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Integrated annual report for the year ended

31 March 2014

Scaw is a leading South African-based integrated steel maker producing steel products for the mining, rail, power, offshore oil and gas, construction, commercial and other industrial sectors headquartered in Johannesburg, South Africa.

Scaw is a significant beneficiator of scrap metal and iron-ore in South Africa. The business’ product range philosophy extends beyond manufacture of primary steel products as the business is strongly focused and committed to the manufacture of secondary value-added steel products.

Scaw’s capabilities combined with its established track record have seen the group achieve numerous prestigious international accreditations. As a globally recognised leader in numerous specialised products Scaw serves markets across the globe.

The Scaw group is currently segmented into four key business units:• Grinding Media division

Manufacturing both forged and high-chromium casting grinding media for the African mining industry

• Rolled Products divisionManufacturer of low to high carbon long steel products for the construction and wire processing industry. The division also supplied product internally to its Grinding Media and Wire Rod Products division to produce secondary value add products for a diverse range of industries

• Cast Products divisionManufacturer of a wide range of low alloy cast steel products for mining, railway, power and general engineering applications

• Wire Rod Products divisionManufacturer and distributor of specialised wire ropes, chains and wire products. The division is globally recognised for its specialised products under the Haggie® and McKinnon® Chain brands

Additionally, given Scaw’s integrated supply chain, the business operates three large scrap collection and processing facilities in Germiston. These facilities known as the Scrap Processing division serve Scaw’s scrap metal (raw material) needs for the group. The Scrap Processing division also boasts the largest scrap shredder in Africa.

Scaw’s various divisions are further benefited from an extensive distribution network of sales branches and outlets that extend across southern Africa, Australia and North America.

Scaw services the general engineering industry throughout South Africa through its 14 distribution branches by offering lifting solutions and access to internationally recognised lifting components. In Australia, Scaw has chain manufacturing facilities and distribution facilities for crusher wear parts and excavator mining ropes. In addition, Scaw has sales engineers servicing North and South America mining regions.

In November 2012, the Industrial Development Corporation (IDC) acquired a 74% stake in Scaw from Anglo American plc, becoming the majority shareholder in the group. The remaining shareholding is held jointly between a BEE continuum comprising Izingwe Holding, Southern Palace and Shanduka, and Scaw Employee Share Ownership Programme (ESOP). The IDC also separately purchased Scaw’s international assets in Australia, Zambia, Namibia, North America and a 50% stake in Consolidation Wire Industries (CWI), a joint venture with ArcelorMittal South Africa. In addition, the IDC has a 31% stake in GSI Lucchini, a joint venture with Lucchini SpA. These international businesses are managed by Scaw South Africa given their synergistic fit with Scaw’s integrated model.

The IDC is South Africa’s largest development finance institution (DFI). As a development finance investment institution the IDC’s investment in Scaw provides the ideal platform to grow industrialisation across a wide spectrum of industries that Scaw serves. The IDC is intent on assisting the business in improving its competitive advantage in an increasingly global competitive environment. Notwithstanding the IDC’s stake, the group remains independently managed with its own executive.

This report is Scaw’s first integrated report, and presents a summary of our financial results and the economic, environmental, social and governance performance of the group for the year 1 April 2013 to 31 March 2014. Our integrated reporting is an entirely voluntary exercise as Scaw is not listed on the JSE Securities Exchange Limited (JSE) and therefore is not subject to JSE Rules and Regulations regarding integrated reporting. Scaw is regulated by the new South African Companies Act. The report is a reflection of our aspiration to adhere to the highest possible standards in all endeavours, including reporting to stakeholders.

W

ire Rod Products

Rolled P

rodu

cts

About this report 01Corporate information 01Process for defining report content 01Assurance 01Responsibility statement 01

Definitions 02

Group at a glance 03 – 17Highlights 03Footprint 042013 – a landmark year 06Our history 08Our operations 10Our markets and key products 13Our growth strategy 14Key performance indicators 16Our group structure 17

Building this integrated report 18 – 27

Stakeholder engagement 20

Operating context 22

Risk management 23

Key risks 24

Group supply chain 27

Leadership 28 – 43Directors and executive management 30Leading ethically 33Executive chairman’s report 34CEO’s report 36Acting CFO’s report 38

Sustainability framework 42 – 61

Governance 44Transformation at Scaw group 49Our people 53SHE 54Protecting our environment 60

Appendices 62 – 73

Audit and risk committee report 64GRI Index 65Contact details 73

www.scaw.co.za

FOCUSED ON OUR PRODUCT

Cas

t Pro

ducts

Grinding Media

Contents

Scaw intends to implement sustainability assurance in the next three to five years. The combined assurance model of the group in its current format is set out below:

Business processNature of assurance Status

Assurance provider

Annual financial statements

Financial statements

Assured Deloitte & Touche

B-BBEE BEE scorecard Assured Veridex B-BBEE Verification Agents (Practice No 931403)

Sustainability information

ISO 9000 series accreditedOHSAS 18001 accreditedISO 14001 Environmental Management System accreditedCarbon disclosure project

Assured SABS

DQS

DQS

DQS

All Scaw sites in South Africa are fully compliant.

Engage with us on:

Weblink provides reference to online disclosure

QR code links will take you to information suitable to view on your mobile device. Download an application for your phone, take a picture of the code and the relevant page will open in your browser window

Responsibility statementThe audit and risk and the social, ethics and transformation committees acknowledge responsibility on behalf of the board to ensure the integrity of the Scaw Integrated Report 2014. The committees reviewed and recommended the report to the board for approval.

Approved by

Ufikile Khumalo Markus Hannemann Nkosemntu NikaExecutive chairman CEO Audit and risk committee chairman

Corporate informationThe group’s executive directors are Ufikile Khumalo (executive chairman), appointed February 2013 and Markus Hannemann (CEO), appointed August 2013. Shaw Manyema is the acting CFO. They can be contacted at the registered office of the company.

Scaw’s 2013 integrated annual report is posted on the group’s website: www.scaw.co.za. The company’s contact details are disclosed on page 73.

Process for defining report contentScaw has considered and applied many of the recommendations contained in the Discussion Paper on the Framework for Integrated Reporting and the Integrated Report issued by the Integrated Reporting Council (IRC) South Africa in January 2011, and the International Integrated Reporting Framework issued in December 2013.

The company has also applied the principles in the King III Report. In respect of those which have not been applied, explanation is offered. The report was further prepared based on principles and guidance from the GRI (GRI G3.1 Guidelines) and is compiled based on a self-declared Application Level C. The GRI index is on pages 65 to 72.

The annual financial statements have been prepared in accordance with and comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and their interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), and the requirements of the Companies Act of South Africa 2008.

There was no change to any measurement techniques nor were there any restatements of previously reported information.

The report focuses on issues that materially impact Scaw’s ability to create and sustain value, and on which the company materially impacts in the course of business, and outlines how these issues have been integrated into its business strategy.

AssuranceThe business’ external auditors, Deloitte & Touche, have independently audited the annual financial statements for the year ended 31 March 2014.

Scaw Metals Group Integrated annual report 2014

Group at

a glanceB

uilding this integrated report

LeadershipSustainability fram

ework

Appendices

About this report

01

02 Scaw Metals Group Integrated annual report 2014

Group at a glance

Definitions

AMP Advanced Management ProgrammeBEE consortium Shanduka Resources Proprietary Limited, Izingwe

Holdings Proprietary Limited, and Southern Palace Group of Companies Proprietary Limited

board The board of directors of Scaw South Africa Proprietary Limited

Business principles Good Citizenship Business PrinciplesCEO Chief executive officer of Scaw Metals Group,

Markus HannemannCFO Acting chief financial officer of Scaw Metals Group,

Shaw ManyemaCompanies Act South African Companies Act 71 of 2008, as amendedCSI Corporate social investmentcurrent year The year ended 31 March 2014DED Department of Economic DevelopmentDFI Development finance institutionDTI Department of Trade and IndustryDRI Directly reduced ironEME Exempted micro enterprisesESOP Employee share option programmeExco Executive committee of Scaw Metals GroupGDP Gross domestic productGRI Global Reporting InitiativeIDC Industrial Development Corporation (of South Africa),

the largest state-owned national development finance institution that provides financing to entrepreneurs and businesses engaged in competitive industries, and is a majority shareholder in Scaw

IFRS International Financial Reporting StandardsJSE JSE Limited, incorporating the JSE Securities

Exchange, the main bourse in South AfricaKing III Report King Report on Corporate Governance for South Africa,

2009LTIFR Lost-time injury frequency rateLTI Lost-time injuryMAP Management Advancement ProgrammeMEIBC Metal and Engineering Industries Bargaining CouncilMI Material issueNEEC National employment equity committeePig-iron Crude iron that is the direct product of the blast furnace

and is refined to produce steelprevious year The year ended 31 March 2013PPPFA Preferential Procurement Policy Framework ActPPE Personal protection equipmentR&D Research and developmentSA South AfricaSAIFM South African Institute of FoundrymenSAPICS South African Production and Inventory Control SocietySEFA Small Enterprise Finance AgencySEIFSA Steel and Engineering Industries Federation of

South AfricaSETA Small Enterprise Training AgencyScaw or the company Scaw Metals GroupScaw Metals Group Comprises Scaw South Africa and Scaw International

Proprietary LimitedSHE Safety, health and environmentSHE plan Safety, health and environment management planTRIFR Total recordable injury frequency rateUnion Junction operations

The various operations and facilities at the Union Junction site, Germiston

VFL Visible felt leadership

year under review The year ended 31 March 2014

Scaw Metals Group is a proudly South African integrated steel maker and manufacturer of valued added secondary steel products, with an international footprint through established operations and distribution network. The company generates over R6 billion of turnover annually.

The group is backed by almost a century of experience; the group manufactures beneficiated steel consumables for the mining, rail, power, offshore oil and gas, construction, commercial and other industries. Scaw has a diverse range of products.

