsite:
www.acsionsa.co.za
NAVIGATIONAL
ICONS
For more information
see pages o f report
Stakeholder feedback
We welcome and appreciate any constructive input and
feedback from stakeholders with regard to the content of
this report.
• Email: info@acsionsa.co.za
• Mail: PO Box 569, Wierda Park 0149
• Website:
www.acsionsa.co.za
ACSION INTEGRATED REPORT 2019 1
This is Acsion Limited’s fi fth integrated report as a listed
company. The report has been prepared to provide the reader
with an overview of the business since the previous fi nancial
year. Acsion (“Acsion”, “the company”, “the Group”) is listed
on the Johannesburg Stock Exchange (“JSE”) in the Real Estate
Holdings and Development sector as a proper ty development
company. The share code is “ACS”.
Scope and boundaries
This repor t provides the read er with an overview of t he business
since the pre vious fi na ncial year. The report is pr oduced by
Acsion Li mited. All the proper ties are individua lly held in separate
companie s that are subsidiarie s and are all managed intern ally by
Souther n Palace Investment s 108 P roprietary Limi ted (T/A Ana prop
Proper ty Management), one of t he subsidiaries of Ac sion Limited.
Frameworks applied
This integr ated report has bee n compiled in line with th e
guideline s, frameworks and r egulation s as detaile d below:
• International Integrated Reporting Council’s (“IIRC”) Integrated
Reporting Framework
• South African Companies Act 71 of 2008 (asamended)
• JSE Listings Requirements
• International Financial Reporting Standards (“IFRS”)
• The King IV Code of Corporate Governance for South Africa
November 2016 (King IV)
Board responsibility and approval of the
integrated report
The Board of di rector s acknowl edges it s responsibility to e nsure
the integr ity of the in tegrated re port as required by th e
International Integrated Reporting Council’s Integrated Repor ting
IIRC’S Framework.
The Board has a ccordingl y applied its mind to the preparation and
presentation of this report and believes that it is a balanced and fair
represen tation of the p erformance of the Gr oup.
CONTENTS
Forward-looking statements
This repor t contains forw ard-look ing statements. T here are a
number of ri sks, uncertain ties and othe r factors that are
associa ted with the se forward-loo king statements wh ere actual
results a nd developments co uld materiall y differ f rom those wh ich
are presented in this rep ort.
We used words s uch as “beli eve”, ”anticipate”, “intend”,
“s ee k”, “e nde av ou r”, ”w ill ”, “pl an”, “ pr oje ct ”, “co uld ”, “ma y”,
“estimate”, “expect”, “forecast”, “envision” and other sim ilar
expres sions which a re intended to identif y these forward -looking
stateme nts, but are not an exclusi ve means for ide ntifying such
statements.
We are not under a ny obligatio n (and expres sly disclaim any such
obligatio n) to update or alte r our forward-loo king information,
whether a s a result of new information, future even ts or other wise.
Investor s and stakeh olders are caution ed not to place un due
reliance on th e forward-look ing statem ents contained here in, as
they have not be en reviewed o r reported on by Acsio n’s
independent external auditors.
Materiality
The matte rs addressed in thi s report are consid ered by the Boa rd
and execut ive commit tee to be material in quanti tative and
qualitat ive terms. A s the readers of this rep ort are primarily
investor s and providers of capi tal, more focus has been placed on
these items than some of t he other capitals ref erred to in the
Integrate d Reporting Framew ork issue d by the IIRC International
Integrated Reporting Council in 2013.
This repor t will cover the
period from 1 March 2018
to 28 Februar y 2019 during
which Acsion traded ver y
successfully, despite tough
economic conditions.
ABOUT ACSION
Who we are F r o n t fl a p
What we do F r o n t fl a p
Our values F r o n t fl a p
About th is report IFC
ACSION STRATEGY
Strategy a nd key milestones 2
OUR DEVELOPMENTS
Our develo pments 4
OUR LEADERSHIP REPORTS
Chairman’s re port 12
Chief execu tive offi cer’s repor t 14
MATERIAL RISKS AND OPPORTUNITIES
Top 5 risks 18
CORPORATE GOVERNANCE
Corporate governance report 20
Board of dire ctors 26
ANNUAL FINANCIAL STATEMENTS
Audit and Ri sk Committee Rep ort 30
Directors’ Responsibilities and Approval 34
Group Secretary’s Confi rmation 34
Independent Auditor’s Report 35
Directo rs’ Report 40
Statements of Financial Position 44
Statemen ts of Profi t or Loss and Ot her Comprehensi ve Income 45
Statemen ts of Changes in Equit y 46
Statemen ts of Cash Flows 47
Accounting Policies 48
Notes to the Annual Financial Statements 60
NOTICE OF THE ANNUAL GENERAL MEETING
Notice of the a nnual general meet ing 99
Form of prox y 105
Notes to the fo rm of proxy 106
CORPORATE INFORMATION
Corporate information IBC
ABOUT
THIS REPORT
The name
Acsion derives
from the greek
word “axia”
which means
“value”.
For further information
visit our w ebsite:
www.acsionsa.co.za
NAVIGATIONAL
ICONS
For more information
see pages o f report
Stakeholder feedback
We welcome and appreciate any constructive input and
feedback from stakeholders with regard to the content of
this report.
• Email: info@acsionsa.co.za
• Mail: PO Box 569, Wierda Park 0149
• Website:
www.acsionsa.co.za
OUR WORK / 39
40 / HKLM EXCHANGE
Although Etion Limited hd experience in producing integrted
reports, HKLM ws engged to rise the level of wht hd been
chieved in the pst by producing  2 integrted report tht
reflected the compny’s new corporte structure nd thinking in
n integrted wy.
HKLM performed  review of Etion’s previous report nd presented
its findings to the compny’s mngement tem. Detiled nd
relevnt uestionnires were prepred for one-on-one interviews
with key members of the compny’s executive tem. Our design
tem worked on developing options for the look nd feel nd
begn implementing the pproved version s the copy ws being
compiled. Ongoing consulttive enggement ws mintined
throughout the process.
Etion ws presented with n integrted report tht in its nrrtive
nd design pproch reflected the innovtive nd integrted
thinking of the compny.
OUR WORK (continued)
40 / HKLM EXCHANGE
Creating
value
CREATING VALUE
Our operating environment 14
Our value-creating business model 16
Our operating structure 18
Our strategy 20
Managing risk 22
Engaging with our stakeholders 28
Our human capital 32
13 ETION Integrated Report 2019ETION Integrated Report 2019 12
5 ETION Integrated Report 2019ETION Integrated Report 2019 4
5
Integrated Report
Integrated Report
4
4 I Businesses 331 IEmployees
2018: 260
(0.53) cents I HEPS
2018: 7.29 cents
30.3% IGross margin
2018: 28.3%
R29.86 million I EBITDA
2018: R60.7 million
at a glance
R595.9 million I Revenue
2018: R572.6 million
Providing for a changing world
The horizontal design of our Group forms a value chain that delivers products and
services across a spectrum of industry sectors, including industrial, transport,
telecommunications, defence, energy, fintech and government.
IN SAFETY AND PRODUCTIVITY
Providing
Internet of Things (IoT) digital systems built to enable our
rail, mining and transportation clients to track and monitor their
assets effi ciently, conduct needs-based maintenance and improve
safety, delivering real-time monitoring of location, speed, safety
systems as well as the provision of collision detection and improved
productivity from the use of reliable real-time data.
IN CONNECTIVITY
Providing
both passive and active connectivity equipment and
solutions that enable telecommunications networks to function.
IN CYBER SECURITY
Providing
cyber secure products and solutions, including our SOLIDguard
range and eDNA solution, that are designed to transform business, fintech
and personal security from the moment data is created, to the final end-
point where it is secured. Through the use of the latest technology, from
cryptographic and certification solutions and tools to digital signatures with
biometric access to remove delays in internal or customer-facing approval
processes smoothly, easily and with a solid audit trail. We deliver what
business, government and the military need to reduce fraud, and facilitate
headcount/employee integrity management ecosystems that reduce fraud,
and improve identification for complete digital peace of mind.
IN ORIGINAL DESIGN AND MANUFACTURING (ODM)
Providing
customised electronic subsystems and products designed
and manufactured for clients in aerospace and defence, as well as in the
mining, industrial and transportation sectors, including our internal
business unit.
OUR WORK / 41
42 / HKLM EXCHANGE
Our Board of Directors
Our Board Board composition
Board tenure
The Board, its role, responsibilities, composition and meeting activities are governed by the Etion
Board Charter.
NONHLANHLA
MJOLI-MNCUBE (60)
Board Chairman
Independent Non-Executive
Director
Appointed: 4 Ju ne 2013
Resigned : 31 May 2019
SEC, NC, HCRC, IC
MARTIE JANSE VAN
RENSBURG (62)
Independent Non-Executive
Director
Appointed: 1 2 November 2018
ARC, HCRC, NC
RICHARD WILLIS (49)
Non-Executive Director
Appointed: 1 3 November 2018
ARC, NC , SEC
DR SNOWY KHOZA (61)
Chairman
Appointed: 1 Ju ne 2019
ARC, SEC , NC, HCRC
COEN BESTER (63)
Independent Non-Executive
Director
Appointed: 1 Ju ne 2015
ARC, NC , HCRC
The Etion Board is a unitary board with the necess ary skills and experience relevant to the Company’s business operations, with a
majority of independent non-executive members. In compliance with the requirements of the JSE Limited, the Group has a Race
and Gender Diversity Policy in place. In compliance with this, at financial year-end, the Board comprised four independent executive
directors, one non-executive director and three executive directors.
