“Transformation isn’t a future event it’s a present day activity.”

Jillian Michaels

BROAD-BASED BLACK ECONOMIC EMPOWERMENT VERIFICATION CERTIFICATE (BBBEE)

AEEI has evolved from a qualifying small enterprise to a generic enterprise in terms of section 9 of the Broad-Based Black Economic Empowerment Act, 2003 (No. 53 of 2003). In obtaining our BBBEE status, information was provided to Veridex BBBEE Verification Agents, an independent option-based verification agency accredited by the Independent Regulatory Board of Auditors.

This is the first year that AEEI qualified to be in the main rankings of the JSE Top 100 listed companies as we were previously classified as a qualifying small enterprise (QSE) (which is now termed exempt micro enterprises under the new BEE codes) and were exempted from participating as a QSE. The results were compiled after collecting data from companies listed on the main board of the JSE. The survey was aimed at providing the public with an overview of the empowerment status of JSE-listed companies in order to raise awareness of BBBEE.

As a South African business, the Group is committed to the principles of transformation and Broad-based Black Economic Empowerment (BBBEE) and over the years, AEEI’s commitment to transformation has seen us record strong BBBEE contributor status ratings. However, under the Department of Trade and Industry’s revised Codes of Good Practice, we have embarked on a project to re-assess our BBBEE strategies in order to retain our level 1 status.

The AEEI Group continues to place this high on the agenda in order to stay at the forefront of transformation to prevent failure to embrace transformation at a Group level and risk being sidelined by suppliers, government, customers and the communities. It is also a key consideration with customers when evaluating sourcing decisions.

Transformation in the Group is monitored and managed by each subsidiary Board and feedback is provided on a quarterly basis to the transformation committee.

OUR TRANSFORMATION PHILOSOPHY

AEEI’s aim is to be the employer of choice in the market place. AEEI continues to champion transformation within the Group and has since been recognised for its contribution to this process. For AEEI, transformation is beyond the need for BBBEE but is inclusive of transformation of culture, ethics and values of the organisation.

The BBBEE Codes of Good Practice, promulgated in 2007, emphasised the need to extend empowerment to a broader base of South Africans. They provided guidelines and a balanced scorecard to measure the transformation of a business entity from an empowerment perspective.

The revised Codes implemented by the Department of Trade and Industry signal major changes in the BBBEE environment making it easier for some companies to comply and more difficult for others.

As a generic enterprise, AEEI has to comply with all five elements under the new codes.

OWNERSHIP

Ownership is now considered a priority element.

As a JSE listed investment holding Company AEEI contributes to the empowerment of its underlying investments through its ownership credentials. It is an imperative that we continuously engage with and meet the needs of our major black shareholders in order for them to retain their shareholding in the Company. AEEI continues to engage with potential new black investors through various forums.

From the Top 20 shareholders in the Company, AEEI’s largest black shareholder currently owns 61.09% of the Company with 5% being held by the balance of the top 20 shareholders.

The table below shows the results of an independent analysis of AEEI’s ownership as at 31 August 2016:

MANAGEMENT CONTROL

Under the revised codes management control and employment equity has been collapsed into one element.

The Group has been successful in providing equal employment opportunities and in promoting internal employees and is committed to driving employment equity goals and enhancing diversity across the Group. The Group subscribes to the Employment Equity Act and senior executives work with the Department of Labour to ensure ongoing compliance and proactive implementation of regulations and plans. Open dialogue is encouraged between employees and management through our information sessions and committees.

All of the Group’s businesses have Employment Equity committee’s and employment equity plans in place. Each committee meets on a quarterly basis to review the reports submitted and an evaluation is done to check if the subsidiaries are on target to meet their goals. Identifying, attracting and retaining qualified candidates to support our employment equity targets remain a challenge due to the low turnover in staff. The smaller subsidiaries have a two-year equity plan, while the larger subsidiaries have a three-year equity plan in place. The transformation committee monitors and measures performance against these employment equity plans. Annual reports are submitted in accordance with the Employment Equity Act.

85.88% of the total Group’s workforce comprises historically disadvantaged South Africans (HDSA). HDSA top management is 2.65% in 2016 (2.26% in 2015) while HDSA in senior management is 2.94%.

Refer to employee diversity.

Employee turnover statistics for 2016:

As part of our Vision 2020 Vision which includes various targets as well as our target for our BBBEE rating under the new codes, we will continue to promote and drive excellence and opportunities across our workforce by:

  • Further promoting empowerment and transformation at all levels in the Group;
  • Fostering equality within our work environment irrespective of gender, race, creed and other forms of diversity;
  • Meeting employment equity targets;
  • Ensuring full compliance with the changing regulatory requirements on employment;
  • Further entrenching The Way We Work, the Code of Ethics and Code of Conduct across the Group; and
  • Look at implementing a standardised report to monitor our progress across the Group on our diversity status.