Our key numbers

More than 5 500 93 years On average across our product range in South Africa – our local content is in excess of

employees of experience and technical expertise 95%

750 000 The largest cast produced in our Union Junction weighs

The longest steel wire rope produced at our Steel Wire Rope factory in Johannesburg was

tonnes steel produced annually 30 tonnes 15 km23% Level 3 Only majorof sales are export BEE company level 3 B-BBEE steel producer in

South Africa

Fast facts

¼ Sole manufacturer in Africa of cast steel railway wheels

¼ The specialised stay cables supporting the Nelson Mandela bridge in Johannesburg were manufactured by Scaw

¼ Largest producer in the southern hemisphere of cast high-chrome grinding media

¼ Only significant producer in Africa of forged grinding media

¼ Steel Wire Rope operation is the largest integrated wire mill and ropery plant in the southern hemisphere

¼ Germiston Foundry is US-approved (American Association of Railroads) for the manufacture of locomotive frames, freight car side frames, bolsters and cast steel railway wheels

¼ Only manufacturer of PC strand in southern Africa ¼ Single largest recycler of scrap in the steel industry in South Africa

Key accreditation

¼ ISO 9000 series accredited ¼ OHSAS 18001 Occupational Health and Safety Management System accredited

¼ ISO 14001 Environmental Management System accredited

¼ German Homologation ¼ SANAS ¼ Det Norske Veritas (DNV) – Scaw’s McKinnon® Chain Operation in Vereeniging is approved to manufacture and supply premium chain products into the European oil and gas sector

¼ Berutsgenossenschaftliches Pruf und Zertifizier ungsystem (H-Mark): Scaw’s McKinnon® Chain Operation in Vereeniging is approved to manufacture and supply premium chain products into the European industrial sector

¼ AAR – Germiston Foundry is US approved for the manufacture of locomotive frames, freight car side frames, bolsters and cast steel railway wheels

Group at

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Appendices

03Scaw Metals Group Integrated annual report 2014

HighlightsGroup shareholding%

21%

74%

5%

● IDC● Main Street 510 Proprietary Limited ● ESOP

Italy

Piombino

GhanaTema

Namibia

ZambiaKitwe

Haggie North America – 100% ownedDistributes steel wire rope

Africa distribution – 100% ownedDistributes grinding media and wire rod products to the African mining industry (Zambia, Zimbabwe, Namibia, Ghana)

Scaw SA – 74% ownedManufactures and distributes full range of Scaw products

Consolidated Wire Industries – 50% ownedManufactures steel wire

Klerksdorp

South Africa

Mossel Bay Port Elizabeth

East London

Pietermaritzburg

Kuruman

Witbank

Rustenburg

Nelspruit

Richards Bay

Jacobs (Fibres)

Cape Town

Newcastle

ZimbabweKwe KweWindhoek

Gauteng province

Germiston (SWR, W&S)

Union Junction

Springs(Flather Bright

Steel)

BoksburgStandard

Vereeniging(Chain, CWI (50%))

Eclipse East

RSI & Leo Scrap


Group at a glance

Footprint

Australia

Sydney

Melbourne

Brisbane

Scaw’s international footprint facilitates access to key mining geographies and extends its distribution network

Australia operations – 100% ownedManufactures chain, distributes steel wire rope, chain, and crushing equipment

GSI Lucchini, Italy – 31% ownedManufactures grinding media for Europe, Middle East and West Africa

Zimbabwe

Perth

Key

Distribution

Joint venture

Grinding Media

Wire Rod Products

Cast Products

Rolled Products

Scrap Processing

Group at

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Appendices


Appropriately a changing of the guard heralded in a new leadership for the revitalised business. Ufikile Khumalo was appointed executive chairman of Scaw Metals Group on 1 February 2013, and is responsible for the strategic direction of the business. On 1 August 2013, Markus Hannemann was appointed CEO. Markus’ insight into the Scaw group stretches over a period of more than 20 years. During this period he has played a major leadership role in the vast majority of Scaw’s businesses both locally and internationally. Markus has been instrumental in the development and growth of Scaw’s Grinding Media businesses and provided leadership to stabilise the Wire Rod Products division in tough economic times.

As the Scaw group evolves, so too has our brand. The Scaw logo and corporate identity has been refreshed to reflect that the Scaw group recognises that business evolution is essential in fostering a sustainable and growth business.

Our new leadership team has embraced this next phase in the group’s development, and is spearheading a process of review and continuous improvement across all areas including manufacture, capacity, service delivery and resources in order to achieve our growth goals.

We remain cognisant of the need for transformation within the group through the empowerment and development of our people to ensure Scaw’s sustainability. To this end we began to facilitate a process of internal transformation during the year with our dedicated campaign, Siyaphambili, “We are moving forward”.

One of our core strategic objectives is to “stabilise, grow and harvest”. The IDC’s acquisition of a 74% shareholding in Scaw Metals Group in November 2012 marked the start of a new era of growth in the group’s history. Scaw is now positioned to further leverage on its established competencies. The group is aligned in its focus on unlocking efficiencies in our beneficiation business while looking to expand our facilities. Further, we are aiming to expand our already vast range of secondary products to achieve the dual purpose of increased exports while decreasing our reliance on raw material commodities such as iron ore and coal. The combination of these factors will help drive growth not only for Scaw, but for the local industry as a whole.


2013 – a landmark year

Group at a glance

Key highlights

¼ Consolidation of Scaw’s strategy to stabilise, grow and harvest, and its associated five key performance indicators

¼ Introduction of the Siyaphambili Transformation Project, including employee development of Scaw’s seven values

¼ Groundbreaking for a grinding media plant at Scaw Ghana

¼ 13% reduction in lost-time injury frequency rate and total recordable frequency rate in 2013

Key challenges

¼ Securing sufficient scrap metal of the correct quality in order to ensure the efficient and sustainable operation of Scaw’s numerous electric arc furnaces

¼ Sluggish and inconsistent demand from various domestic sectors such as the construction and rail sectors

¼ Demand for products from the mining competition with low priced imported finished products have also been negatively affected as a result of the recent labour disputes within the sector

¼ Scaw is an energy-intensive manufacturer with a large reliance on electricity. Ensuring stable electricity supply at competitive prices remains a challenge

¼ The upskilling of employees and retention of critical skills in a highly technology environment

Transformation

¼ The employment equity (EE) committee concluded a five-year EE plan, facilitated the Siyaphambili Transformation Project and formed a sub-committee focused on empowerment of women within Scaw

¼ Skills transfer programme formalised and started between Scaw’s Rolled Products division and Badische Stahl-Engineering (BSE), Germany

¼ Dedicated enterprise development (ED) committee established

¼ Dedicated CSI committee established

SHE

¼ Scaw’s overall safety performance showed a significant improvement during the year in review. The LTIFR decreased to 0,33 representing an improvement of 13% against the prior year of 0,38 and the TRIFR decreased from 1,80 to 1,39

¼ Flather Bright Steel operation recorded eight years without a single LTI

¼ Updated and published Scaw’s SHE Management Toolkit, an instruction manual to managers to lead the business to zero harm, and the Fatal Risk Standards manual aimed at eliminating and minimising high risks

¼ Three sites, including Union Junction, reported that no new cases of HIV/Aids were diagnosed

¼ Introduction of latest HIV medication regime including more than 80% of the workforce participating in voluntary counselling and testing, a wellness programme and the provision of ARVs for HIV infected employees

¼ No new diagnoses of tuberculosis in silica areas at Union Junction, Standard Foundry, Eclipse East and Boksburg Foundry

¼ First time achievement at Steel Wire Rope operation of zero elevated levels of lead in blood

¼ 2012 recycling and recovery project (500 tonnes per hour slag recycling plant at Union Junction) continued to perform well

¼ Participated for the first time in the Carbon Disclosure Project

¼ Hosted Scaw group Safety Summit focused on ensuring alignment across our diverse range of business. The Scaw group remains committed to making further gains in addition to the significant safety, health and environment improvements the group has made in the last few years

Group at

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Appendices


The group as we know it today was borne from the merger of two manufacturing giants. Scaw Metals and Haggie Limited Group merged in 1998 after Anglo American purchased a controlling interest in the Haggie Group. Coincidentally, both Scaw Metals and Haggie Limited were founded in the 1920s not far from one another in Johannesburg.

Scaw Metals originally manufactured steel ceilings and aluminium castings, soon evolving to serve the burgeoning gold mining industry in South Africa by producing cast steel grinding balls. Later a ball forge and merchant bar rolling mill was commissioned to meet the demands of the mining and construction industries. In the 1950s Scaw diversified into manufacturing cast steel for the rail industry. In the latter years Scaw made significant investments in modernising its melt shop number 3, rolling mills, grinding media and other facilities.

Haggie Limited started out supplying the South African mining industry with deep level mining ropes. The business rapidly expanded to see the group supply wire products both locally and internationally in the mining, construction, commercial, industrial, and offshore oil and gas sector. The group’s Haggie® and McKinnon® Chain brands are recognised globally. As a result these businesses export a significant proportion of these premium value-added products.

Today the group’s primary operations is still headquartered at its Union Junction premises in Germiston (opened in 1942). Importantly, the group corporate offices are situated nearby and opposite the original Haggie business opened in 1921. Illustrated below are Scaw’s key historical milestones.

1920s Scaw established as Steel Ceilings Aluminium Works (SCAW).Haggie, Son & Love opens the first steel wire rope making factory in the southern hemisphere

1936Haggie, Son & Love merges with Rand Ropes Limited, changing the name to African Rope and Wires (the present wire and strand factory)

1937Scaw Metals Limited lists on JSE

1942 Scaw Metals Limited moves to Union Junction site

1946 Scaw Metals Limited merges with Chamber of Mines Steel Products Company

1949 Scaw Metals Limited steel foundry commissioned

1950sScaw Metals Limited Meltshop number 1 continuous billet caster commissioned to manufacture billets. This was the first continuous caster in Africa

Scaw Metals Limited ball and merchant bar rolling mill commissioned

Scaw Metals Limited starts producing cast steel locomotive frames and other railway items

1964 Anglo American acquires Scaw Metals Limited


Our history

Group at a glance

1996 Haggie Rand North America established in Canada

1998 Anglo American acquires remaining share of Haggie Limited

1999Haggie Limited delisted from JSE

1980 Anglo American acquires 36% of Haggie Limited

Scaw Metals Limited commissions its first of three directly reduced iron ore plants to beneficiate iron ore to provide in-house sponge iron

Haggie Limited acquires 50% of Consolidated Wire Industries, which expands to Europe, Singapore and Australia

2002Scaw acquires PWB Chain in Australia

2006Scaw acquires AltaSteel Canada

2007Scaw corporatised into Scaw SA and empowered by sale of 21% to a BEE consortium and 5% to an employee share ownership scheme

2008Scaw acquires Ozz Industries (now Scaw Eclipse Foundries)

2009Scaw acquires Leo Scrap to further enhance the beneficiation of steel scrap

Anglo American announces intention to dispose of Scaw

2011Moly-Cop and AltaSteel sold

201274% of Scaw South Africa sold to the IDC

1968 The Morgan Mill commissioned at the Union Junction site to produce reinforcing bar and wire rod

1978African Rope and Wires changes its name to Haggie Limited and lists on JSE

1985The first automated High Chromium Grinding Media line commissioned

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Appendices


Business unit Competitive strengths Facilities Number of employees

Grinding Media

High-chromium grinding media ¼ Largest producer in the southern hemisphere and leading supplier in Africa

¼ Scaw’s technology licence with Magotteaux, a leader in the development and design of high-chrome grinding media, ensures world-class technical support and access to the latest technology

Forged steel grinding media ¼ The only significant producer of forged grinding media in Africa

¼ Facilities are located at Scaw’s Union Junction site in Germiston ¼ The forged plant operates three production lines and is vertically integrated, sourcing input barstock directly from Scaw Rolled Products

¼ Regional sales office, Scaw Ghana services the West African region

404

Rolled Products

¼ One of the largest suppliers of long steel products in South Africa ¼ All operational facilities are located at Scaw’s Union Junction site in Germiston in close proximity to the Scrap Processing division

¼ Rolled Products operates an ultra-high powered electric arc furnace to cast steel billets

903

Cast Products

¼ A leading manufacturer of specialised, high-quality cast products ¼ Germiston Foundry is one of the largest foundries in the southern hemisphere

¼ The foundry holds the American Association of Railroads’ approval for the manufacture of locomotive frames, freight car side frames, bolsters and cast steel railway wheels

¼ Five foundries located in South Africa. All of the foundries are serviced by in-house machine shops which include vertical and horizontal boring mills, CNC machining centres, lathes and planers• Germiston Foundry at Union Junction• Standard Foundry in Benoni• Boksburg Foundry in Boksburg• Eclipse East Foundry in Benoni