All non-executive directors were provided with a letter of
appointment for an indef inite period.
The rotation of non-executive directors is fully governed in
terms of the Memorandum of Incorporation (MOI), which
requires one third of them to retire from office at each Annual
General Meeting (AGM). The retiring directors at each AGM are
those who have been longest in of fice since their last election
or appointment. Coen Bester and Snow y Khoza retired by
rotation at the previous AGM and were re-elected upon of fering
themselves for re-election.
During the year under review, the following changes to the
Board were:
•
Rynier van der Watt, resigned on 20 June 2018
•
Christi Maherry appointed 20 June 2018
•
Sizakele Mzimela resigned 18 Oc tober 2018
•
Martie Janse van Rensburg and Richard Willis were
appointed to the Board on 12 and 13 November 2018
respectively
•
Ndume Medupe resigned 2 5 January 2019
•
Nonhlanhla Mjoli-Mncube resigned 31 May 2019
COMPLEMENT GENDER REPRESENTATION
BOARD SUB-COMMITTEE:
ARC Audit and Risk Committee
HCRC Human Capital and
Remuneration Committee
IC Investment Committee
(adhoc Committee)
NC Nomination Committee
SEC Social and Ethics Committee
ETHNIC REPRESENTATION
Board members
7
Non-Executive
Directors
57.1%
4
42.9%
57.1%
Executive
Directors
42.9%
3
4
57.1%
42.9%
3
3 IBlack
4 IWhite
TEDDY DAKA (54)
Group Chief Exe cutive Office r
(GCEO)
Executive Director
Appointed: 1 0 October 2001
ELVIN DE KOCK (61)
Chief Financi al Officer (CFO)
Executive Director
Appointed: 8 J anuary 2018
CHRISTI MAHERRY (50)
Executive Director
Appointed: 2 0 June 2018
SEC
RYNIER VAN DER WATT
(51)
Executive Director
Appointed: 1 Ju ne 2015
Resigned : 20 June 2018
NDUME MEDUPE (48)
Independent Non-Executive
Director
Appointed: 9 September 2015
Resigned : 25 January 2019
SIZAKELE MZIMELA (53)
Non-Executive Director
Appointed: 4 Ju ne 2013
Resigned : 18 October 2018
77 ETION Integrated Report 2019ETION Integrated Report 2019 76
Protecting value
ELVIN DE KOCK (61)
Group Chief Fina ncial Officer
Executive director
Appointed: 8 J anuary 2018
FCMA, CGM A, MBA
Executive di rector and Group Chief Financial O fficer, Elvin has exte nsive executive and stron g consulting experience b oth at board and
at senior execut ive levels across vari ous industries including te lecommunications, inf ormation technology and f inancial service s. He is
highly skille d in finance, risk manageme nt, corporate governance an d compliance, strategic p lanning and change management . He is
also currently ser ving as a non-executive direc tor at Br yte Insurance and chairman of Bry te Life Company Limited. Elvinis a Fellow of
the Chartered In stitute of Management Acco untants (UK), a Chartered Glo bal Management Accountant , and an associate member o f
the Chartered Institute of Company Se cretaries.
COENRA AD BESTER (63)
Non-Executive Director
Appointed: 1 Ju ne 2015
BSc Electro nic Engineering; BSc Elec tronic Engineering (Hons); MB A; OPM
Coen has 40 ye ars of experience in the techn ology industry, and ha d the privilege of succe ssfully start ing, growing high-tech compa ny.
Currently he ser ves on the boards of seve ral technology companie s. He is the author of Live & L ead: Discover Your Persona l and
Organisationa l Guidan ce System (2012). His passion is leade rship coaching and strategy. Coen is the CEO and owner of Br ainWork s, a
management consulting company.
Skills, expertise and experience:
Technology st rategy, systems thinking , corporate culture and future stu dies.
Member
ARC, NC, HCRC
MARTIE JANSE VAN RENSBURG (62)
Independent Non-Executive Director
BComm, BCom pt (Hons), CA(SA)
Martie, is a Cha rtered Accountant, with a s ubstantial understan ding of and experience in goo d corporate governance pr actices,
corporate st rategy, shareholder managem ent models, enterpris e-wide risk manageme nt, regulatory compliance , financial reporting
and analysis, human resource s strategies and performance management .
She is an experie nced executive and non- executive director, ser ving as either chairman of the b oard and board committees , in
organisation s in the public and private sec tors for the past 20 years .
Her current posi tions as non-executi ve director, chairman or member of bo ard committees involves t he Independent Regulator y
Board for Audito rs, Sephaku Holdings L imited, The Develop ment Bank of Southern Afri ca. She also serve s as a non-executive me mber
of the FirstRa nd Bank Limited Credit Commit tee overseeing Afri ca, specialised and p roject finance and A shburton Investment Cre dit
Committee .
Member
ARC, HCRC, NC
RICHARD CHARLES WILLIS (49)
Non-Executive Director
Appointed: 1 N ovember 2018
CA(SA)
Richard Willis is a no n-executive directo r on the board of Etion Limited. He i s a qualified Chartered A ccountant and the Chief Operat ing
Off icer of Clive Douglas Inves tments (Pty) Ltd. H e is also an independent no n-executive directo r of Alaris Holdings Ltd, whe re he serves
as the Chairman of the au dit and risk and social and ethi cs committees.
He has serv ed as COO, investment prin cipal and director of Dougla s Investments since 20 07, having joined the company from V irgin
Money South Afri ca, where he was the financial director and a board member. His career inclu des a stint at Standard Private Bank,
where he was hea d of finance and operatio ns as well as an Exco member ; Melville Douglas Inve stment Management, whe re he was
head of their international bu siness; and Rawlinson & Hunter, British Virgin Is lands, where he served as a manager and E xco member.
He obtained a B Com (Accounting and Finance) fro m the University of Stellen bosch and a Post Graduate D iploma in Accounting from
UCT which enabled him to pass the Bo ard exam and beco me a CA (SA). Rich ard completed his article s with De loitte in South Africa
Member
ARC, NC , SEC
CHRISTI MAHERRY (50)
Chief Execut ive Officer: Et ion Secure (LAWTrust)
Executive Director
Appointed: 2 0 June 2018
BCom (Strateg ic Business Manageme nt), MAP, Stanford Executiv e Leadership Programme f or Female Leaders
CEO of Etion Secure (LAWTrust), Chris ti is the co -founder and CEO of LAWTrust Information Securit y Solutions. Before committin g her
energy to the priv ate sector, Christi worked in s tate security and intellige nce for nearly a decade. T he experience gained the re has been
eminently appli cable in the digital era of cy ber threats, crime and wa rfare. Christi is pas sionate about female emp owerment and youth
education and i s a board member of Junior Achi evement Africa. She has b een the winner of the EY Worl d Entrepreneur Awards for
Southern Af rica in the emerging categor y.
Member
SEC
DR SNOWY KHOZA (61)
Chairman of the B oard
Appointed Ch airman: 1 June 2019
Appointed to the b oard: 21 October 201 5
BA (Social Work) ; BA Honours (Social Work); M A (Social Science); PhD (So cial Policy); MBA; E xecutive Programmes: Gl obal
Programme for Management Development; Utility Regulation and Strategy; Finance for Executives
Dr Khoza is a sea soned executive, ack nowledged develop ment activist and s trategist with busine ss acumen honed from mo re than
25 years of manag ement and directorship exp erience in the South Afric an public and private sec tors. She has been rec ognised for
her busines s acum en on the cont inent, receiving awards such as Top Busines s Lead er in SA; One of the Most Influential Women in
Africa countr y and Continental Lifetime Achiever ; Ethical Bu siness Leader; and Most Emp owering Woman Leader in the Infrastructure
Developm ent Sector.
She currently hol ds the office of execu tive chairperson of the B igen Group and sits on the adv isory boards of the Uni versity of Pretoria
– Water Institute and Ke ctil Program (Atlanta). Her forme r chair and/or directorships in clude, amongst others , Trans Caledon Tunnel
Authority ; Water Research Commissio n; Centre for Social Develo pment in South Africa at th e University of Johanne sburg; Family and
Marriage Societ y of South Africa; Women’s Develo pment Business Trust; Statisti cs South Africa; Freights Dynami cs (Transnet); National
Housing Financing Corporation; and National Lotteries Commission.
Skills, expertise and experience
Leadership, commercial and busine ss acumen, governance, research and policy
Member
ARC, SEC , NC, HCRC
TEDDY DAKA (54)
Group Chief Executive Officer
Executive director
Appointed: 1 0 October 2001
BA (Hons) Busin ess Management; MBA
Executive dire ctor and Group Chief Executive O fficer, Teddy was appointe d as the Etion Group CEO in June 2013. Prior to this he ser ved
as non-exe cutive chairman of Etion Limited s ince 2006. Befo re assuming an executive rol e in Etion he founded Tedaka Invest ments, a
company that had interests in various indu stries including telecommunications, def ence, cyber security, consulting engine ering, mining,
propert y and railways.