SKILLS DEVELOPMENT

Under the new codes Skills Development is a priority element.

The Group is committed to promoting employees within the Group and recruiting employees from the local communities in which it operates. Employees are the foundation of the Group’s success and the Group has bursary and learnership programmes in place that encourages growth and further education through various learnerships and development programmes for all employees. The employees in the Group are actively involved with the University of the Western Cape, the University of Cape Town (UCT), UCT’s Graduate School of Business (GSB), Stellenbosch University, Cape Peninsula University of Technology and various other tertiary institutions.

The Group complies with the Skills Development Act, 1998, whereby relevant reports are submitted timeously to the Sector Education and Training Authority (SETA). The skills development plans ensure that both the strategic needs of the business and the personal development needs of all employees are incorporated and that implementation is planned and budgeted for during the year.

The Group further subscribes to affirmative action measures to address any employment matters experienced by historically disadvantaged groups and individuals. The training and development of employees within subsidiary companies is an important strategic objective of the Group. Our skills development programmes, internal and external training as well as our learnerships aims to develop the required skills to support our employment equity plans.

Empowering women

The Group inspires and supports empowering women in all its business units. In order to retain women with career advancement opportunities, we continue the promotion and development of women and this continues to gain momentum in the Group. Special emphasis is being placed on building leadership capacity among women in the Group.

Diverse workforce

We remain committed to building a workforce that reflects the communities in which we operate. As one of the leading black empowerment companies we believe that diversity helps us maintain our winning edge. Throughout our businesses we strive to create an inclusive talent pool that taps into the potential found across race, gender, sexual orientation and demographics. We have intensified our efforts to entrench diversity and inclusiveness in all our business units through training, mentorship and recruitment programmes.

During the year under review 372 employees were trained (2015: 277) and a total of R2 372 218 (2015: R1 209 073) was spent on training.

Our Vision 2020 Vision includes various targets. Below are some high-level strategic focus areas:

  • Fostering equality within our work environment irrespective of gender, race, creed and other forms of diversity;
  • Personal development plans for employees;
  • Further promoting skills development and learnership programmes;
  • Promoting performance management;
  • Building leadership capacity among women;
  • Further engagement with our staff at all levels provides us with the necessary feedback and input in understanding and responding to improving their skills and training needs;
  • Ensuring that jobs are available for learners after completion of learnership programmes; and
  • Ensuring full compliance with the changing regulatory requirements and that all Workplace, Skills Plan, an Annual Training Report and Pivotal Report as per SETA needs have been developed.

ENTERPRISE AND SUPPLIER DEVELOPMENT

Preferential Procurement and Enterprise Development has been collapsed into one element – Enterprise and Supplier – under the new codes.

The Group’s current enterprise development initiatives assisted the development of HDSAs by providing opportunities and support including financial support. The Group’s preferential procurement contributed to the development of black-owned businesses by directing procurement spend to HDSA-owned businesses. All subsidiaries in the Group adhere to the Group procurement policy.

All of our suppliers are encouraged to be evaluated to determine the extent to which it has been transformed. Only BBBEE Verification Certificates from an accredited verification agency based on the final gazette BEE codes are acceptable.

We expect our enterprise development clients and suppliers to meet the same high standards of ethics, labour rights, health and safety, and the environment that we apply to our own operations and they are expected to follow our Enterprise and Supplier Code of Conduct.

Our business units continually work to improve sustainability standards and performance throughout their supply chain by:

  • Embedding sustainability into core business practices by integrating the Code of Conduct into contracts and assessing their sustainability performance through AEEI’s business scorecard;
  • Engaging with suppliers and enterprise development clients to improve performance through audits, corrective actions and follow-up engagement; and
  • Partnering to build capability through training and regular dialogue.

Localisation

Business units encourage enterprise development clients and suppliers to improve disclosures about their performance. This in turn helps us to support them in building their capability and improving their performance. Increasing transparency and addressing sustainability in the supply chain allows them to build customer trust, reduce costs, secure continuity of supply, respond to stakeholder needs, and the protection of our brand. Collaboration with suppliers also encourages innovation to develop more sustainable products for our customers.

We continue to pursue partnerships with key stakeholders and form joint venture initiatives to promote localisation. Our business units continue to engage their principles to identify opportunities for local manufacture and to promote skills transfer in line with South Africa’s National Development Plan.