¼ In addition, it has distribution facilities across Australia

1 759

Wire Rod Products

¼ A leading manufacturer and distributor of specialised steel ropes, wire, strand and chains

¼ One of the largest and most advanced chain and fitting manufacturers in the world

¼ Steel wire rope is manufactured at the Jupiter Steel Wire Rope plant and distributed from distribution facilities across South Africa

¼ Wire and Strand is based in Germiston ¼ The Chain Products facility based in Vereeniging is one of the largest and most advanced chain and fitting manufacturers in the world

3 017

Scrap Processing division

¼ Operates the largest scrap shredder in Africa ¼ Procures and processes in excess of 500 000 tonnes of scrap metal for liquid steel production

¼ Operates from three sites in the Germiston area ¼ Scrap steel in all its forms is processed into the optimal size for the foundry’s various furnaces by a mega-shredder, shear and bailer at Union Junction

¼ Scrap processed at Union Junction is melted in electric arc furnaces to produce billets, castings and grinding media

¼ Rand Scrap and Leo Scrap businesses offer collection and service to scrap generators and purchase scrap from the public. Both these sites utilise scrap processing equipment feeding the output

321


Group at a glance

Our operations

Business unit Competitive strengths Facilities Number of employees

Grinding Media

High-chromium grinding media ¼ Largest producer in the southern hemisphere and leading supplier in Africa

¼ Scaw’s technology licence with Magotteaux, a leader in the development and design of high-chrome grinding media, ensures world-class technical support and access to the latest technology

Forged steel grinding media ¼ The only significant producer of forged grinding media in Africa

¼ Facilities are located at Scaw’s Union Junction site in Germiston ¼ The forged plant operates three production lines and is vertically integrated, sourcing input barstock directly from Scaw Rolled Products

¼ Regional sales office, Scaw Ghana services the West African region

404

Rolled Products

¼ One of the largest suppliers of long steel products in South Africa ¼ All operational facilities are located at Scaw’s Union Junction site in Germiston in close proximity to the Scrap Processing division

¼ Rolled Products operates an ultra-high powered electric arc furnace to cast steel billets

903

Cast Products

¼ A leading manufacturer of specialised, high-quality cast products ¼ Germiston Foundry is one of the largest foundries in the southern hemisphere

¼ The foundry holds the American Association of Railroads’ approval for the manufacture of locomotive frames, freight car side frames, bolsters and cast steel railway wheels

¼ Five foundries located in South Africa. All of the foundries are serviced by in-house machine shops which include vertical and horizontal boring mills, CNC machining centres, lathes and planers• Germiston Foundry at Union Junction• Standard Foundry in Benoni• Boksburg Foundry in Boksburg• Eclipse East Foundry in Benoni

¼ In addition, it has distribution facilities across Australia

1 759

Wire Rod Products

¼ A leading manufacturer and distributor of specialised steel ropes, wire, strand and chains

¼ One of the largest and most advanced chain and fitting manufacturers in the world

¼ Steel wire rope is manufactured at the Jupiter Steel Wire Rope plant and distributed from distribution facilities across South Africa

¼ Wire and Strand is based in Germiston ¼ The Chain Products facility based in Vereeniging is one of the largest and most advanced chain and fitting manufacturers in the world

3 017


¼ Operates the largest scrap shredder in Africa ¼ Procures and processes in excess of 500 000 tonnes of scrap metal for liquid steel production

¼ Operates from three sites in the Germiston area ¼ Scrap steel in all its forms is processed into the optimal size for the foundry’s various furnaces by a mega-shredder, shear and bailer at Union Junction

¼ Scrap processed at Union Junction is melted in electric arc furnaces to produce billets, castings and grinding media

¼ Rand Scrap and Leo Scrap businesses offer collection and service to scrap generators and purchase scrap from the public. Both these sites utilise scrap processing equipment feeding the output

321

Group at

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Appendices


Distribution networkScaw boasts a strong distribution network with 14 branches across South Africa that are primarily focused on products for lifting purposes for the mining and industrial applications. The distribution network sells both steel wire rope as well as chain products. Besides adding value through cutting, stocking and assembling, these branches allow the Scaw group to position its products better and compete more effectively with imported wire rope and chain products that are offered by independent distributors.

Combined with subsidiaries wholly owned by the IDC which Scaw manages, the distribution network stretches beyond South Africa with outlet facilities in Australia, North America, Namibia, Zambia, Ghana and Zimbabwe.

Our operations continued

Vertically integrated supply chainBenefits

¼ Supply assurance and flexibility ¼ Product mix optimisation ¼ Quality ¼ Cost optimisation ¼ Maximum local content


Steel and processed scrap supply

Scaw recycles 460 kt of scrap per year

Downstream beneficiation accounts

for c.50% of steel products produced

Grinding Media Wire Rod Products

End products

Rolled Products

External sales

Cast Products


Group at a glance

Market sector Product category Operation

Mining High-chrome grinding balls Grinding MediaForged grinding balls Grinding MediaHaggie® mine winding steel wire ropes Steel Wire RopesHaggie® shovel ropes Steel Wire RopesHaggie® dragline ropes Steel Wire RopesHaggie® hoist ropes Steel Wire RopesHaggie® scraper rope Wire & StrandGround engaging tools Cast ProductsDragline wear parts and bucket components Cast ProductsMcKinnon® chain Chain ProductsMill liners Cast ProductsFlexible rock anchors PC strand Wire & StrandFixed rock anchors and roof bolts Rolled Products

Construction Reinforcing bar and coil Rolled ProductsLow-carbon wire rod Rolled ProductsHigh-carbon wire rod Rolled ProductsSteel sections Rolled ProductsSteel rounds Rolled ProductsPrestressed concrete strand and wire Wire & StrandLintel wire Wire & StrandHigh-chrome grinding balls Grinding MediaEarthmoving wear parts Cast Products

Rail Cast wheels Cast ProductsSide frames and bolsters Cast ProductsLocomotive frames Cast ProductsRail couplers Cast ProductsPrestressed concrete wire and strand for sleepers Wire & Strand

Power Grinding elements Cast ProductsEngineering spares – spiders, yokes, air seals, throat rings Cast ProductsHigh-chrome grinding balls Cast ProductsACSR wire Steel Wire Ropes

Industrial McKinnon® chain Chain ProductsMaxAlloy® chain accessories and masterlinks Chain ProductsSpring steel wire Wire & StrandHigh-carbon weave wire Wire & StrandBedding spring wire Wire & StrandBright bar Flather Bright SteelGirth gears Cast ProductsAdjustment rings Cast ProductsGeneral engineering ropes Distribution networkCrane ropes Distribution networkLifting slings Distribution networkWire rope fittings Distribution networkRigging accessories and tools Distribution networkLifting equipment Distribution networkRAM® natural fibre and synthetic ropes, cords and twines Fibre products/Distribution

networkMarine and offshore

Fishing ropes Distribution networkRiser tensioner lines Steel Wire RopesDrill lines Steel Wire RopesAnchor lines Steel Wire Ropes

Our markets and key products

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Appendices


Stabilise, grow and harvestSix strategic pillars

1. Building a performance culture 2. Skills development 3. Employee relations

¼ Effective change management ¼ Evolution of the corporate culture ¼ Realigning corporate structures to execute business strategy

¼ Unlock the potential of Scaw’s people

¼ Boosting the competitiveness of the group

¼ Provide training and development opportunities to staff

¼ Ensure relevant skills set for economic competitiveness

¼ Keep abreast of market and technological trends

¼ Maintain high-quality standards ¼ Improve performance ¼ Increase group competitiveness ¼ Contribute to the local steel industry initiatives

¼ Improve overall stakeholder relationships

¼ Build a strong, collaborative industrial relations environment

Progress in FY2013/14 Progress in FY2013/14 Progress in FY2013/14

¼ Introduced the Siyaphambili Transformation Project

¼ Five-year EE plan concluded ¼ Women’s EE committee established

¼ Employment equity targets implemented

¼ ED committee and programme implemented and achieved

¼ 11 EDs identified with partner finance

¼ Skills transfer programme formalised

¼ CSI committee established ¼ Introduction of new corporate identity

¼ Achieved a level 3 B-BBEE rating

¼ Review of skills development programmes, productivity and overall competitiveness in local and global industry

¼ Investment in sustainable development of employees

¼ Skills transfer programme formalised

¼ 250 employees received training during the year on business integrity and 237 received competitions law training

¼ Updated and published Scaw’s SHE management toolkit

¼ Introduction of latest HIV medication regime

¼ 94 employees trained in Germany at the BSE Academy

¼ Introduced bridging structures to connect employees to management and so ensure more regular interaction with union representatives including:• Management union meetings

and forums held monthly• National Forum meetings held

with the CEO quarterly ¼ Enhanced platforms that impact directly on employees, eg EE and skills development programmes

¼ Launched workers’ indaba

(Refer to transformation page 49 for further details)

(Refer to transformation, our people, SHE on pages 54 to 59 for further details)

Focus in FY2014/15 Focus in FY2014/15 Focus in FY2014/15

¼ Further roll-out of Siyaphambili actions

¼ Increase impact on enterprise development

¼ Engagement with international technical partners to transfer skills

¼ Evaluate effectiveness of interaction forums and improve where necessary

¼ Extend workers’ indaba divisionally


Our growth strategy

Group at a glance

Stabilise, grow and harvest continuedSix strategic pillars continued

4. Investing to develop a sustainable and growing business

5. Product rationalisation 6. Geographical diversification

¼ Remain at the forefront of steel products manufacture

¼ Increase manufacturing capacity ¼ Assure an eco-friendly, sustainable business

¼ Support the beneficiation of scrap metal as a key to sustaining the steel industry in South Africa

¼ Continue to advance value addition of steel products

¼ Enterprise development

¼ Extend profitable product range to maintain competitiveness

¼ Expand capacity at the foundry operations to extend the rail product offering

¼ Continue the beneficiation process at various business units, particularly Grinding Media

¼ Fully utilise scrap collection capacity to improve scrap availability

¼ Expansion into Africa ¼ Capitalise on increased demand in SADC and West African regions driven by growth in their local construction and mining industries

¼ Continue to expand sales into Europe, USA and South America

Progress in FY2013/14 Progress in FY2013/14 Progress in FY2013/14

¼ R100 million growth project under way in Vereeniging to increase high grade chain capacity to be completed in 2015

¼ R170 million committed to increase the capacity for railway products at Union Junction operations to be completed in 2014

¼ Introduced sustainability projects such as R210 million dust extraction system at Union Junction to be completed in 2015

¼ Improved scrap sourcing ¼ Significant improvements made in various divisions against difficult global conditions

¼ Opened sales office in Ghana ¼ Groundbreaking for the grinding media plant in Tema

¼ R400 million growth project under way to build a new grinding media plant in Ghana to be completed in 2015

¼ Achieved German homologation for prestressed strand product

Focus in FY2014/15 Focus in FY2014/15 Focus in FY2014/15

¼ Improving Scaw’s technical capability and competitiveness

¼ Work with strategic technical partners and customers to manufacture new products

¼ Implement Ghana project expansion

¼ Grow sales further into Europe, USA and South America

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Being globally competitive ¼ Improving operational efficiencies across the business

¼ Driving cost reductions and reducing wastage ¼ Improving quality ¼ Improving our delivery performance

Portfolio alignment ¼ Driving capacity expansions in core markets and boosting Scaw’s position

¼ Seeking strategic upstream and downstream investments to strengthen our core

¼ Focusing on exposure to increasing value addition ¼ Seeking portfolio optimisation

Acting responsibly ¼ Maintaining an excellent safety record ¼ Complying with updated environmental legislation ¼ Improving the organisational culture of adherence to standards

Unlocking people potential ¼ Improving the industrial relations climate ¼ Entrenching a performance-oriented workforce culture

¼ Investing in our skills base ¼ Retaining skills in the organisation

Adding value beyond products ¼ Understanding customer requirements and market opportunities

¼ Offering customers increased value by offering multiple products across Scaw’s range

¼ Offering more compelling products and services (technical service and product support)

¼ Prioritising product innovation and research and development

Scaw’s strategy emanates from shareholder values of striving to build a sustainable and growing business. These values guide the group’s strategy. Likewise, the business has implemented KPIs that foster alignment in achieving targets and goals across our diverse group.