An ex-Telkom and Palabora Foun dation executive, Teddy has s erved as a non-exe cutive director for both p rivate and public sector
companies , both locally and internation ally, as well as on various minis terial task teams.
Our Board of Directors continued
79 ETION Integrated Report 2019ETION Integrated Report 2019 78
Protecting value
OUR WORK (continued)
42 / HKLM EXCHANGE
45 ETION Integrated Report 2019ETION Integrated Report 2019 44
Our performance
What we do
Create is a growth engine of the Group and forms a key part of
our financial, intellectual and manufactured capitals. It is an ODM
that designs, develops and manufactures a wide range of
advanced electronic and digital technologies for internal and
external customers. Create develops customised electronic
subsystems and products for clients in the aerospace and
defence and cyber security industries as well as in several other
sectors, including mining, industrial and transportation.
Where we
operate
Where we deliver products to:
SOUTH AFRIC A
UNITED ARAB
EMI RATE S (UAE)
SAUDI ARABIA
EUROPE
Risk Owner
Risk Owner
Risk Owner
Contribution to
Group revenue
35%
Contribution to
Group profit
34%
Our capabilities
ENGINEERING
•
System/subsystem and LRU development
•
System integration
ENGINEERING CAPABILITIES AND SERVICES
•
Programme and project management support
•
System engineering
•
Software skills
•
Hardware skills
•
Firmware skills
•
CAD
PRODUCTI ON AND CAPABILITY SERVICE S
•
Production
•
Test and qualification
•
Industrialisation
•
Support
IRevenue declined 12%from R235.8 million to R206.5 million
ISegment profi t declined 47% from R38.4 million to R20.2 million
IExport revenue decreased 59%from R103.4 million to R42.5 million
Our performance: Etion Create
Delivering value
47 ETION Integrated Report 2019ETION Integrated Report 2019 46
Our performance: Etion Create continued
Our financial performance
Despite the context of the depressed markets in which we
operate and the downturn in the industr y, Create remains
a profitable business.
Outlook
Our track record and reputation in the Middle East has
placed us well in our pursuit of large public sector
contracts in the region’s defence and cyber security
markets. We expect this to lead to an uptick in
development work in new manufacturing business in the
short to medium term.
Globally IoT continues to generate great interest in the
marketplace, and the industr y is on the cusp of major
steps forward in the short to medium term. We remain
focused on po sitioning ourselves to take advantage of the
potential of this market, and are exploring international
geographies such as S outh America, where our solutions
have various potential applications.
IoT constitutes high-volume applications, which will
require associated manufacturing capabilities in our
production facilit y. We have therefore moved towards
enhancing our design capability and strategy and are
preparing to launch a high-volume line. We will continue
to drive that thrust in the short to medium term, which will
help balance our engineering and production capacities.
This will provide a benef icial upside, although we may be
required to supply large bank guarantees and or
demonstrate cash-flow, and establish international offices.
In the medium to long term, we are very well positioned in
Saudi Arabia. With a strong brand reputation and
awareness there, we are potentially poised to reap the
benefit in contrac tual terms with large governmental
contracts that we are pursuing, as well as in the facilitation
of that country’s localisation policies .
Challenges and risks
Part of the impact on our revenue stream during FY2019
has occurred as a result of slower orders from our
international clients. In addition, the uncertainty besetting
the South African mining industry and the resultant
tightening of capital expenditure has had an impact on
our production output . Lead times in component supply
that can add up to as much as 40 week s, have also had an
effect on our productivity during the year under review.
Our priorities in meeting the se challenges are therefore to:
•
manage the cyclical industry low;
•
protect capacity by managing morale in slow market
conditions;
•
manage the impact of global comp onent shortages; and
•
acquire additional golden clients and monetise new
inventions.
Condensed segment report
R’000 31 March 2019 31 March 2018 31 March 2017
Segment revenue 206 565 235 775 279 419
Segment profit 20188 38375 22 232
Gross profit 53 744 64746 60 243
Gross margin % 26% 27% 22%
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
31 March
2019
31 March
2018
31 March
2017
22 232
38 375
20 188
R’000
SEGMENT PROFIT
Most of our market base comprises long-term clients, and during the year under review we continued to actively
pursue IoT opportunities through our dedicated team of specialised business developers.
Create – Investment in projects 2017-2019
R’000 31 March 2019 31 March 2018 31 March 2017
Etion Create
Investments less income on projects
– Cyber security 1 510 5 387 5 196
– COTS (VF360, VF370/ComX, AiDR) 9 212 4 933 1 659
10 722 10 321 6 855
Intercompany business
In its new positioning as a pure ODM that services
internal and external customers, Create undertook
the redesign of the Integrated System Display
product, with Digitise as its customer, a good
example of how we optimising Group assets.
Intercompany business also included Create
joining Secure on the development of the Solid
WebKey solution, with both of these being major
initiatives in implementing the Group’s corporate
strategy of leveraging Create’s capabilities. We
have also shifted the sale of secure
communications to Secure which is be ginning to
make inroads.
For more on Digitise and Secure, see below.
Operational focus for FY2019
While we did not run at full capacity due to reduced business during the year under review, our operational teams
introduced new sys tems and continued to improve on efficiencies, quality and delivery, in order to position with
Etion Create for the next upswing.
Our human capital
Attracting, retaining and motivating our skilled
people continues to be a priority for the business
– one that needs to be carefully balanced with the
strategic need to reduce costs.
For more on human capital, see page 32.
0
50 000
100 000
150 000
200 000
250 000
300 000
279 419
235 775
206 565
R’000
SEGMENT REVENUE
31 March
2019
31 March
2018
31 March
2017
Segment revenue Segment profit
Delivering value
OUR WORK / 43
44 / HKLM EXCHANGE
Merfe Resources is listed on the JSE in the enerl Mining
sector, nd their mjor shreholders re lencore B.V. nd the
ndustril Development orportion Limited.
HKLM provides Merfe with  full service oering cross the
production of their integrted report, yer-end nd interim
results. The services include project mngement, design,
typesetting, printing nd medi plcement.
OUR WORK (continued)
OUR WORK / 45
MERAFE RESOURCES
INTEGRATED ANNUAL REPORT 2018
2
Our business
We are listed on the JSE in the General Mining sector under the share
code MRF. Our business is the 20.5% participation through our wholly
owned subsidiary, Merafe Ferrochrome, in the earnings before interest, tax,
depreciation and amortisation (EBITDA) of the Glencore-Merafe Chrome
Venture (the Venture), in which Glencore Operations South Africa Proprietary
Limited (Glencore) has a 79.5% participation.
Our major shareholders are Glencore (Netherlands) B.V. (Glencore BV) and
the Industrial Development Corporation Limited (Industrial Development
Corporation). (See page 63 for more detailed shareholder information.)
The Merafe Group and Glencore (formerly Xstrata) formed the Venture in
July 2004 when we pooled our chrome operations to create the largest
ferrochrome producer in the world. Glencore’s merger with Xstrata took
place in May 2013.
Stakeholder relationships
We believe our commitment and achievements in terms of empowerment,
sustainability and good governance have allowed us to establish sound
relationships with our stakeholders. A diagram setting out the stakeholders
that Merafe and the Venture have identified, together with the issues we have
identified that could have a material impact on our stakeholders, can be found
on page 4.
Our shareholders
36%
29%
13%
22%
Glencore BV
SA free oat
Industrial Development Corporation
Oshore free oat
Governance and sustainability
Our commitment to good governance and sustainability is reflected in our
inclusion in the JSE Socially Responsible Investment (SRI) Index since its
inception in 2003. Since 2014 the SRI Index assessment was applied to
the top 100 companies on the JSE by market capitalisation and therefore
excluded small capitalisation companies. However, Merafe continues to apply
the principles of King IV and the SRI Index reporting criteria in its business.
Our material issues
Our material issues and our materiality determination process are set out on
pages 8 and 9.
2018 year in reviewORGANISATIONAL OVERVIEW
For more information on the assets we pooled, of which we have
retained ownership, and the additional assets we have invested in since
participating in the Venture, see the tables on pages 21 and 60.
Empowerment at 31 Decemb er 2018
of our Board
members are
female
of all our
employees are
female
50% 57%
of our Board
members are
black
of all our
employees are
black
88% 85%
OUR GROUP STRUCTURE
20.5%100%
100%
Glencore-Merafe Chrome
Venture formed
1 July 2004
Merafe Chrome and
Alloys Proprietary
Limited
Merafe
Resources
Limited
Merafe Ferrochrome
and Mining
Proprietary Limited
OUR APPROACH TO RISK
We recognise that risk is inevitable in business and that it goes hand in
hand with opportunity. We have established a risk management system
that allows us to pursue business opportunities and grow shareholder
value, monitor risk in our investments and develop and protect our people,
the environment in which the Venture operates and our reputation.
Our approach to risk management is discussed in the Transparency
and accountability section of this report on page 58.
