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Equity Ownership

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BROAD-BASED BLACK ECONOMIC EMPOWERMENT

Transformation continues to be a key focus area and priority for the group. We see ourselves playing a role in terms of partnerships with government and other players in some of the programmes targeted by government, such as the increase in Eskom’s capacity to provide electricity for all South Africans, and through many of the products and services we provide such as cables, switchgear and transformers. The Altron group is mindful of its BBBEE compliance obligations as well as its equally important obligations to all stakeholders to unlock value through BBBEE.

Our BBBEE strategy is underpinned by an unwavering commitment to transformation from the group and operational leadership which was stated in our Beyond 2012 document (this is presently being updated at present). Management is committed to ongoing monitoring to steady progress against predetermined targets. This transformation strategy is driven by Altron’s transformation committee (“Transcom”), a subcommittee of Altron’s executive committee, which includes representatives of the underlying companies.

Transformation is similarly driven in each of the subholding companies by their own transformation committees, whose responsibilities include reporting on the BBBEE status to the operational and group boards, to ensure accreditation, as well as undertaking regular benchmarking studies through annual competitor analysis research.

At subsidiary as well as group level, the Altron board monitors progress on an ongoing basis through regular reporting by operations on their BBBEE performance, current status and progress.

The group was audited by Empowerdex in April 2015 and was rated a level 2 contributor in terms of the Department of Trade and Industry (dti) Codes of Good Practice (the codes).

The Altron Beyond 2012 document is currently being reviewed to reflect the recently gazetted codes. To ensure thorough understanding within the group of the codes, Altron embarked on an extensive programme to educate and train both its management and transformation practitioners in terms of the codes, and a full set of implementation guidelines has been developed internally to assist the group operations in meeting the targets set out in the scorecards for the different elements of the codes.

Transformation targets have also been incorporated into our performance scorecard for management. Following detailed research into various systems to effectively measure BBBEE performance, we implemented an internally-developed electronic group information system, Everest. In addition, to providing consolidated financial and non-financial data for the legislated empowerment scorecard, Everest is also a strategic business intelligence platform gathering meaningful, accurate and auditable information for enhanced stakeholder reporting, especially in terms of customers and suppliers.

Ratings

Ratings processes occur annually of all the companies within the group. The majority of companies have been rated throughout the group and results have ranged from AA (good BBBEE contributors) to C.

Partners

Altron has credible empowerment partners in the market, measured by their capacity to add value. Our anchor partnerships with Thebe Investment Corporate, Southern Palace Group and Power Matla within Altech and Izingwe Holdings, Izingwe Capital and Power Matla within Powertech continue to add significant value through the commercial input of our empowerment shareholders.

In line with Altron policy, this structure allows value to be added at operating level, in some cases governed by service level agreements as between Aberdare and Izingwe. Shareholder agreements specify the responsibilities of BBBEE partners including employment equity, skills development and career planning, affirmative procurement and customer relations.

Aberdare enjoys the participation and associated value add of having Izingwe’s executive chairman Sipho Pityana, financial director Tsakani Matshazi, and chief executive officer Ashley Alley on its board. Izingwe’s delivery and commitment to their partnerships has resulted in the company being identified as the primary partner of Altron’s Powertech subsidiary. This relationship entails a reciprocal commitment to focus on businesses that supply the power industry. We are confident that these mutually beneficial partnerships will continue into the future.

Powertech commissioned research during the review period to benchmark itself and a selected number of its subsidiaries against their main competitors, including multinationals, on BBBEE. Findings from this research indicated that Battery Technologies leads its competitors in ownership, skills development and employment equity, exceeding the board, top management and senior management targets in employment equity. Aberdare, Crabtree and Powertech Transformers also compared well in skills development, preferential procurement and enterprise development. In addition, the sector as a whole has not managed to attract black women representation in ownership and management.