The five pillars below form the basis of Scaw strategic goals:

GLOBALLY COMPETITIVE

PORTFOLIO ALIGNMENTTO KEY MARKETS

ACTING RESPONSIBLY

UNLOCKING PEOPLE POTENTIAL

ADDING VALUE BEYOND PRODUCTS


Group at a glance

Key performance indicators

Main Street 510 (Pty) Limited(South Africa)

ESOP Trust

Scaw South Africa (Pty) Limited(South Africa)

Scaw Ghana Limited

(South Africa)

Ozz International Limited

((BVI) including Crushing Equipment Australia)

Grinding Media

Wire Rod Products

Rolled Products

Scrap Processing

Division

Cast Products

38,89% 33,33%

21,0%5,0%74,0%

27,78%

Izingwe Holding (Pty) Limited(South Africa)

Southern Palace Holdings (Pty) Limited

(South Africa)

Shanduka (Pty) Limited(South Africa)

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Our group structure

Building this integrated report

Stakeholder engagement 20Operating context 22Risk management 23Key risks 24Group supply chain 27


Building stakeholder relationships and partnerships is a key strategic priority for Scaw. Information gathered as part of our various stakeholder engagement processes feeds directly into decision making and drives our business strategy. Our public affairs and communications department is key in driving stakeholder relations for the group. We aim to engage with our stakeholders through ongoing effective and transparent communication.

Stakeholder Type of engagement Issues raised in FY2013 Action taken

Employees

¼ CEO’s newsletter, Newsflash ¼ Employee magazine, The Junxion ¼ Internal portal ¼ Campaigns that make use of mass emails, posters, surveys and workshops

¼ SHE memos and meetings ¼ Visible leadership walkabouts that enable senior personnel to engage directly with workers on the shop floor

¼ Workers’ indaba ¼ Individual perception surveys ¼ ESOP ¼ Employment equity national structure

¼ Group strategy and development plans ¼ Group performance feedback ¼ Transformation and change management ¼ Revision of ESOP ¼ Transformation, EE policies and targets ¼ Recruitment and promotion policies ¼ Plant-specific issues on the workplace environment and employee benefits

¼ Individual performance management ¼ Safety in the workplace

¼ Through the Siyaphambili programme, Scaw has ongoing communication with employees to implement recommendations from the surveys

¼ ESOP trust is under review by the board and options to enhance its value will be assessed

¼ Five-year EE plan has been registered with the Department of Labour

¼ Performance KPIs have been rolled out across the group

Board directors

¼ Board packs ¼ Meetings ¼ Integrated report ¼ Website

¼ Outlook for the group ¼ Financial performance ¼ Implementation of strategy ¼ Carbon footprint ¼ CEO succession

¼ Written report provided after each engagement ¼ New CEO appointed ¼ Maiden integrated annual report in 2014

Trade unions

¼ Meetings ¼ Plant indabas

¼ Revising ESOP trust rules to deliver tangible benefits to workers

¼ Plant-specific issues on the workplace environment and employee benefits

¼ Varies across 12 sites in South Africa

Industry associations

¼ Meetings ¼ Conferences ¼ Working committees

¼ Industry trends in legislation and labour practices, economic indicators for the industry and consumer inflation movements

¼ Participation in industry policy forums ¼ A joint labour and employee initiative under the Metal and Engineering Bargaining Council

¼ Scaw’s increasing role with industry associations has led to the appointments of the executive chairman, CEO, executive head of operations, executive head of human resources and the general manager of Cast Products assuming leadership roles with key associations including SEIFSA

Government and regulatory bodies

¼ Meetings ¼ Plant tours ¼ PPPs ¼ Annual environmental stakeholder forums at Union Junction

¼ Anti-dumping ¼ Scrap metals legislation ¼ Environmental compliance ¼ Local manufacturing and PPPFA ¼ Outbound investments ¼ Water usage

¼ Above 95% local content on rail products ¼ Continued engagement at ministerial level

Customers

¼ Meetings ¼ Independent surveys ¼ Advertising ¼ Plant visits ¼ Exhibitions and trade shows ¼ Website

¼ Complicated sales structure and unclear contact persons

¼ Brand misunderstanding ¼ Brand reputation

¼ Clarified sales and marketing structures and appropriate contacts displayed on website

¼ Ongoing internal sales administration training to direct customers accordingly

¼ Reintroduction of Haggie® and McKinnon® product brand. Consistency in distribution of partner brands

¼ Ongoing customer engagement addressing any reputational issues

Communities(see also SHE on page 54)

¼ Public forums ¼ Partnerships ¼ Meetings ¼ Website ¼ Annual environmental stakeholder forums at Union Junction

¼ Operational and environmental performance ¼ Projects to support community upliftment through our CSI programme

¼ Partnerships formed with various communities where Scaw operates


Stakeholder engagement


Building stakeholder relationships and partnerships is a key strategic priority for Scaw. Information gathered as part of our various stakeholder engagement processes feeds directly into decision making and drives our business strategy. Our public affairs and communications department is key in driving stakeholder relations for the group. We aim to engage with our stakeholders through ongoing effective and transparent communication.

Stakeholder Type of engagement Issues raised in FY2013 Action taken

Employees

¼ CEO’s newsletter, Newsflash ¼ Employee magazine, The Junxion ¼ Internal portal ¼ Campaigns that make use of mass emails, posters, surveys and workshops

¼ SHE memos and meetings ¼ Visible leadership walkabouts that enable senior personnel to engage directly with workers on the shop floor

¼ Workers’ indaba ¼ Individual perception surveys ¼ ESOP ¼ Employment equity national structure

¼ Group strategy and development plans ¼ Group performance feedback ¼ Transformation and change management ¼ Revision of ESOP ¼ Transformation, EE policies and targets ¼ Recruitment and promotion policies ¼ Plant-specific issues on the workplace environment and employee benefits

¼ Individual performance management ¼ Safety in the workplace

¼ Through the Siyaphambili programme, Scaw has ongoing communication with employees to implement recommendations from the surveys

¼ ESOP trust is under review by the board and options to enhance its value will be assessed

¼ Five-year EE plan has been registered with the Department of Labour

¼ Performance KPIs have been rolled out across the group

Board directors

¼ Board packs ¼ Meetings ¼ Integrated report ¼ Website

¼ Outlook for the group ¼ Financial performance ¼ Implementation of strategy ¼ Carbon footprint ¼ CEO succession

¼ Written report provided after each engagement ¼ New CEO appointed ¼ Maiden integrated annual report in 2014

Trade unions

¼ Meetings ¼ Plant indabas

¼ Revising ESOP trust rules to deliver tangible benefits to workers

¼ Plant-specific issues on the workplace environment and employee benefits

¼ Varies across 12 sites in South Africa

Industry associations

¼ Meetings ¼ Conferences ¼ Working committees

¼ Industry trends in legislation and labour practices, economic indicators for the industry and consumer inflation movements

¼ Participation in industry policy forums ¼ A joint labour and employee initiative under the Metal and Engineering Bargaining Council

¼ Scaw’s increasing role with industry associations has led to the appointments of the executive chairman, CEO, executive head of operations, executive head of human resources and the general manager of Cast Products assuming leadership roles with key associations including SEIFSA

Government and regulatory bodies

¼ Meetings ¼ Plant tours ¼ PPPs ¼ Annual environmental stakeholder forums at Union Junction

¼ Anti-dumping ¼ Scrap metals legislation ¼ Environmental compliance ¼ Local manufacturing and PPPFA ¼ Outbound investments ¼ Water usage

¼ Above 95% local content on rail products ¼ Continued engagement at ministerial level

Customers

¼ Meetings ¼ Independent surveys ¼ Advertising ¼ Plant visits ¼ Exhibitions and trade shows ¼ Website

¼ Complicated sales structure and unclear contact persons

¼ Brand misunderstanding ¼ Brand reputation

¼ Clarified sales and marketing structures and appropriate contacts displayed on website

¼ Ongoing internal sales administration training to direct customers accordingly

¼ Reintroduction of Haggie® and McKinnon® product brand. Consistency in distribution of partner brands

¼ Ongoing customer engagement addressing any reputational issues

Communities(see also SHE on page 54)

¼ Public forums ¼ Partnerships ¼ Meetings ¼ Website ¼ Annual environmental stakeholder forums at Union Junction

¼ Operational and environmental performance ¼ Projects to support community upliftment through our CSI programme

¼ Partnerships formed with various communities where Scaw operates

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The global financial crisis has created a tough trading environment locally and globally. The steel and construction sectors have been particularly hard hit. In addition, the local landscape is extremely competitive with all the major international steel companies having a presence in South Africa.

Despite the economic challenges, we remain confident that developing a stronger, more efficient steel sector in South Africa is critical to improving our competitiveness, thus fostering general economic growth within the wider African continent.

A key driver of this is the steel scrap market. The prevailing dire shortage of scrap metal globally is driving high demand for large volumes at appreciable pricing. Scrap metal generally comes to the fore in an economic recession as global steel manufacturers seek cost-effective alternatives. Disappointingly, approximately 50% of South Africa’s prime scrap metal is exported to other emerging markets. This practice has placed upward pressure on domestic steel prices, hindering the competitiveness and potential growth of the local industry. Lowering scrap prices will undoubtedly provide a competitive advantage to the steel manufacturing sector thus stimulating the steel sector in growing value-added export while being able to defend the domestic market against imports.

Given that scrap metal is a wholly recyclable raw material, full beneficiation to produce locally value-added products should be a priority. This alleviates stress on natural resources and enables recycling, which consumes less energy than producing steel from ironore. Scaw actively supports ongoing initiatives that limit the export of scrap metal, a key ingredient in the steelmaking process.Value addition to steel scrap forms the basis of Scaw’s comprehensive product range. These proudly South African value-added products are exported across the globe, highlighting our capabilities while securing local employment opportunities. Importantly, the Scaw group recognises the importance of continuously improving the skills bases within the organisation. Scaw is committing significant resources in closing identified skills gaps and the implementation of adapted best-practice models.