KEY FEATURES
Revenue of
R5.6 billion
(2017: R5.9 billion)
EBITDA of
R1.35 billion
(2017: R1.7 billion)
Net profit of
R683 million
(2017: R914 million)
Fatalities:
1
(2017: 1 fatality)
Total dividend for 2018 of
R351 million
(2017: R301 million)
Headline earnings of
27.2c per share
(2017: 36.4c)
Ferrochrome sales volumes of
372kt
(2017: 375k t)
Ferrochrome production of
407kt
(2017: 395kt)
TRIFR of
3.39
(2017: 3.74)
Average European benchmark ferrochrome
price of
131 USc/lb
(2017: 142 USc/lb)
Successes
Revenue, EBITDA and net profit
Record production volumes
Nil debt at Merafe level
Improved TRIFR
Three-year wage agreements concluded
Record dividends declared
Challenges
Electricity pricing and availability
Commodity prices/demand volatility
Community issues
Operating expenses
Safety
MERAFE RESOURCES
INTEGRATED ANNUAL REPORT 2018
3
KEY FEATURES
Ferrochrome
The aim of our business model and strategy is to ensure that our
ferrochrome interests are profitable and sustainable and that they
add value to all our stakeholders. We achieve this by:
• extracting chrome ore from the Venture’s mines and beneficiating it
in our smelters in a safe and cost-efficientmanner;
• investing in projects such as the Bokamoso and Tswelopele
pelletising and sintering plants and the Lion ferrochrome plant
Phases I and II that improve theenergyand cost efficiency of the
Venture's ferrochrome operations;
• employing the Venture’s proprietary Premus technology to ensure
that it is the lowest-cost producer of ferrochrome in South Africa
and, despite rising energy costs in South Africa, remains in the
lowest quartile of the global ferrochrome production cost curve;
• using the flexibility provided by the Venture’s variety of technologies
to meet changing operating circumstances and customer
requirements; and
• focusing on reducing costs at the operations and head office.
The Company may also consider acquisitions outside of ferrochrome
on an opportunistic basis.
OUR BUSINESS MODEL AND STRATEGY
S
u
s
t
a
i
n
a
b
i
l
i
t
y
E
m
p
o
w
e
r
m
e
n
t
C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e
O
p
e
r
a
t
i
o
n
s
FeCr
MERAFE RESOURCES
INTEGRATED ANNUAL REPORT 2018
4
In this report we have identified material issues and risks that could impact the stakeholders of Merafe and the Venture. These issues and risks were identified
during engagements that Merafe and the Venture had with their stakeholders. We provide an overview of our stakeholders' issues on this page and a table
setting out our stakeholders, our methods of engaging with them and the issues arising from these engagements form part of our online report and can be found
on our online report under stakeholders. The material issues are set out on pages 8 and 9 of this report and our approach to risk can be found on page 58.
Safety statistics
2018 2017 2016 2015 2014
Fatalities 1 1 1 0 2
Total recordable injury frequency rate (TRIFR) 3.39 3.74 4.15 4.17 4.63
Cents
0
10
20
30
40
'18'17'16'15'14
8
21
27
36
14
%
0
5
10
15
20
25
30
'18'17'16'15'14
16
20
24
28
18
USC/1b
0
20
40
60
80
100
120
140
160
'18'17'16'15'14
119
96
131
142
107
R million
0
200
400
600
800
1 000
1 200
1 400
1 600
'18'17'16'15'14
306
501
478
1 400
956
Kilo tonnes
0
100
200
300
400
500
'18'17'16'15'14
334
393
407
395
377
0
1
2
3
4
'18'17'16'15'14
3.37
2.25
2.95
2.95
2.01
2.92
2.96
2.00
2.10
1.98
MWh per tonne of ferrochrome
Tonnes of ore per tonne of ferrochrome
THE VENTURE
Five-year historical
review of key indicators
Headline earnings per share EBITDA margin on revenue
Average European benchmark
ferrochrome price
Cash generated from
operating activities
Attributable production tonnes
Power and ore consumption
efficiencies
STAKEHOLDERS
MERAFE RESOURCES
INTEGRATED ANNUAL REPORT 2018
5
Impact of Rand/US
Dollar exchange rate
on cash flow
Impact of
ferrochrome prices
on cash flow
Risk management
Ability to repay
borrowings
Compliance with
covenants
Operational
performance
PROVIDERS
OF DEBT
Job creation
Regulatory
compliance
Tax compliance
Employment equity
Empowerment
credentials
Health and safety
GOVERNMENT
AND
REGULATORS
Health and safety
Remuneration,
incentives and
benefits
Career opportunities
Training and skills
development
MERAFE
EMPLOYEES
Sustainability
Accountability and
transparency
Risk management
Financial stability
Empowerment
credentials
Alignment of
interests
OUR
PARTNERS IN
THE GLENCORE-
MERAFE CHROME
VENTURE
HDSA procurement
requirements
Contract terms
Payment terms
SUPPLIERS
Regulatory
compliance
Governance
Internal controls
Transparency
ASSURANCE
PROVIDERS
Potential for future
returns
Impact of Rand/US
Dollar exchange rate
on cash flow
Impact of
ferrochrome prices
on cash flow
Project progress and
funding
Sustainability
Impact of industrial
action
Safety record
Good governance
SHAREHOLDERS
AND INVESTORS
GOVERNMENT
AND
REGULATORS
Job creation
Training and
development
Black empowerment
credentials
Employment equity
Environment
Regulatory
compliance
Compliance with
MiningCharter
Mining rights
Health and safety
COMMUNITIES
Infrastructure
development
Job creation
Enterprise
development
Local employment
opportunities
Portable skills
development
Local procurement
Stakeholder
responsiveness
Corporate social
investment
Environment
VENTURE
EMPLOYEES
Health and safety
Career opportunities
Training and skills
development
Consultation on
future operational
changes
Employment equity
Housing benefits
Workers’ rights
Remuneration,
incentives and
benefits
TRADE UNIONS
Training and skills
development
Consultation on
future operational
changes
Employment equity
Housing benefits
Workers’ rights
Remuneration,
incentives and
benefits
Health and safety
CUSTOMERS
Pricing
Product availability
Quality of product
Contract terms and
delivery
Reliability of supply
SUPPLIERS
Contract terms
Payment terms
HDSA procurement
requirements
Regulatory
compliance
Governance
Internal controls
Transparency
ASSURANCE
PROVIDERS
46 / HKLM EXCHANGE
OUR WORK (continued)
46 / HKLM EXCHANGE
OUR WORK / 47
48 / HKLM EXCHANGE
Royl Eswtini Sugr orportion (previously known s
Royl Swzilnd Sugr orportion Limited) is  listed
compny in Eswtini, nd the HKLM tem ssists the RES
in their reporting nd promotionl element reuirements.
We utilised  full spectrum oering in the production of
the integrted report, including project mngement,
copywriting nd editing, design, photogrphy, lyout,
proofreding nd printing.
RES’s 28 integrted report ws wrded  merit
wrd in the regionl compny ctegory t the hrtered
Secretries Southern Afric ntegrted Reporting Awrds.
OUR WORK (continued)
RSSC Integrated R eport 2018
17
RSSC In tegrated Repor t 2018
16
09
RSSC Integrated R eport 2018
OUR STRATEGY04
LOW COST/
HIGHVALUE?
We will have to be
patient and choos e
the low cost route,
which requires that
we re-o rganise
ourselves.
RATIONALISATION
We will have to
collaborate m ore,
shareresources
and operate in an
integrated fashi on.
OPERATIONAL
EXCELLENCE
Systems and
processes that will
enable us to do
business quicker and
more accurately will
enable us to operate
optimally.
CANE EXPANSION
As part of reducing
the unit cost, RSSC
and Outgrowers will
have to expand so
that we can produce
more, under the low
price environment.
Partnership s are a
prerequisite for a
win-win.
FACTO RY
EXPANSION
We will need bigger
factories for the ext ra
cane resulting from
RSSC and O utgrower
cane expansion.
Thiswill require skills
and funding.
STAKEHOLDER
SATISFACTION
The goal of creating
a sustainable
business will be
achieved, resulting
in profitability
and stakeholder
satisfaction.
LONG-TERM
VISION
In the year 2020,
once we get to
the summit of
Simama 20-20,
we can then be
ready to pursue
our long-term
vision to 2035.
Secure
more water
SIMAMA 20-20
An impor tant ongoing effor t at the OSM is
to communicate the underlying motivation
of Simama 20-20 – the aim of which isto
REDUCE THE GROUP’S UNIT COST
by 20% by 2020.
PASSION BRAVERYCOLLABORATION COMMITMENTMUTUAL SUPPORT
Grow more
cane to
match factory
capacity
Improve mill
performance
and efficiency,
particularly at
Mhlume
Expand the
Mhlume
factory in
a modular
fashion
Move towards
energy self-
sufficiency
and potentially
become an
exporter of
energy in the
long term
Produce
more
sugar and
ethanol
Focus on
operational
efficiency in
the production
chain
Grow the
business
through
appropriate
investment
and partnering
Ensure
that human
resources are
suitably skilled,
motivated and
aligned
Continue
to motivate
for a new
vision for the
Swaziland
sugar
industry
Given the
circumstances
prevailing in our
environment, our
plan in the short- to-
medium- term is to
address water security,
expand production and
optimise our operations
in order to effectively
lower our unit cost.