Supplier development

We have recently initiated a supplier workshop and the feedback continues to be positive. This will be carried through in the following years:

  • All divisions in the Group are accelerating empowerment within their procurement operations;
  • In the Group’s supply chain, new suppliers are engaged with in terms of transformation and black economic empowerment; and
  • All divisions in the Group continue to work towards furthering their BBBEE compliance.

AEEI continues to look at ways to strengthen efficiencies within the traditional supplier base while also increasing capacity and procurement from non-traditional, historically disadvantaged service providers. The efforts remain essential to promoting sustainability and creating value among our stakeholders.

Guiding principles

The following principles apply to all our business units:

  • Operate ethically and in compliance with applicable laws;
  • Value employees, embrace diversity, and promote a fair and respectful workplace;
  • Provide a safe and healthy workplace and strive to reduce the environmental footprint of products and operations;
  • Be an asset to local communities by supporting programmes as well as ongoing economic development;
  • Promote engagement with and the development of diverse suppliers and enterprise development clients;
  • Strengthen management systems that govern responsible operations; and
  • Work with enterprise development clients and suppliers to improve performance.

The Group invested R1 486 513 in enterprise development projects compared to R1 243 882 in 2015. The Group’s preferential procurement from HDSAs increased to R325 023 410 from R210 394 000 in 2015.

Our Vision 2020 Vision includes various targets. Below are some high-level strategic focus areas:

  • Continue to operate ethically and in compliance with applicable laws;
  • Continue to value suppliers and embrace diversity;
  • Continue to provide a safe and healthy workplace and strive to reduce the environmental footprint of products and operations;
  • Support local communities;
  • Engage with and further develop diverse suppliers and enterprise development clients;
  • Strengthen management systems that govern responsible operations;
  • Evaluate and work with enterprise development clients and suppliers to improve performance;
  • Develop an Enterprise and Supplier Development plan for allowable imports;
  • Continue to procure from empowering suppliers and designated groups;
  • Develop a plan to Graduating an Enterprise Development beneficiary to Supplier Development;
  • Develop and define a matrix on “empowering supplier” for integration in the subsidiaries;
  • Negotiate shorter payment terms;
  • Continue to pursue partnerships with key stakeholders and form joint venture initiatives to promote localisation; and
  • Further identify opportunities for local manufacture and the promotion of skills transfer.

SOCIO-ECONOMIC DEVELOPMENT

For the AEEI Group, socio-economic development goes beyond legislative compliance. It recognises the rights and responsibilities of businesses within a broader societal context and reinforces the Group’s aim to implement a social contract between business, government and civil society.

The Group also continually strives to meet and exceed the benchmarks set by the BBBEE Codes of Good Practice.

The Corporate Social Investment programmes are managed through the Sekunjalo Development Foundation (SDF), and its aim is to create a sustained social impact through focused activities. The Group continues to invest in the upliftment of society and in playing a pivotal role in improving the quality of life among the disadvantaged communities and the Group is well aware of the critical role that a business has to play in the upliftment of society.

By developing entrepreneurs and supporting SMMEs and small business in the communities in which the Group operates, we in turn stimulate economic growth and create work opportunities. In addition to the value we create through our business units, we assist the communities through our enterprise development initiatives, which in turn contribute to economic development and transformation.

Under the new codes only annual contributions may be used for the financial period being assessed therefore cumulative is no longer acceptable.

Some of the Group’s socio-economic development initiatives include:

  • Learnership programmes to assist with elevating the skill levels of previously disadvantaged individuals;
  • Financial and in-kind contributions to the development of various early childhood development, youth centres and adult teacher training;
  • Organisational involvement and sponsorship of start-up workshops held annually;
  • Investment in a number of emerging, black-owned technology enterprises at an enterprise development level through business incubation programmes;
  • Access to resources that encourages innovation;
  • Support entrepreneurs as they extend their product offering.
  • Placement of interns in our various business units;
  • Full administration support and services – including infrastructure;
  • Assisting with start-up costs for new business ventures;
  • Infrastructure development; and
  • Bursary programmes.

The Group spent R14 754 652 on socio-economic development/corporate social initiatives in 2016 compared to R12 430 356 in 2015.

Our Vision 2020 Vision includes various targets. Below are some high-level strategic focus areas:

  • Continue to support the communities within which we operate;
  • Assist with access to resources – financial and in-kind;
  • Support entrepreneurs and assist with their development;
  • Assist with infrastructure;
  • Provide learnership programmes;
  • Provide bursaries;
  • Provide internship programmes;
  • Assist and provide investment for business incubation programmes;
  • Development of early childhood development, youth centres and adult teacher training;
  • Continue to provide administration support and services – including infrastructure;
  • Assisting with start-up costs for new business ventures; and
  • Infrastructure development.

 A detailed list of our corporate social initiatives can be found in social sustainability.