Operating context



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In today’s business environment, change and uncertainty are constraints. Change and uncertainty create both risks and opportunities, which can either erode or enhance value for an organisation. Scaw’s Risk Management Strategy aims to manage these risks consistently, comprehensively and economically through effective enterprise risk management, and to ultimately provide reasonable assurance regarding the achievement of the company’s objectives.

Our Enterprise Risk Management (ERM) is a structured approach to manage risk management across Scaw and to ensure that all risks that could have an adverse effect on the organisation are managed in a structured, consistent and integrated manner. Its purpose is to identify, analyse, evaluate and manage all significant uncertainties Scaw faces and to maximise opportunities. This involves people at every level of the organisation and requires applying a portfolio view of risk across the organisation. By embedding risk management techniques in day-to-day operations, Scaw is better equipped to identify events affecting its objectives and to manage risks in a manner that is consistent with the corporate strategy

The ERM is based on the principles embodied in the Enterprise Risk Management Framework published by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission, the International Guideline on Risk Management (ISO 31000) and the King Code on Governance Principles (King III) and complies with the Public Finance Management Act (Act 1 of 1999) (PFMA). The Risk Management Framework as depicted in the following diagram lays out guiding principles for Scaw’s management of risk on an ERM basis:

Enterprise risk management process

Process for managing risk

Establishing the context

Risk assessment

Risk identification

Risk analysis

Risk evaluation

Repo

rting

, com

mun

icat

ion

and

cons

ulta

tion

Monitoring and review

Risk treatment

Risk management

23

We have developed our corporate risk register through a company-wide risk assessment and update mitigating actions on an ongoing basis. Our risks have been split into the following categories:

¼ External factors: external risks with the potential to affect the financial sustainability of the company and/or delivery on financial objectives;

¼ Strategic: risks that have the potential to impact, either positively or negatively, delivery of strategy; ¼ Financial: risks with the potential to affect the financial sustainability of the company and/or delivery on financial objectives;

¼ Operational: risks that have the potential to impact, either positively or negatively delivery on production; ¼ People: risks that have the potential to impact, either positively or negatively, the human capital of the company; and

¼ Governance: risks that have the potential to impact, either positively or negatively, the governance of the company.

We have made substantial progress in implementing our risk management plan and will continue to refine our ERM processes, systems and reporting to ensure risk management can achieve and sustain its desired value as a business enabler.

OverviewIn the ordinary course of business, Scaw faces a number of risks that could affect our business operations. As part of our ongoing risk assessment process during the year, we compiled a risk register listing the material risks to which the business may be exposed. These are aligned to our strategic objectives as illustrated below:

Key risks Aligned strategic objective Mitigation

External factors

Macro-economic cycle ¼ Protracted economic downturn impacting negatively on the sustainability of the organisation

¼ Slow economic recovery placing strain on market demand for products

¼ Be globally competitive ¼ Portfolio alignment ¼ Adding value beyond products

¼ Expansion into rest of Africa, Australasia and South America

¼ Securing strategic tenders and long-term contracts

¼ Strategic partnerships and joint ventures

Increased competition (locally and internationally)

¼ New entrants in the local and international market in direct competition with Scaw


¼ Increase in rail business in North America

¼ Investment in cast manufacturing to improve global competitiveness

¼ Investment in Africa targeting mining, eg Ghana and Zambia

¼ Geographic diversification operations in Australia and the rest of Africa

¼ Competitive pricing ¼ Delivery on time ¼ Quality improvements

Changes in industry dynamics ¼ Negative industry trends effecting product demands

¼ Construction, agro, power, rail, oil, gas, steel, scrap, metals, mining (eg platinum industry strike)




¼ Product diversification ¼ Participation in industry forums


Key risks



Strategy

Balance sheet restructuring ¼ Excessively geared ¼ Debt and shareholder funds need to be restructured

¼ Limited access to capital ¼ High interest burden ¼ Limit on strategic capex

¼ Be globally competitive ¼ Restructuring of the balance sheet ¼ Debt restructuring ¼ Working capital management ¼ Market diversification

Finance

Funding/liquidity ¼ Working capital conversion cycle ¼ Inability to secure finance at a competitive rate due to the strength of the balance sheet

¼ Failure to free up cash locked up in unproductive assets for capital projects

¼ High interest burden

¼ Be globally competitive ¼ Portfolio alignment

¼ Inventory optimisation programme ¼ Optimising creditor payments ¼ Improving debtors book ¼ Procurement management ¼ Increase sales

Financial sustainability ¼ Balance sheet and income statement ratios negatively impacted (EBITDA, ROCE, gearing, etc)

¼ The strength of the order book ¼ Unsuccessful tenders bid/submissions




¼ Cost containment programme

High input costs ¼ High cost burden due to increased raw material, scrap, electricity and labour costs (overtime)

¼ Concentration of supply ¼ Scaw is in most instances a price taker

¼ Increased competition


¼ Engagement with authorities ¼ Maintain adequate buffer stock of strategic raw materials

¼ Contractual agreements with strategic suppliers

¼ Acquisition of Leo Scrap has reduced reliance on key market players and secured quality scrap at competitive prices

¼ Investigating expanding scrap processing and collection infrastructure

¼ Dual sourcing of strategic raw materials

¼ Ongoing engagement with government

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Operations

Customer service ¼ Product quality/liability risk ¼ Meeting delivery deadlines ¼ Non-adherence with organisational and product quality standards could have a detrimental effect on Scaw’s reputation and credibility


¼ Acting responsibly

¼ Quality systems ¼ Process controls ¼ Specification and technical test for all products

¼ Additional design recommendations to client where appropriate

¼ Senior management oversee customer complaint resolution processes

¼ Training and development

Production inefficiencies (including wastage)

¼ Failure to optimise unit costs due to inefficient and outdated production processes, old and outdated plant and equipment as well as labour productivity challenges

¼ Be globally competitive ¼ Portfolio alignment ¼ Unlocking people potential ¼ Acting responsibly

¼ Investment in infrastructure ¼ Proactive resource planning ¼ Proactive communication and engagement with staff

¼ Training and development ¼ Performance management

People

Attraction and retention of skills ¼ Failure to attract and retain key skills required for Scaw to achieve its strategic objectives

¼ Loss of institutional memory vested with some key individuals

¼ Inadequate succession planning ¼ Dependence on critical/rare skills

¼ Unlocking people potential ¼ Implementation of a performance and retention scheme

¼ Re-establishment of the Scaw bursary scheme for mechanical, electrical and metallurgical engineers

¼ Engagement with the SA Institute of Foundrymen to develop training materials and courses

¼ Review of Scaw’s business leadership programmes

¼ Talent management programme

Volatile industrial relations climate

¼ Challenging labour environment with greater demands from unions and the workforce

¼ Impact of strikes on production

¼ Unlocking people potential ¼ Engagement with SEIFSA and MEIBC structures to secure participation in the 2014 negotiations

¼ Mandatory participation by Scaw managers in the SEIFSA Council, the chairman’s forum, and the industry policy forum

¼ Internal communication initiatives

Regulatory compliance

Non-compliance to health and safety legislative requirements

¼ Non-adherence with health and safety requirements resulting in injuries and fatalities which could have serious consequences for Scaw

¼ Acting responsibly ¼ Continuing to address historical non-compliances

¼ Annual review of the group’s SHE objectives, targets and standards

¼ Baseline risk review at all operations ¼ Monitoring of feedback on progress at SHE management meetings

¼ Weekly VFL walkabouts, which now also include assessing systems

¼ Newly appointed managers continue to received A3 safety training

¼ Campaign initiated to highlight compliance with the “Golden Rules”



Key risks continued

Scaw’s supply chain team has aligned itself with Scaw’s business strategies and KPIs to add value to the business where it matters. Through a structured approach we have been able to deliver real benefits to the group that include:

¼ Preferential procurement score of 20/20 ¼ Enterprise development score of 15/15 ¼ Improved governance and controls ¼ Cash flow improvement initiatives ¼ On Time In Full (OTIF) improvement ¼ Service delivery improvement from the central warehouse

¼ Risk mitigation through improved contract coverage and strategic supplier engagement

The supply chain function is responsible for R3,6 billion of discretionary spend among 3 000 vendors in the financial year, while stocking about 20 000 stock keeping units at its warehouses, providing a 24/7 service to its internal customers. The team has also shown its commitment to people, education and moving supply chain forward by winning the SAPICS runner-up award for supply chain educator of the year in 2013. We aim to deliver more together.

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Group supply chain

Leadership

Directors and executive management 30Leading ethically 33Executive chairman’s report 34CEO’s report 36Acting CFO’s report 38


Executive directors

Executive chairmanBSc Elec Eng, MSc Eng, MAP, EDP, AMP

Ufikile joined the board of Scaw Metals Group in February 2013.

Ufikile Khumalo (48) Markus Hannemann (47)

CEONHD MechEng, GCC (Mech Eng) Factories, MBA, AMP

Markus Hannemann is responsible for providing strategic leadership to the entire Scaw Metals Group and was appointed CEO in August 2013.

Independent non-executive directors

Nkosemntu Nika (56)

CA(SA)

Nkosemntu joined the board of Scaw South Africa (Pty) Limited on 1 January 2013.

Vusi Opper Twala (51)

BSc (Acc), MBA, MA Development Finance

Vusi joined the board of Scaw South Africa (Pty) Limited on 1 January 2013.

Neo Violet Mokhesi (53)

BCom, MAP

Neo joined the board of Scaw South Africa (Pty) Limited on 1 January 2013.


Leadership

Directors and executive management

Non-executive directors

Ashley Basil Ally (50)

BSc Elec Eng,Town and Regional Planning, Business and Public Admin

Ashley joined the board of Scaw South Africa (Pty) Limited on 4 May 2007.

Nokuzola Amanda Mpulo (35)

CA(SA), MBA

Nokuzola joined the board of Scaw South Africa (Pty) Limited on 29 January 2013.

Lucas Tseki (35)BCom

Lucas joined the board of Scaw South Africa (Pty) Limited on 4 November 2008.

Alternate non-executive directors

Sechaba Serote (33) Ortal Sharp (32)CA(SA)

Ortal joined the board of Scaw South Africa (Pty) Limited on 1 December 2013.

CA(SA)

Sechaba joined the board of Scaw South Africa (Pty) Limited on 1 December 2013.

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Executive managementExco comprises the most senior leaders in Scaw Metals Group. In addition to executive chairman, Ufikile Khumalo, and CEO, Markus Hannemann, Exco comprises:

Shaw Manyema (37) Gerrit van Wyk (54) Acting CFO BAcc (Hons), MBA

Professional ServicesBCom (Hons), MCom, MBL, AMP

Steve van Wyk (42) Ray Abrahams (45)

OperationsBSc Metallurgical Eng, AMP

TechnicalBSc Mech Eng

George Katergarakis (40) Bheka Khumalo (48)Human ResourcesBCom, Post Grad Dipl in Management, Masters in Management

Sales and MarketingBTech Metallurgical Eng

Dudu Ndlovu (44) Vimla Reddy (38)

Public Affairs and CommunicationBA Comm, MAP

Company secretary and LegalBA, LLB, LLM, Admitted Attorney of the High Court of South Africa


Leadership

Directors and executive management continued

for raising in good faith, violations against the Good Citizenship Business Principles or any legal or ethical concern. There were no reported incidences of corruption during the year.