RSSC Integrated Re port 2018
1
Contents
E264m
CANE GROWING
CONTRIBUTION
(2017: E476M)
E369m
SUGAR MILLING
CONTRIBUTION
(2017: E343M)
E2 962m
REVENUE
(2017: E2 958M)
E301m
ATTRIBUTABLE TO
THE OWNERS OF
THEGROUP
(2017: E393M)
E8m
ETHANOL CONTRIBUTION
(2017: E59M)
E402m
PROFIT BEFORE TAX
(2017: E564M)
Highlights
List of achievements for the FY 2018
02
FY2018 was the first year of RSSC emerging from the harsh drought.
Production levels increased to within normal levels. Profits exceeded
budget despite sugar prices being lower than budget and the prior
year actuals.
SIMAMA 20-20
Our new business as usual
With all the turmoil in the sugar m arkets and the
exchange rate rollercoaster, there is nothing we
can control out there. What we can reason ably
influence though is our level of productio n and the
costs of production. We need suppor t from every
stakeholder to achieve our Simama 2 0-20 strategy,
which in turn guarantees value creation for all.
01
About this report
02
Highlights
2 Message from the Chairman
03
Who we are
4 Our vision
04
Our strategy
9 Message from the Managing Director
12 Our strategy
18 Stakeholder relations
22 Managing risk
05
Our business
28 Our value-creating business model
30 Background – The sugar industry
31 The Swaziland Sugar Association (SSA)
34 Human Resources (HR)
37 Employee wellness
39 Information Technology (IT)
40 Property Services
41 Public Affairs
06
Our performance
45 Our water resources
47 Our crop
48 Our factories
49 Ethanol production
51 Ethanol marketing
55 Procurement
55 IYSIS
57 Mananga Sugar Packers (MSP)
07
Our governance framework
60 Our Board of Directors
62 Governance overview
64 Our Board committees
66 Our executive management
67 Internal audit
08
Consolidated and separate financial s tatements
68 Consolidated and separate fi nancial statements
120 Abbreviations and acronyms
OUR WORK / 49
50 / HKLM EXCHANGE
Nedbnk (Swzilnd) Limited is n interntionl bnk tht is 
subsidiry of the Nedbnk roup of South Afric, nd s such,
it cretes vlue through constnt innovtion nd reinvestment.
Through orporte, Business, Retil nd SME bnking, it oers 
wide rnge of products coupled with exceptionl services such s
lending, globl business products, investments, lons, e-bnking,
sset-bsed finnce, tresury nd trnsctionl bnking.
HKLM ssisted Nedbnk Swzilnd with the cretion of their
28 integrted report, nd delivered the following services:
OUR WORK (continued)
50 / HKLM EXCHANGE
• p nlysis nd content dvisory services
• Design, lyout nd project mngement of
the reports
• Typesetting nd production of reports,
including visuls, grphs nd infogrphics
• PowerPoint presenttions
• Finncil dvertising
• opywriting, proofreding nd
sub-editing services
OUR WORK / 51
52 / HKLM EXCHANGE
The Lesotho Revenue Authority, in ccordnce with its own
dministrtive restructuring, tsked HKLM with producing 
report for 28-2 tht would reflect its first step on the
rod to integrted reporting, nd the emergence of integrted
thinking within the orgnistion. An importnt element of the brief
ws to provide  ulity document tht would be  substntil
improvement on its predecessor.
HKLM orgnised nd led n ntegrted Reporting workshop to
fmilirise the LRA’s mngement tem with the methodology,
reuirements nd processes reuired for integrted reporting.
Detiled nd relevnt uestionnires were prepred for one-on-one
interviews with key members of the mngement tem. Our design
tem pproched the project from the sme perspective employed
for  South Africn commercil entity, nd implemented the finl
pproved design s the copy ws being developed.
A modern, ttrctive nd visully ppeling report ws produced
tht reflected the forwrd-thinking of the LRA, while t the sme
time ccurtely presenting the orgnistion’s desire to cement
its rised nd now friendly profile mong its clients. The report
represents  se-chnge for the LRA, nd fulfilled the brief of
substntilly improving on the previous report. At the sme time,
it provides  meningful nd utilitrin tool for the orgnistion s
it pursues ongoing progress in integrted reporting.
OUR WORK (continued)
INTEGRATED REPORT 2019 1
CONTENTS
LRA AT A GLANCE 1
Our guiding policy
1
Our vision 1
Our mission 1
Our values 1
LRA footprint 2
ABOUT OUR REPORT 3
WHO WE ARE 4
Our five sources of capital
4
Our operating structure
5
Our operating environment
6
CHAIRMAN’S REPORT 8
COMMISSIONER GENERAL’S REVIEW 10
Our strategy – Rea Aha
10
Transforming the LRA
11
Our value-creating business model
14
Making trade-offs
16
Our performance
16
Revenue collection
17
Project management
20
International relationships
21
Corporate Social Investment
21
MANAGING RISK 24
OUR HUMAN CAPITAL 27
INFORMATION TECHNOLOGY (IT) 29
STAKEHOLDER ENGAGEMENT 30
INTERNAL AUDIT 32
GOVERNANCE 34
Our Board
34
Our Executive Committee (EXCO)
36
Board committees and roles
38
Executive Committees (EXCO) and roles
40
Board attendance – 2018/19
42
LRA AT A
GLANCE
OUR
GUIDING
POLICY
Building a service culture through
collaborative leadership
OUR
VISION
To be a leader in service delivery
in Lesotho and beyond, putting
the interests of people at the
heart of everything that we do
OUR
MISSION
To contribute to the economic
development of Lesotho through:
an environment that encourages our Clients
to voluntarily comply;
collaborative leadership;
capable, service-oriented and motivated
staff; and
continuous improvement in everything
that we do.
As the Lesotho Revenue Authority, we have been mandated
to assess, and collect revenue for the Government of
Lesotho, operating under the general supervision of the
Minister of Finance.
OUR
VALUES
We are responsive
We care
Service first
Shared ownership
M6.9 billion
Total revenue
collected
(FY2018/19)
(M5.9 billion - 2017/18)
3
Service
Centres
16%
Year-on-year
growth
13
Ports of entry
and exit
43%
Tax revenue
contribution to the
national budget
(FY2018/19)
(38 % – 2017/18)
630
Employees
6
Offices
M1 billion
more than
2017/18
collection
OUR WORK / 53
14 LESOTHO REVENUE AUTHORITY INTEGRATED REPORT 2019 15
Our value-creating business model
The LRA creates value through its restructured organisational framework, which comprises the Commissioner General’s (CG’s) office and
four divis ions. Together, they provide the inputs which are transformed by our integrated activities that enable us to deliver on our mandate
through the outcomes of our five capitals.
COMMISSIONER GENERAL’S REVIEW CONTINUED
Shareholder –
Ministry of Finance
•
Improved revenue
performance
– M6.9 billion in
revenue collected
•
Reduced cost of
collection 1 loti:5.6
lisente
Clients
•
Improved quality of
service
– Client satisfaction
rating of excell ence is
between 75%-80%
•
Improved compliance
culture through
introduction of VDP a
voluntary disclosure
programme
Employees
•
Skills advancement:
Achieved 73%
implementation of the
training plan
•
Improved workpl ace
environment
•
Improved morale a nd
motivation
– M5 million spent
on training
•
55% female
representation
Improved revenue
performance
Improved quality of
service
Reduced cost of
collection
Improved voluntary
compliance culture
In terms of our
4 STRATEGIC
OUTCOMES
INPUTS
– our capitals
To deliver
our coherent
actions as
OUTPUTS
Creating
VALUE
for our
Stakeholders
ACTIVITIES
Justifying small copy is
causing bad breaks
SOCIAL CAPITAL
Building internal trust
Building brand recognition and brand respect by
external stakeholders:
•
Rated A3 (high level of corporate reputation)
with Compa ny Reputation Index of 4%
SC
FINANCIAL CAPITAL
Building financial sustainability
Establishing a culture of voluntary compliance
•
Revenue collection: M6.9 million
•
Cost of collection: 1loti: 5.6 lisente
FC
HUMAN CAPITAL
Increasing staf f motivation:
•
Subsidised staff attended Inter-revenue
Games in Botswana
Increasing staff competencies:
•
M5 million spent on training
•
45% female representation
HC
INNOVATION CAPITAL
Creating a continuous improvement culture
Enhancing delivery channels
Three additional service channels:
•
Call centre
•
Instant chat
•
Online tax clearance certificate
IC
SPIRITUAL CAPITAL
Embodying a servant culture throughout the
organisation
Creating a sense of worthy purpose:
•
449 staff attended counselling sessions
SpC
Through strategic planning,
suppor ted by risk management and
strong governance, the LR A
promotes knowledge, skills,
expertise, reputati on and targeted
financial goals to implement projects
successfully by integrating the
activities of our five divisions
CG’s office – Stakeholder,
Marketing and Public Relations;
Delivery Unit; Internal Audit; and
Governance, Risk and Compliance
Client Services – Frontier Client
Services; Priority Client Services;
Aggregator services; General Client
Servi ces; Inland service centres a nd
Cashiering
Core Operations – Registration
and Licensing; Refunds Process and
Returns; Debt Manageme nt;
Customs Clearance; Tax Audit;
Compliance Risk Management and
Intelligence
Operations Support – Education;
Investigations; Information
Technology; Technical Advisory
Services; Records Management;
and Anti-smuggling
Business Enablement – Legal
Services; Finance; Human Capital
Management and Corporate Services
Revised performance
management system
Queue management system
and client feedback
introduced
Integrated Client-facing
processes to provide
seamless service
500 Clients attended the
LRA Lekhetho Khotla
( Ta x Expo )
Reduced turnaround time
for refund process
Improved accessibility of
services for Clients by
introducing online and TCC
payment referencing tool
54 / HKLM EXCHANGE
38 LESOTHO REVENUE AUTHORITY
INTEGRATED REPORT 2019 39 INTEGRATED REPORT 2019 40
COMMITTEES
ROLES
FOCUS
AREAS
in FY2018/19
MEMBERS
FOCUS
AREAS
for FY2019/20
Board committees and roles
The Finance and
Audit Committee
(FAC) met eight
times during the
year under review.