“Speak Up” operates 24/7 through varied channels including a toll-free telephone line, email, FreePost and free fax. Trained telephone operators answer in English, isiZulu, Afrikaans, isiXhosa and seSotho. The “Speak Up” facility is referred to in, inter alia, the business integrity policy, good citizenship business principles and reinforced in the business integrity training. Reports are “sanitised” and provided to internal audit who prioritises (with the approval of the head of professional services) and investigates said reports. A summary of reported matters from the “Speak Up” facility is periodically presented to the social, ethics and transformation committee and audit and risk committee by internal audit. During the reporting period, there were nine reports via “Speak Up” and of that aforementioned number, there were five ethics-related reports. All anonymous reports were investigated and although there were nil disciplinary hearings, three matters are still being investigated.

Further, we have embarked on a transformation project, which has united the group in a commitment to understanding, inter alia, our employees’ views of their personal values, current group values and the desired group values going forward. Our employees’ feedback will form the basis of the group’s review of the current core values which is currently in progress. The adoption of new values for the group will obviously necessitate the review of all relevant ethics-related policies and the provision of appropriate communication and training to all stakeholders throughout the group.

Ethics awareness remains a priority for Scaw because we believe that earning and continuing to command trust is fundamental to our success. Our stakeholders should be confident that we deal with them fairly and ethically. Integrity means taking an honest, fair and transparent approach in everything that we do. It’s not about being popular, it’s always about doing the right thing.

There were no new incidents or legal actions relating to anti-competitive or collusive behaviour during the year.

Our current values and ethics-related policies were derived from our former parent company, Anglo American. Certain policies have been adopted including, but not limited to, the business integrity policy, gifts, entertainment and hospitality policy and good citizenship business principles which accord with our seven core values. These policies serve as our “moral compass” and helps guide our daily decisions and actions and outlines collectively the expectations we have of our ourselves, what our stakeholders can expect of us and what we can expect of them.

Ethics-related policies are communicated to employees in employment contracts, letters of appointment and form part of ongoing internal communications. In addition, copies of the business integrity policy and the good citizenship business principles are provided to Scaw suppliers. To reinforce ethics awareness, business integrity training is provided annually to employees. In 2013, 250 employees at Scaw operations in Johannesburg, Durban and Cape Town received business integrity training and 237 received competition law training.

The group’s approach to practicing ethical leadership at all times is to lead by example, thereby “setting the tone” and ensuring that there are appropriate mechanisms in place to promote the required ethical practices throughout the group. Management is accessible to employees who seek advice on ethical behaviour. Further, the formation of certain board committees such as the group’s social, ethics and transformation committee and the audit and risk committee provide close scrutiny and oversight of the group’s ethics management programme.

In addition, the group has an anonymous whistle blowing mechanism in place called “Speak Up”. It is operated and managed by Tip-offs Anonymous, an independent company offering anti-corruption reporting services. “Speak Up” is available to employees, customers, suppliers and shareholders to report dishonesty, fraud and other inappropriate behaviour in the workplace and they are able to do so in a safe, confidential and secure way. The group has a non- retaliation policy, ie no person will be prejudiced

Human ResourcesBCom, Post Grad Dipl in Management, Masters in Management

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Leading ethically

holistic transformation process within the group (our Siyaphambili Transformation Project) which is positioning us to achieve our core strategic goal of “Stabilise, Grow and Harvest”. This is beginning to bear fruit as evidenced by the sod turning of our new grinding media plant in Ghana, which fulfils our objective for accelerated expansion into the rest of Africa. We have also committed about R100 million to expand our business’s chain manufacturing operation in Vereeniging.

New beginnings bring a renewed fervour in facing challenges, and we are energised to navigate the difficult economic terrain ahead. As a hybrid group of “more than just steel”, our diversified product offering provides resilience.

Business and economic environmentScaw supplies products into the mining, construction and energy sectors both locally and internationally. The overall market demand remains subdued due to the negative effects of the recent global economic crisis. Competition in the steel sector has intensified because of the imbalance between supply and demand. Recently, we have witnessed the closure of many steel companies worldwide. The recent industrial relations challenges in the local gold and platinum mining sectors continue to impact our business considerably. Activity in the local construction sector has also slowed down significantly since 2010 forcing companies to look for other markets elsewhere.

There are potential opportunities on the horizon. The government’s planned infrastructure roll-out, as outlined in the Presidential Infrastructure Coordination Commission, will increase state expenditure and help to stimulate supply into the construction industry. The increased state procurement in the railway sector will also stimulate the local foundry business, as more emphasis is placed on the requirements for local beneficiation as well as higher levels of job creation and retention. The planned construction of

Executive chairman: Ufikile Khumalo

While there is no doubt we are operating in difficult times, with the impact of the global economic recession being keenly felt in our sector, Scaw as a group is well positioned to weather the storm, largely because of our diversified portfolio, with a sustainable foundation for future growth.

2013 marked a milestone year for the group, with new parent investment and leadership coming onboard. On behalf of the group I welcome our new chief executive officer Markus Hannemann and our acting chief financial officer Shaw Manyema, who have joined me in leading the group forward. Further, we initiated our


Executive chairman’s report

Leadership

various power stations in South Africa will also stimulate demand.

The African continent has also generally experienced an increase in foreign direct investment especially channelled into the mining and resources sectors. This presents an opportunity for Scaw to expand our geographical reach and diversify our portfolio.

Scaw will continue to focus on improving operational efficiency and work with our international partners to provide exceptional value-added services to our customers.

Scaw’s sustainabilitySustainability considerations are integral to all areas of our business. Our realigned strategy is supported by a solid business plan, which includes expansion of capacity and improved efficiencies. We also have access to the latest technologies through long-standing partnerships with reputable international companies. We are well positioned to compete with international companies both on quality and price.

Our Siyaphambili Transformation Project is a critical enabler of our growth strategy and will assist us in empowering our employees across all our businesses for sustainable growth.

Health and safety remains a priority. Our systems, standards and policies provide the basis to minimise risks to our employees and contractors while striving towards a target of zero harm. In addition, we are committed to sound environmental management principles ensuring that our operations do not negatively impact the environment.

Scaw’s ability to beneficiate steel products has seen the group progress beyond being just a primary steel producer. Scaw’s strategy of producing value through the manufacture of secondary steel products, places the group firmly to serve all sectors of the markets in Africa and internationally. Scaw’s products in the mining, construction, rail, industrial, oil and gas sectors are recognised internationally.

GovernanceAs the executive chairman, I have continued to lead the board of directors since my appointment on 1 February 2013. The non-independence of my role is adequately addressed by the composition of the board and particularly by the appointment of a lead independent non-executive director, Mr Nkosemntu Nika, who is also the chairman of Scaw’s audit and risk committee.

AppreciationI wish to thank our entire directorate and management team, and all employees, for hanging in during challenging times and I look forward to working together with you to take Scaw to new heights.

Finally I thank our new and existing stakeholders, whose confidence in the group and faith in management are a constant inspiration to succeed.

Ufikile KhumaloExecutive chairman

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By early 2014, the positive benefits of these changes had already provided an improved position for the group to leverage future growth.

Safety, health and environmentFor the period under review Scaw achieved a significant improvement in its safety performance. The Scaw group achieved a lost-time injury frequency rate (LTIFR) of 0,33. This represents an improvement of 13% against the prior year.

The Scaw group has completed 98% of medical surveillances on employees, while 79% of our employees have undergone voluntary counselling and testing for HIV. The Scaw group has a well established HIV wellness programme and provides employees with ARTs.

The Scaw group remains committed to best environmental practices. During the year, the group committed to an investment of more than R200 million to further improve fume emissions in line with future stricter standards. The group also commissioned equipment that will enable the recycling of waste generated from our melting operations at the Union Junction site.

Group performance overviewScaw has operated under challenging market conditions for the period under review. Similar to steel producers across the globe, Scaw suffered the effects of weak demand and the resultant amplification of the competitive landscape. Locally, the lack of large-scale infrastructure projects and instability in the mining industry compounded the situation resulting in domestic volumes declining. In order to increase sales volumes the group focused on the export market to make up for the declining local demand.

Against a challenging market environment, the group delivered a pleasing performance, production volumes improved by 3% while the group’s EBITDA finished 10% above the corresponding period in the prior year.

Our business divisions reflected a mixed performance given Scaw’s diversity in markets and products. Both the Grinding Media and Rolled Products divisions

Chief executive officer: Markus Hannemann

Scaw is entering a new era of stability following Anglo American’s decision to divest in 2009 and the subsequent effects of the global economic recession. Strategically the group has placed a greater emphasis on ensuring ongoing stability given the tough economic climate and the increased competitiveness of the global steel sector.

During the course of last year, functional changes were implemented to better leverage the combined functional strengths of the Scaw group. Changes at Exco level allowed the development of a strong and aligned team. In addition, various initiatives are under way to boost skills training, stakeholder relationships and communication across all levels to ensure alignment of the group’s strategic objectives.


Leadership

CEO’s report

Looking externally, we continued to emphasise protection of natural resources and the environment and implemented the group’s carbon disclosure project.

OutlookScaw continues to operate in a tough economic environment, but management remains cautiously optimistic of the future. Scaw’s largest customer sectors are the mining and construction sectors. The local construction sector is starting to show early signs of recovery while the mining sector is expected to gain rapid momentum once the current labour issues in the sector are resolved. Furthermore, we remain optimistic that the Scaw group should benefit from the adjudication of the many Transnet infrastructure rail component tenders. Scaw has a long track record of manufacturing these components, Scaw’s localisation content exceeds 95%.

AppreciationI welcome new members and thank our executive chairman, directors, Exco and management and their teams for supporting our vision and facing the challenges with unwavering tenacity.

I also thank our business partners, suppliers and clients for their invaluable support.

Markus HannemannCEO

showed a marked improvement against the prior period. Grinding Media made market share gains across Africa and the Rolled Products division, while suffering sluggish demand from the construction industry, benefited from cost improvements and increased pricing levels. The Wire Rod Products and Cast Products divisions were negatively impacted by depressed sales from the mining industry. Additionally, Cast Products was further impacted by weak demand from the domestic rail sector as continuing adjudication delays for the various local rail tenders severely affected the division’s performance.

SustainabilityTo entrench the sustainability of our business we have consolidated our strategy to Stabilise, Grow and Harvest, and our success in this regard will be measured on an ongoing basis using five key performance indicators associated with our strategy.

Our new corporate identity, launched in November 2013, reflects the refreshed group.

While we welcome some new faces who will be instrumental in guiding the group to achieve our strategic objectives, ie a new majority stakeholder in the IDC and new leadership executives – we have also focused on our existing team and a number of notable achievements became evident in the year. Most importantly, the Siyaphambili Transformation Project was initiated and enthusiastically embraced.

We also appointed task teams charged with removing obstacles to the advancement of women in business. Further, our first group of employees in the Rolled Products division embarked on the knowledge exchange programme with BSE Germany. We also launched a safety campaign to re-educate employees with the purpose of directing them to zero harm.

The group is also delighted to announce an improvement in its B-BBEE rating to a level 3 (110% recognition). It is truly an outstanding and prized achievement in our sector.

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Acting chief financial officer: Shaw Manyema

RevenueRevenue for the 12-month period ended 31 March 2014 was R6,5 billion compared to the 15-month period ended 13 March 2013 which was at R8,3 billion. Local sales remained subdued in the period resulting in declines in sales volumes across most operations. In order to increase sales volumes the group focused on the export market to make up for the declining local demand. As a result of the increased focus on export sales, 23% of total revenue was generated from export sales compared to 20% in the previous year.

77%

23%

● Exports● Local

Revenue%

2013: 20%

2013: 80%

Revenue Rbn

March 2014

Additional 3 months

March 2013

6,5

1,6

6,6

The 2014 financial period has been challenging for Scaw. Local demand across most sectors was weak combined with increased import competition. Increased exports assisted the group in negating the effects of sluggish local demand. Competitive pressures continued to place pressure on margins.


Acting CFO’s report

Leadership

EBITDA (Earnings before interest, tax and depreciation)Despite the challenging operating environment, Scaw Metals recorded an EBITDA profit for the period of R361 million, an improvement from the EBITDA of R328 million in the previous comparable period.

EBITDA profit Rm

March 2014 March 2013

361

184

328

Additional 3 months

Finance costsDuring the current period Scaw successfully negotiated and restructured the debt with both Nedbank and the IDC, further strengthening the group’s balance sheet. The restructuring of the Nedbank debt resulted in reduced capital repayments and interest expense while the restructuring of the IDC debt resulted in R3,5 billion of the debt being converted into non-interest-bearing debt. As a result of the debt restructuring process, finance costs declined significantly during the period.

Capital expenditureThe group spent R356 million in capital expenditure during the period in order to maintain, improve and expand production capacity. Key capital expenditure projects for the period included the side frame and bolsters projects and the chain expansion project.

In line with the group’s safety emphasis, 20% of the total capital expenditure during the period was for work done to ensure and improve a safe working environment for our employees.

CovenantsThe group was compliant with all bank covenants in the current period.

Shaw ManyemaActing CFO

Capital expenditureRm

72

10

52

1132

4

175

Safety 72m (Fumex R41m)

SAP payroll R10m

Side frames and bolstersR52m

Substation replacement R11m

Chain expansion R32m

Roll former plant (Ghana) R4m

Other stay in businessR175m

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March2014

(12 months)Rm

March2013

(15 months)Rm

Statement of comprehensive income – key figuresRevenue 6 450 8 252EBITDA 361 328Finance costs (381) (832)

Statement of financial position – extractsNon-current assets 2 245 2 317 Current assets 2 525 2 419

Total assets 4 770 4 736

Total equity and non-current liabilities 3 666 3 286Current liabilities 1 104 1 450

Total equity and liabilities 4 770 4 736

Cash flows – extractsCash flows from operating activities 65 458 Cash flows from investing activities (338) (423)Cash flows from financing activities 22 161

Net cash flow movement for the period (251) 196

Extracts from the group’s financial statements


Acting CFO’s report continued

Leadership

March2014

Rm

March2013*

Rm

Wealth createdTurnover 6 450 8 252Purchase of material and services 4 582 5 836Income from investments 2 15

Total wealth created 1 870 2 430

Wealth distributed as follows:To employees 1 524 1 913To government (in the form of taxes) 0 3To providers of capital 355 795Finance costs on borrowings 355 795Dividends to shareholders 0 0

To support future growth (10) (281)Depreciation 174 204Retained profit/(loss) (184) (485)

Total wealth distributed 1 870 2 430

Wealth distribution proportions % %Employees 82 79Government 0 0Providers of capital 19 33Support future growth (1) (12)

Total wealth distributed 100 100* The year ended 31 March 2013 had 15 months because of the change in year-end.

Value added statement%

(12)

79

33

0

● Employees● Government● Providers of capital● Support future growth

2013

Value added statement%

(1)

82

19

0

● Employees● Government● Providers of capital● Support future growth

2014

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Value added statement

Sustainability framework

Governance 44Transformation at Scaw group 49Our people 53SHE 54Protecting our environment 60


The role and responsibilities of the executive chairman and the chief executive officer have been clearly defined and are distinct.

The company secretary was appointed with effect from 8 October 2013. The company secretary plays a significant role in facilitating good governance, supporting the executive chairman and the board by, inter alia:

¼ Providing the board and the individual directors with guidance on discharging their responsibilities; and

¼ Ensuring the effective functioning of the board in accordance with the relevant laws.

Access to the advice and services of the company secretary and to company records, information, documents and property is unrestricted. The company secretary also acts as secretary for the sub-committees of the board.

In its annual evaluation, the board has considered and satisfied itself on the competency, qualifications and experience of the company secretary.

CharterThe board is guided by a charter, which was approved in the period under review and will be reviewed annually. The charter was formulated taking into account King III recommendations. The board charter serves as a guide to members of the board regarding, inter alia:

¼ purpose and role; ¼ responsibilities and authority; ¼ composition; ¼ meetings; and ¼ board evaluations.

Board appointments and resignationsDirectors are appointed through a formal process taking into account the applicable provisions of the company’s MOI and the Companies Act, 2008. When appointments to the board are considered, skills, experience, gender and racial composition are carefully considered.

For the period under review, Christopher Davis resigned as a director and the chief executive officer on 30 June 2013. Markus Hannemann was appointed to the board on 1 August 2013 as a director and the chief executive officer. Sipho Pityana resigned on 1 December 2013. Sechaba Serote and Ortal Sharp were appointed on 1 December 2013 as alternate directors to Nokuzola Mpulo and Ashley Ally respectively. Vaughan Firman resigned as a director and the chief financial officer on 31 December 2013. Gerrit van Wyk resigned as a director on 31 March 2014.

As the “directing mind of the company”, the board of directors endeavour to ensure that sound corporate governance standards are applied in a meaningful and robust manner, while supporting the company’s strategic objectives and ultimately delivering sustainable growth in the interests of all stakeholders.

For the period under review, governance structures and processes were evaluated in detail. After due and measured deliberation, a clear and defined governance structure was implemented which resulted in, inter alia, the following:(a) The constitution of a board that consists of

executive directors and a majority of non- executive directors;

(b) The formation of four appropriate sub-committees to support the board in its discharge of its duties; and

(c) A review of the company’s delegation matrix clarifying the limits of authority.

Board of directorsStructureAt year-end, our board comprised two executive directors and a majority of non-executive directors, three of whom are independent non-executive directors. Collectively, the directors have a diverse range of qualifications, experience and expertise spanning both locally and internationally. In addition, they have an understanding of the complicated and demanding business environment in which we operate and a knowledge of the challenges facing the business.

The executive chairman is responsible for the overall leadership of the board and acts as a link between the board and management and particularly between the board and the chief executive officer. In his role, Ufikile provides leadership to enable Scaw to attract appropriate partners for further market penetration and technology transfer while working closely with Scaw’s majority shareholder, the IDC. One of the priorities for his role is to set the tone and culture for transformation in Scaw.

The chief executive officer, Markus Hannemann, was appointed with effect from 1 August 2013. Markus’ insight into the Scaw group stretches over a period of more than 20 years. During this period he has played a major leadership role in the vast majority of Scaw’s businesses both locally and internationally. Scaw’s strategic objective is to position itself as a benefactor of steel scrap into value-added secondary steel products. Markus’ responsibility is to stabilise the business and grow it in line with the strategy approved by the board.



Governance

Board meetingsThe board charter requires that there be a minimum of four board meetings held every year. Seven board meetings were held during the period under review including a strategy session that was held between 30 and 31 May 2013. Attendance at these meetings is reflected below:

Board members19 Apr

2013

30 – 31May

20136 Jun2013

24 Jun2013

26 Jun2013

20 Sep2013

22 Nov2013

28 Mar2014

Ufikile Khumalo (chairman) Present Present Present Present Present Present Present PresentChristopher Davis# Present Present Present Markus Hannemann## Present Present PresentVaughan Firman** Present Present Present Present Present Present Present Lucas Tseki Present Present Present Apology Present Present Present ApologyNokuzola Mpulo Present Present Present Present Present Present Apology PresentSechaba Serote (Alternate)* ApologySipho Pityana† Apology Apology Present Apology Present Apology Apology Ashley Ally Present Apology Present Present Present ApologyOrtal Sharp (Alternate)†† ApologyNkosemntu Nika Present Present Present Present Present Present Present ApologyGerrit van Wyk¤ Apology Present Present Present Present Present Present ApologyVusi Twala Present Present Present Present Present Present Present PresentNeo Mokhesi Present Present Present Present Apology Apology Present Present

# Resigned: 30 June 2013## Appointed: 1 August 2013† Resigned: 1 December 2013†† Appointed: 1 December 2013* Appointed: 1 December 2013** Resigned: 31 December 2013¤ Resigned: 31 March 201430 and 31 May: Board strategy session6 and 24 June: Special board meetings

The executive chairman, in consultation with the chief executive officer and the company secretary, is responsible for setting the agenda of each board meeting. Board meetings are scheduled in advance in order to facilitate the making of decisions which management is required to implement. The board is timeously provided with all relevant information by management to enable efficient and well-informed decision making.

The chairman of each sub-committee is required to report back to the board on matters discussed in the respective committee after every sub-committee meeting.

Board induction and trainingIn order to acclimatise themselves with the business, all new board members attended a whole day board induction programme on 24 February 2013. They were provided with comprehensive presentations regarding the state of the business from an operational and financial perspective and the proposed growth plans.

They were also given information packs which included the company’s MOI and shareholders’ agreement. In addition, a presentation was provided to them regarding their duties as directors and the directors’ and officers’ liability insurance that was in place. Further, they were taken on a tour of some of the plants and introduced to and given access to management.

Certain training initiatives were implemented for the period under review, such as a social and ethics committee workshop and certain directors attended training seminars at the Institute of Directors.

Directors’ personal interestsDirectors are required to declare their personal interests at each board meeting and sub-committee meeting. In addition, they are required to complete a declaration of interest form every year. Directors are required to recuse themselves from any discussion and decision on matters in which they have a personal interest.

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committee chairmen at every board meeting and the minutes of committee meetings are available to the board at any time. In addition, the chairmen of the sub-committees or a nominated committee member attended the company’s annual general meeting to answer any questions from stakeholders pertaining to the sub-committees.

Audit and risk committeeThe audit and risk committee has an independent role with accountability to the board and shareholders, where applicable. With regard to its non-statutory responsibilities, the audit and risk committee operates as an overseer and makes recommendations to the board for its consideration and final approval.

The full scope of the role of the committee includes risk management, internal controls, accounting systems and information, accounting policies, internal audit, external audit, information technology systems, protection of assets and public reporting, and monitoring of compliance with laws, rules, codes of conduct and standards.

Regarding its risk function specifically, the role of the audit and risk committee is to assist the board in ensuring that the company implements an effective risk management policy and plan that will enhance the company’s ability to achieve its strategic objectives, and that disclosure regarding risk is comprehensive, timely and relevant.

As at 31 March 2014, the members of the audit and risk committee were:

¼ Nkosemntu Nika (chairman) – member and chairman since 22 February 2013 and reappointed as chairman with effect from 1 April 2014.

¼ Vusi Twala – member since 22 February 2013 and reappointed as a member with effect from 1 April 2014.

¼ Ashley Ally – appointed as a member with effect from 1 December 2013.

¼ Gerrit van Wyk – member since 22 February 2013 and resigned as a member with effect from 31 March 2014.