• Integrated reporting
• Review of the funding model
• Collection of Non-tax Revenue
• Disclosure requirements of King IV
The Human
Resource and
Remuneration
Committee
(HRRC) The
committee met
11 times during
the year
under review.
The Information and
Communication
Technology
Committee (ICTC)
• SAS
• Build an employer brand
• Establish a training academy
• Review Staff benefits
• Disclosure requirements of King IV
• Adoption of COBIT 2019
• Restructuring IT
• ASYCUDA stabilisation
• Expansion of service delivery
channels
• CMP Phase II
• Disclosure requirements
of King IV
The committee assists the Board
with oversight on human
resources management,
recruitment processes for
executive management, including
the Commissioner General,
remuneration matters and general
staff welfare matters.
The committee is responsible for
providing advice to the Board with
regard to monitoring the adequacy,
efficiency and effectiveness of the
LRA’s ICT policies and investments,
in as much as these may impact
the strategy, financial performance
and risk profile of the LRA. The
committee is also responsible for
ensuring the alignment of ICT
investments with the overall
LRA strategy.
The committee provides oversight
on the financial management of
the LRA including ensuring the
preparation of accurate financial
reporting and statements in
compliance with all applicable
legal requirements and accounting
standards. The committee is also
responsible for risk management
and oversight of the internal audit
function.
Mr. C.J. Ramolise
(Chairman)
Mrs. L. Leisanyane
Adv. L. Sephomolo KC
Mrs. T. Mojela
Mr. T. Khasipe
Mr. L. Mokaoane
(Chairman)
Mrs. L. Leisanyane
Mr. B. Phakoe
Mr. C.J. Ramolise
Mr. T. Khasipe
•
Approve policy to migrate from the COSO framework to
ISO 31000
•
Ensure independence of Internal Audit by separating it from
other assurance functions
• Set up a Governance risk and compliance function
•
Ensure financial sustainability of the Authority through
responsible financial management
• Empowerment of committee members in risk management
• Review of the Committee’s Charter
• Review of the Internal Audit Charter
• Design organisational structure (SAS)
• Review IPMS
• Develop an onboarding programme (service culture)
• Introduce a structured training programme
• Build internal trust and staff collaboration
• IT governance
• Restructuring IT
• Capacity building on cyber security
• ASYCUDA stabilisation
COMMITTEES
ROLES MEMBERS
Executive Committee (EXCO) and roles
Tender
Committee
The committee is responsible for
making necessary procurement
decisions in order to ensure that
goods and services procured in
the LRA achieve value for money.
(Chairperson) Head of
Business Enablement
Senior Manager
responsible for Finance
Manager Supply Chain
Head of Buying Division
GOVERNANCE CONTINUED
The operations of the LRA are governed by EXCO which comprises heads of
divisions and is chaired by the Commissioner General. The EXCO charter has
been developed. EXCO is designed to have sub-committees which assist it in
fulfilling its mandate. However, due to the restructuring process and the need to
align the EXCO sub-committees to the new structure, the Tender Committee
was the only sub-committee active during the period under review.
Mr. B. Phakoe (Chairman)
Adv. L. Sephomolo KC
Mrs. T. Mojela
Mr. T. Khasipe
OUR WORK (continued)
54 / HKLM EXCHANGE
38 LESOTHO REVENUE AUTHORITY
INTEGRATED REPORT 2019 39 INTEGRATED REPORT 2019 40
COMMITTEES
ROLES
FOCUS
AREAS
in FY2018/19
MEMBERS
FOCUS
AREAS
for FY2019/20
Board committees and roles
The Finance and
Audit Committee
(FAC) met eight
times during the
year under review.
• Integrated reporting
• Review of the funding model
• Collection of Non-tax Revenue
• Disclosure requirements of King IV
The Human
Resource and
Remuneration
Committee
(HRRC) The
committee met
11 times during
the year
under review.
The Information and
Communication
Technology
Committee (ICTC)
• SAS
• Build an employer brand
• Establish a training academy
• Review Staff benefits
• Disclosure requirements of King IV
• Adoption of COBIT 2019
• Restructuring IT
• ASYCUDA stabilisation
• Expansion of service delivery
channels
• CMP Phase II
• Disclosure requirements
of King IV
The committee assists the Board
with oversight on human
resources management,
recruitment processes for
executive management, including
the Commissioner General,
remuneration matters and general
staff welfare matters.
The committee is responsible for
providing advice to the Board with
regard to monitoring the adequacy,
efficiency and effectiveness of the
LRA’s ICT policies and investments,
in as much as these may impact
the strategy, financial performance
and risk profile of the LRA. The
committee is also responsible for
ensuring the alignment of ICT
investments with the overall
LRA strategy.
The committee provides oversight
on the financial management of
the LRA including ensuring the
preparation of accurate financial
reporting and statements in
compliance with all applicable
legal requirements and accounting
standards. The committee is also
responsible for risk management
and oversight of the internal audit
function.
Mr. C.J. Ramolise
(Chairman)
Mrs. L. Leisanyane
Adv. L. Sephomolo KC
Mrs. T. Mojela
Mr. T. Khasipe
Mr. L. Mokaoane
(Chairman)
Mrs. L. Leisanyane
Mr. B. Phakoe
Mr. C.J. Ramolise
Mr. T. Khasipe
• Approve policy to migrate from the COSO framework to
ISO 31000
• Ensure independence of Internal Audit by separating it from
other assurance functions
• Set up a Governance risk and compliance function
• Ensure financial sustainability of the Authority through
responsible financial management
• Empowerment of committee members in risk management
• Review of the Committee’s Charter
• Review of the Internal Audit Charter
• Design organisational structure (SAS)
• Review IPMS
• Develop an onboarding programme (service culture)
• Introduce a structured training programme
• Build internal trust and staff collaboration
• IT governance
• Restructuring IT
• Capacity building on cyber security
• ASYCUDA stabilisation
COMMITTEES
ROLES MEMBERS
Executive Committee (EXCO) and roles
Tender
Committee
The committee is responsible for
making necessary procurement
decisions in order to ensure that
goods and services procured in
the LRA achieve value for money.
(Chairperson) Head of
Business Enablement
Senior Manager
responsible for Finance
Manager Supply Chain
Head of Buying Division
GOVERNANCE CONTINUED
The operations of the LRA are governed by EXCO which comprises heads of
divisions and is chaired by the Commissioner General. The EXCO charter has
been developed. EXCO is designed to have sub-committees which assist it in
fulfilling its mandate. However, due to the restructuring process and the need to
align the EXCO sub-committees to the new structure, the Tender Committee
was the only sub-committee active during the period under review.
Mr. B. Phakoe (Chairman)
Adv. L. Sephomolo KC
Mrs. T. Mojela
Mr. T. Khasipe
OUR WORK / 55
56 / HKLM EXCHANGE
2019 Integrated report
Playing is
learning
Igniting potential through play
Cotlands 2019 Integrated report
otlnds is  registered non-profit orgnistion
committed to creting ccess to ulity ply-bsed
erly lerning experiences through toy librries nd
plygroups. otlnds cpcittes dults working
with children nd educte the prents of children
on  vriety of topics relted to erly childhood
development.
otlnds hs been  pro bono client of HKLM for
the pst 5 yers. We hve ssisted them with
the design nd production of their integrted report
for most of tht time, nd the 2 integrted
report gin pushed the boundries of cretivity. t
incorported vrious gmes to ssist the reders in
their understnding of otlnds s n orgnistion
nd the importnt role it plys in our society.
OUR WORK (continued)
56 / HKLM EXCHANGE
F Cotlands 2019 Integrated report
Table of contents
2
About this
report
1
Our
impact
Our
governance
View from
the top
24
Our fi nancial
performance
57
24 | Chairperson’s report
26 | CEO’s report
28 | Treasurer’s report
Situation of
children in
South Africa
4
How we
create value
34
Independent
assurance
report
66
36 | Our programmes, networks
and legal frameworks
40 | Our employees
42 | Our stakeholders
Cotlands
at a glance
6
9 | Our investors
12 | Cotlands in numbers
16 | Highlights of FY2019
18 | Our 83-year journey
46
Where to
fi nd us
Inside
back
cover
46 | Our governance and
safeguards (risks)
48 | Our material risks
49 | Our board of non-executive
directors
51 | Our governance structure
55 | Our executive
management team
F
Cotlands 2019 Integrated report
F
Cotlands 2019 Integrated report
Thank you to our
generous sponsors
Papercor | Law print | HKLM
Exchange | Untamed Potential
(Pty) Ltd | KPMG Services
Proprietary Limited | Singular
Systems (Pty) Ltd |
www.cotlands.org
Igniting potential
Igniting potential
through playthrough play
Playing is
learning
Cotlands 2019 Integrated report 1
Our impact
Cotlands 2019 Integrated report 1
50 058
toys lent
179 746
registered for
online training
42
toy libraries
207
employees
24 088
trainees
346 105
meals
427
playgroups
66 446
benefi ciaries
R508
per child per annum
in the toy library
programme
R4 715
per child per annum
in the playgroup
programme
20%
improvement in child
development outcomes
OUR WORK / 57
2 Cotlands 2019 Integrated report
About this report
strategy, footprint, stakeholders, investors, networks
and operating environment. It presents our highlights
andincludes messages from the chairperson, chief
executive o cer and treasurer.
Our business model and strategic objectives are
outlined as well as our performance against our
strategic goals and the activities planned for the
upcoming fi nancial year. We describe our
governance and the safeguards that are in place,
andcomprehensively report on our fi nancial
performance. Our report complies with the principles
and guidelines as provided by the International
Integrated Reporting Framework, Global Reporting
Standards and the International Financial Reporting
Standards (IFRS). Our statistics (non-fi nancial
information) were assured by KPMG and our newly
appointed auditors, LSG Integrated, undertook our
fi nancial audit. The Cotlands board has reviewed this
report and satisfi ed itself of the materiality, accuracy
and balance of the disclosures.
Assurances of our business practices, governance
and fi nancial information are provided through
compliance with audit and oversight from a number
of regulatory entities, including:
• The Non-profi t Directorate
• The Department of Social Development (DSD)
• The Department of Health (DOH)
• The Department of Labour (DOL)
• The South African Revenue Service (SARS)
Feedback on this report can be forwarded to our
chief executive o cer, Dr Monica Stach, either via
email to monicas@cotlands.org or telephonically
+2711 683 7201.
Cotlands is a registered non-profi t organisation committed to
creating access to quality play-based early learning experiences
through toy libraries and playgroups. We capacitate adults working
with children and we educate the parents of children on a variety of
topics related to early childhood development (ECD).
Our integrated report covers all the operations of
Cotlands for the period 1 April 2018 to 31 March 2019.
This integrated report is a sincere attempt to provide
a balanced, accurate and accessible account of our
activities to our stakeholders. The materiality was
determined in consultation with our employees,
benefi ciaries, partners, management and the board.
Topics that substantively a ect our work are
therefore included in this report, which provides an
overview of Cotlands’ 83-year journey as well as our
Cotlands 2019 Integrated report 3
2 Cotlands 2019 Integrated report
About this report
strategy, footprint, stakeholders, investors, networks
and operating environment. It presents our highlights
andincludes messages from the chairperson, chief
executive o cer and treasurer.
Our business model and strategic objectives are
outlined as well as our performance against our
strategic goals and the activities planned for the
upcoming fi nancial year. We describe our
governance and the safeguards that are in place,
andcomprehensively report on our fi nancial
performance. Our report complies with the principles
and guidelines as provided by the International
Integrated Reporting Framework, Global Reporting
Standards and the International Financial Reporting
Standards (IFRS). Our statistics (non-fi nancial
information) were assured by KPMG and our newly
appointed auditors, LSG Integrated, undertook our
fi nancial audit. The Cotlands board has reviewed this
report and satisfi ed itself of the materiality, accuracy
and balance of the disclosures.
Assurances of our business practices, governance
and fi nancial information are provided through
compliance with audit and oversight from a number
of regulatory entities, including:
• The Non-profi t Directorate
• The Department of Social Development (DSD)
• The Department of Health (DOH)
• The Department of Labour (DOL)
• The South African Revenue Service (SARS)
Feedback on this report can be forwarded to our
chief executive o cer, Dr Monica Stach, either via
email to monicas@cotlands.org or telephonically
+2711 683 7201.
Cotlands is a registered non-profi t organisation committed to
creating access to quality play-based early learning experiences
through toy libraries and playgroups. We capacitate adults working
with children and we educate the parents of children on a variety of
topics related to early childhood development (ECD).
Our integrated report covers all the operations of
Cotlands for the period 1 April 2018 to 31 March 2019.
This integrated report is a sincere attempt to provide
a balanced, accurate and accessible account of our
activities to our stakeholders. The materiality was
determined in consultation with our employees,
benefi ciaries, partners, management and the board.
Topics that substantively a ect our work are
therefore included in this report, which provides an
overview of Cotlands’ 83-year journey as well as our
Cotlands 2019 Integrated report 3
58 / HKLM EXCHANGE
Wholesle nd Retil SETA
HKLM ws tsked with producing  28 nnul report
for the W&RSETA, in ccordnce with the South Africn
Stndrds of enerlly Recognised Accounting Prctice,
the reuirements of the Public Finnce Mngement Act,
 nd the Skills Development Act, 8. An importnt
prt of the brief ws to produce n ccessible, visully
plesing report with  modern nd engging look nd feel,
which nonetheless conformed to the Annul Report uide
for Schedule 3A nd 3 Public Entities, s issued by
Ntionl Tresury.
T
U
R
N
I
N
G
A
N
E
W
P
A
G
E
F
O
R
T
H
E
W
&
R
S
E
T
A
2018/19
ANNUAL
REPORT
Highlights
REGISTERED OFFICE ADDRESS
1303 Heuwel Avenue
Riverside Office Park
Cnr Lenchen South & Heuwel Avenue
Ce n t urio n, 0157
CONTACT NUMBERS
Tel: 012 622 9500
WEBSITE ADDRESS
www.wrseta.org.za
ISBN
97 8 - 0 -621- 4 7412-1
2018/19 ANNUAL REPORTWHOLESALE & RETAIL SETA
MANDATORY
GRANTS
Expenditure
increased by
4% from
R187 million
2019:
R1.3 billion
2018:
R1.2 billion
REVENUE
2019:
R146 million
2018:
R127 million
ADMINISTRATION
EXPENDITURE
2019:
R528 million
2018:
R514 million
DISCRETIONARY
GRANTS
2019:
R868 million
2018:
R827 million
EXPENDITURE
2019:
1 845 867
2018:
1 637 381
NUMBER OF
PEOPLE TRAINED
Employed
2 457
Unemployed
2 505
LEARNERS
CERTIFIED
OUR WORK (continued)
58 / HKLM EXCHANGE
Our client ws guided through the process reuired to produce the desired report, with
cler, ongoing nd constructive enggement from the HKLM tem. A fresh nd engging
report ws produced tht conformed to the regultory reuirements of the client, while t
the sme time reflecting  untum lep in ulity, professionlism nd ppernce for
reporting by such governmentl entities.
HKLM ssisted with  rnge of services, including:
• Design, lyout nd project mngement of the report
• Typesetting nd production of the report, including visuls, grphs nd infogrphics
• opywriting, proofreding nd sub-editing services
F nd pge 
Contents
The achievements that are reflected in this
Annual Report would not have been
possible without the strategic leadership
of the Ministry and the Department,
ensuring that the W&RSETA executes its
mandate and produces a lasting legacy
of a skilled wholesale and retail workforce.
Presentation of the 2018/19 W&RSETA Annual Report to
the Minister of Higher Education, Science and Technology,
the Honourable Blade Nzimande
Dr Blade Nzimande
Hon. Minister of Higher Education,
Science and Technology
Honourable Minister
The Board and Management have great pleasure in presenting to
you the 2018/19 Annual Report of the Wholesale and Retail SETA
(W&RSETA) as prescribed by section 55 of the Public Finance
Management Act, Chapter 28 of the Treasury Regulations and the
Skills Development Act No. 97 of 1998. These statutes require a
public entity to submit an annual report to the Executive Authority,
National Treasury and Auditor-General of South Africa for tabling
to the Parliament of South Africa. The purpose of this report is
to provide the Legislature and the Executive Authority with
the following:
• The activities of the public entit y
• The audited performance information
• The audited annual financial statements
• The auditor’s report on the audited performance and annual
financial statements
The Annual Report reflects on the strides made by the W&RSETA and
the Wholesale and Retail Sector collectively in contributing to the
vision of the National Skills Development Strategy (NSDS) III for a
skilled and capable workforce that shares in, and contributes to, the
benefits and opportunities of economic expansion and an inclusive
growth path.
The achievements that are reflected in this Annual Report would not
have been possible without the strategic leadership of the Ministry
and the Department, ensuring that the W&RSETA executes its
mandate and produces a lasting legacy of a skilled wholesale and
retail workforce.
We recommit ourselves to accelerate our endeavours in skills
development to ensure that the W&RSETA contributes to the
aspirations of the National Development Plan (NDP) 2030.
Ms Y Mbane
Chairp erson
Mr T Mkhwanazi
Chief Executive Officer
STATEMENT OF RESPONSIBILITY AND ACCURACY
Statement of responsibility and confirmation of accuracy of the Annual Report for the year ended 31 March 2019
To the best of my knowledge and belief, I confirm the following:
• All information provided and amounts disclosed in the Annual Repor t are consistent with the annual financial statements audited by
the Auditor-General South Africa.
• The Annual Report is complete, accurate and is free from any omissions and errors.
• The Annual Report has been prepared in accordance with the Annual Report Guide for Schedule 3A and 3C Public Entities,
as issued by National Treasur y.
• The annual financial statements (Part E) have been prepared in accordance with the South African Standards of Generally Recognised
Accounting Practice (SA GR AP), the requirements of the Public Finance Management Act, 1999 and Skills Development Act, 1998.
The Accounting Authority is responsible for the preparation of the annual financial statements and for the judgements made in this
information.
• The Accounting Authority is responsible for establishing and implementing a system of internal control that has been designed to
provide reasonable assurance as to the integrit y and reliability of the performance information, the human resources information and
the annual financial statements.
• The external auditors are engaged to express an independent opinion on the annual financial statements.
• In our opinion, the Annual Report fairly reflects the operations, the performance information, the human resource information and
financial affairs of the entity for the financial year ended 31 March 2019.
Yours in skills development,
Presentation of the 2018/19 W&RSETA Annual
Report to the Minister of Higher Education,
Science and Technology, the Honourable Blade
Nzimande
Statement of responsibility and accuracy
PART A – GENERAL INFORMATION 1
1.1 General information 2
1.2 Sector industr y codes 3
1.3 Acronyms and abbreviations 8
1.4 Strategic over view 9
1.5 Organisational structure 10
1.6 Our Board members 11
1.7 Chairperson’s foreword 12
1.8 CEO’s overview 14
PART B – PERFORMANCE INFORMATION 17
2.1 Predetermined objectives 18
2.2 Strategic outcome- oriented goals 18
2.3 Performance oversight statistics 31
2.4 Summary of financial information 33
2.5 Performance information – programmes 36
PART C – GOVERNANCE 45
3.1 Introduction 46
3.2 Portfolio Committees 46
3.3 Executive Authority 46
3.4 Accounting Authority 46
3.5 Governance Framework 46
3.6 Members of the Board 46
3.7 Composition of the Board 47
3.8 Committees 52
3.9 Remuneration of Board members 52
3.10 Remuneration of the external Audit
Committee members 53
3 .11 Risk management 53
3 .1 2 Internal control 53
3 .1 3 Internal Audit
53
3 .1 4 Compliance with laws and regulations 53
3 .15 Fraud and corruption 53
3 .1 6 Audit Committee report 54
3 .1 7 Statement of compliance 56
PART D – HUMAN RESOURCES
MANAGEMENT 57
4.1 Introduction 58
4.2 Human resources oversight statistics 59
PART E – ANNUAL FINANCIAL
STATEMENTS 2018/19 62
Mr Buti Manamela
Hon. Deputy Minister of
Higher Education, Science
and Technology
GENERAL INFORMATION
OUR WORK / 59
60 / HKLM EXCHANGE
DIGITAL
REPORTING
60 / HKLM EXCHANGE
HKLM
EXCHANGE
is a strategic
stakeholder
communication
advisory firm
WHAT WE DO / 61
62 / HKLM EXCHANGE
App-bsed
integrted report
DIGITAL REPORTING (continued)
62 / HKLM EXCHANGE
DIGITAL REPORTING / 63
Animted
business model
App-bsed
integrted report
64 / HKLM EXCHANGE
DIGITAL REPORTING (continued)
“The most impor tant ingredient of our succ ess as
a construction company is our corporate memory.
As every one of our p rojects is different, the
challenge lie s in tendering at the right pric e, at
very low margin s. There is no room for error.
Ourrobust corp orate memory as a result of
long-term staff re tention and effective succe ssion
planning enables us to produce these results.”
“The succes sful delivery of projects h as
underpinned the strong operating performance of
the group this year, yet goes fu rther in establishing
the foundation for strong relationships with our
clients and other stakeholders.”
MIKE WYLIE
CHAIRMAN
LOUWTJIE NEL
CHIEF EXECUTIVE
OFFICER
2017 INTEGRATED REPORT
www.wbho.co.za
2017
INTEGRATED
REPORT
2017
12 INTEGRATED REPORT 2017
OPERATING CONTEXT
In this section, we present
a broad overview of the
construction environment
and the events and
circumstances impacting
the different regions,
markets and sectors in
which we operate.
SOUTH
AFRICA
The South Afri can economy conti nued to struggle thi s year
and growth remained negligible with a technical recession
experienc ed in the second quar ter of 2017. The currency has
been volatile i n response to numero us political event s, a lack of
clear policy from government and the consequential
downgrades from various international credit ratings agencies.
This environ ment is not conduci ve to job creation and bus iness
confidenc e remains low, resultin g in both local and fore ign
private investm ent being lacklu stre amid this uncer tainty.
The construction sector, which comprises approximately 3%
of the South Afri can economy and em ploys an estimated
1,4million people, ha s been particul arly hard hit: on the wh ole,
local revenu es and order books hav e shrunk furthe r and the
industry co ntinued to shed jobs i n order to match capacit y with
available projects. There is stiff competition for work particularly
within certain sectors, resulting in keen bidding, lower margins
and an increased prevalence of loss-making projects.
Sentiment towa rd the sector is largel y adverse from both
investors and f inancial institu tions and is reflec ted in the
performa nce of the Construct ion and Materials In dex in
compariso n to the JSE All-Share Ind ex.
GEOGRAPHIES
WBHO operates i n three distinct
geographi es: South Africa, the
rest of Africa a nd Australia,
servicin g a broad range of
building and civil engineering
markets.
HIGHLIGHTS2017
CONTENTS
4 About this re port
6 Business mo del
10 Material i ssues
12 Operati ng context
22 Managi ng risk
26 Stakeholder engagement
29 Value added st atement
32 Materia l issues
36 Strateg ic objectives
40 Year in review
46 Performan ce
47 Mess age from the Chairman
50 Mess age from the CEO
54 Operati onal review
72 CFO’s financial rev iew
78 Summarised financial
statements
88 Order boo k and outlook
94 Governanc e review
94 Message fro m the Lead
Independent Director
96 Board of Di rectors
98 Governa nce structure
99 Key eleme nts of governance
101 Key governance initiatives
104 Report from the Company Secretary
110 Co mmittee activitie s for the year
118 Remuneration review
IBC Statutory inform ation and
shareholders’ diary
www.wbho.co.za
REVENUE
2017: R31,9 billion
2016: R30,7 billion
DIVIDEND
2017: 475 cents
2016: 448 cents
2016: 1 322 cents
EARNINGS PER SHARE
2017: 1 346 cents
CASH
2017: R5,5 billion
2016: R5,8 billion
OPERATING MARGIN
2017: 3,1%
2016: 3,3%
CASH GENERATED
FROM OPERATIONS
2017: R1,1 billion
2016: R1,9 billion
WILSON BAYLY HOLMES-OVCON LIMITED
(Incorpor ated in the Republic of Sout h Africa)
(Registration number 1982/011014/06)
Share code: WBO
ISIN: ZAE000009932
(WBHO)
REGISTERED OFFICE AND CONTACT DETAILS
53 Andries St reet
Wynberg, Sandton, 2090
PO Box 531
Bergvlei, 2012
Telephone: +27 11 321 7200
Fax: +27 11 887 4364
Website: ww w.wbho.co.za
Email: wbhoho@wbho.co.za
COMPANY SECR ETARY
Shereen Vally-Kara
ACIS
AUDITORS
BDO South Afri ca Inc.
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
Rosebank Towers
15 Biermann Ave
Rosebank
Johannesburg, 2196
South Africa
Telephone: +27 11 370 5000
Fax: +27 11 370 5271
SPONSOR
Investec Bank Limited
SHAREHOLDERS’ DIARY
Financial year-end 30 June
Final results announced September
Integrated re port published October
Interim results announced Februar y
DIVIDEND
Interim
Approved February
Payable April
Final
Approved August
Payable October
STATUTORY INFORMATION
1223
44 INTEGRATED REPORT 2017
44 months
PROJECT VALUE
* 50% JOINT VENTURE
R952m
*
PROJECT DURATION
INTEGRATED REPORT 201744
App-bsed
integrted report
64 / HKLM EXCHANGE
INDUSTRY BODY MEMBERSHIPS
WHAT SETS HKLM APART?
• A highly ulified nd multidisciplinry tem, with specilised
experience in integrted nd sustinbility reporting
• A cn do ttitude
• We re nottemplte-driven swet shop
• -yer trck record of multiple wrd-winning projects
• We focus on reputtion building through ecient nd cretive
stkeholder communiction
ACCRA,
ADDIS ABABA,
CAPE TOWN,
GABORONE,
JOHANNESBURG,
LAGOS,
MASERU,
MBABANE,
NAIROBI.
issuu.com/hklmexchnge
To view this brochure online, plese visit
http://brochure.hklmexchnge.online
behnce.net/hklmprojects
fcebook.com/hklmexchnge/
linkedin.com/compny/hklm-exchnge
FIND US:
HKLM INTEGRATED AND SUSTAINABILITY REPORTING I STAKEHOLDER COMMUNICATION
pkirsten@hklmgroup.com
or cll Pul Kirsten on +2 ()83 8 84