Performance evaluationBoard, sub-committees and individual directorsKing III recommends that an evaluation of the board and its committees should be carried out on an annual basis.

The board recognises the importance of the evaluation of the board and its committees and has considered it appropriate to carry out a self-assessment evaluation every year, but every third year there will be an independent evaluation that will be carried out by an independent external service provider.

For the period under review, a self-assessment questionnaire relating to the review of the board, its individual directors and the sub-committees was prepared. The self-assessment questionnaire was formulated considering King III recommendations and was approved by the executive chairman before distribution to the board members. The self-assessment questionnaire covered inter alia the appropriateness of the board structure, the effectiveness of meeting management and the general performance of the board. The executive chairman will schedule one-on-one meetings with individual directors to provide feedback received from their peer directors. In addition, the executive chairman will provide overall general feedback to the board on areas of improvement for the board as a collective.

Board committeesThe company has established an audit and risk committee, a remuneration committee, a board investment committee and a social, ethics and transformation committee to assist the board in discharging its duties.

These four sub-committees are governed by their relevant terms of reference which each sub-committee has reviewed and which have been approved by the board in the period under review. All sub-committee terms of reference will be reviewed annually.

There is transparency and full disclosure from board committees to the board in the form of reports by



Governance continued

The audit and risk committee met five times in the period under review and attendance is set out below. Special meetings are convened as required. The external auditors, internal auditors and executive management are invited to attend every meeting.

Audit and risk committee members19 Apr

201321 May

20136 Sep2013

12 Nov 2013

25 Feb2014

Nkosemntu Nika (chairman) Present Present Present Present PresentGerrit van Wyk¤ Apology Present Present Present ApologyVusi Twala Present Present Present Present PresentSipho Pityana† Apology Apology Apology Apology Ashley Ally Apology Apology Present Apology Present

† Resigned: 1 December 2013¤ Resigned:31March2014

A full report from the audit and risk committee is included on page 64.

Remuneration committee (Remco)The role of Remco is to assist the board in ensuring that the company remunerates directors and executives fairly and responsibly; remuneration is competitive, accurate, complete and transparent; and there is effective retention, succession planning and talent management. Remco is involved in the recruitment of the CEO and the CFO.

Remco makes independent recommendations to the board for its consideration and final approval. Remco does not assume the functions of management, which remain the responsibility of the executive directors, officers and senior management.

As at 31 March 2014, the members of Remco were: ¼ Vusi Twala (chairman) – member and chairman since 22 February 2013.

¼ Neo Mokhesi – member since 22 February 2013. ¼ Lucas Tseki – member since 22 February 2013. ¼ Ashley Ally – member since 1 December 2013.

Remco met four times in the period under review and attendance is set out below. Special meetings are convened as required. The executive chairman, the chief executive officer, the chief financial officer and the executive head of human resources are invited to attend every meeting.

For the period under review, Remco has, inter alia, considered numerous matters under its mandate, including but not limited to the company’s remuneration policy, performance and retention plan, the company’s 2013 targets, annual incentives, annual increases and independent non-executive director fees.

Remuneration committee members3 Apr 2013

1 Jul 2013

4 Nov 2013

7 Mar 2014

Vusi Twala (chairman) Present Present Present PresentLucas Tseki Present Apology Present PresentNeo Mokhesi Present Present Present PresentSipho Pityana† Apology Apology Apology Ashley Ally Apology Present Present Present

† Resigned: 1 December 2013

Board investment committee (BIC)The investment committee (committee) is constituted as a committee of the board of directors of Scaw South Africa (Proprietary) Limited (company). The committee has an independent role, operating as a decision maker where applicable and as an overseer and a maker of recommendations to the board for its consideration and final approval.

The committee’s functions include the following: ¼ To consider and, if appropriate, approve new investments, capex, sale or scrapping of assets, acquisition/merger of businesses, and disposal of existing businesses.

Furthermore, it reviews progress with implementation of key projects (capital investment > R75 million).

As at 31 March 2014, the members of BIC were: ¼ Gerrit van Wyk (chairman) – member and chairman since 22 February 2013 and resigned as a member with effect from 31 March 2014.

¼ Nokuzola Mpulo – member since 22 February 2013. ¼ Ortal Sharp – appointed as a member with effect from 1 December 2013.

¼ Lucas Tseki – member since 22 February 2013.

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The BIC met four times in the period under review and attendance is set out below. Special meetings are convened as required. Executive management including the head of operations and the head of technical are invited to attend every meeting.

Board investment committee members13 May

201319 Aug

20138 Nov2013

21 Feb2014

Gerrit van Wyk (chairman)¤ Present Present Present PresentLucas Tseki Present Present Present PresentNokuzola Mpulo Present Present Apology ApologySechaba Serote (Alternate)* PresentSipho Pityana† Apology Apology ApologyAshley Ally† Present Present ApologyOrtal Sharp†† Present

† Resigned: 1 December 2013* Appointed: 1 December 2013†† Appointed: 1 December 2013¤ Resigned:31March2014

Social, ethics and transformation committee (SET committee)The role of the SET committee is to assist the board with monitoring and overseeing social, ethical and transformation matters related to the company.

The SET committee has a reporting role with accountability to the board. It does not assume the functions of management, which remain the

responsibility of the directors, officers and senior management.

As at 31 March 2014, the members of the SET committee were: • Neo Mokhesi (chairman) – member and chairman

since 22 February 2013.• Nkosemntu Nika – member since 22 February 2013.• Vusi Twala – member since 22 February 2013.• Nokuzola Mpulo – member since 22 February 2013.

The SET committee has met three times in the period under review and attendance is set out below. Special meetings are convened as required. Executive management including the head of HR, head of legal, head of sales and marketing, head of public affairs and communications and head of SHE are invited to attend every meeting.

Social, ethics and transformation committee members2 Jul2013

6 Sep2013

12 Nov2013

25 Feb2014

Neo Mokhesi (chairperson) Present Present Present PresentNkosemntu Nika† Present† Present Present PresentVusi Twala Present Present Present PresentNokuzola Mpulo Present Present Apology ApologySechaba Serote (Alternate)* Apology

* Appointed: 1 December 2013 † 2 July 2013: SET workshop – Gerrit van Wyk attended on behalf of Nkosemntu Nika

For the period under review, the SET committee has monitored the company’s activities in social and economic development, labour employment and training, consumer relations, environmental, health and public safety and ethics.

The SET committee considered the impact assessment of the current CSI projects against company policies, strategy and budget. The focus areas of CSI were education, environment, sports development and health in the communities where the company operates.

The SET committee also considered labour, employment and transformation matters in terms of which, inter alia, the introduction and retention of more women in the workplace remains a challenge; the improvement of skills development is a top priority; and

that management remains committed to making concerted efforts to improving industrial relations. The company also carried out a transformation and values alignment survey.

With regards to consumer relations, the SET committee considered the plans to improve customer relationships and the process and systems to track customer complaints.

The SET committee was provided with a comprehensive report on SHE matters including the SHE performance across each business unit, the company and the group.

Management also provided the SET committee with a status quo report on the company’s ethics performance, applicable company policies and the proposed Ethics Work Plan for 2014.



Governance continued

Scaw achieved a level 3 B-BBEE contributor status in terms of the Department of Trade and Industry’s Codes of Good Practice.

B-BBEEScaw is engaged in a process of transformation that seeks to redefine its corporate culture and identity, to become a high-performance company, including the advancement of workers from disadvantaged backgrounds as well as providing increased development for employees across the group. Our board continually monitors progress against transformation objectives, supported by the social, ethics and transformation committee.

Scaw has an effective BEE shareholding of 26%. For our full B-BBEE certificate see www.scaw.co.za.

No incidents of discrimination were reported during the year.

The employment equity process is not new to Scaw, having begun at the group long before South Africa’s first democratic election in 1994.

The group has over 5 000 permanent employees. The employment equity categorisation as at January 2014 is summarised below:

Employment equityScaw is committed to achieving equity in the workplace by ensuring equal opportunities and fair treatment, eliminating unfair discrimination and implementing measures to redress past imbalances experienced by designated groups. Scaw recognises that a cornerstone to organisational transformation is an environment in which each and every employee’s culture is valued and respected, and through which employees will be empowered to make a meaningful contribution to the goals of the organisation.

Transformation in 2013: Siyaphambili

In March 2013, Scaw embarked on a journey that will ultimately transform the business, with the launch of the Siyaphambili Transformation Project. This was

initiated with an employee survey that closed end April. Employees responded enthusiastically to Scaw’s visible commitment to transformation and employment equity.

Around 74% of the workforce completed survey forms, sharing their views on transformation with management. The process was managed by Scaw’s newly formed national employment equity committee (NEEC) and an external partner, Mandate Molefi. The responses to the survey were analysed and in July 2013 follow-up interviews were conducted with 19 senior managers and 12 focus groups comprising approximately 200 employees.

Final results of the Siyaphambili Survey were presented to Exco, the board and the NEEC. Mandate Molefi, together with the general managers and business unit managers, presented the results to all Scaw employees.

Management has developed a roadmap for the implementation of a plan of action to drive transformation drawing from the feedback that was received from the survey. The implementation is being driven by senior leadership and facilitated by a team of internal change agents.

Male Female

African Indian Coloured WhiteTotalmale African Indian Coloured White

Totalfemale

Grandtotal

%HDSA

Top management 1 0 0 1 2 0 0 0 0 0 2 50Senior management 9 3 1 37 50 2 2 0 4 8 58 36Professionally qualified 87 15 14 121 237 16 8 6 29 59 296 59Skilled technical 982 32 83 340 1 437 67 11 21 66 165 1 602 78Semi-skilled 2 151 3 27 36 2 217 59 6 8 23 96 2 313 98Unskilled 1 214 9 33 19 1 275 34 0 7 0 41 1 316 98Total permanent 4 444 62 158 554 5 218 178 27 42 122 369 5 587 90Temporary employees 162 4 1 21 188 86 0 1 4 91 279 92

Grand total 4 606 66 159 575 5 406 264 27 43 166 460 5 866 91

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Transformation at Scaw group

Skills development and training

Shortage of skills in the industry worldwide is a considerable threat to the sustainability of Scaw and the industry at large. To this end the group has introduced measures and programmes to develop its own and the industry’s skills base. An exciting milestone achieved during the year was the finalisation of a knowledge exchange agreement with German steelmaking company, Badische Stahl-Engineering (BSE).

The objective of the BSE programme is to drive technological advances and excellence at Scaw’s steelmaking and rolling facilities. The agreement is valid for three years. Experts from the consultancy unit of Badische Stahlwerke (BSW), the BSE Academy in Germany, has visited the facilities and operations of Scaw’s Union Junction plant in Germiston to provide an onsite assessment of Melt Shop number 3 and Morgan Mill. As part of the programme, Scaw sent 90 of its employees to the BSE Academy for training, which took place over a six-week period. Seven teams travelled to Germany in September 2013. The training addressed the gaps identified by the experts during the onsite assessment.

The BSE Academy has a long and illustrious record. It supports green entrepreneurship and has successfully completed more than 200 consultancy and training contracts and presented more than 400 classical training seminars. A total of 5 500 participants from 28 countries have graduated from the academy in the past two decades.

Scaw is making progress in its efforts to meet its obligations in terms of the Employment Equity Act and has exceeded its own targets for the year, particularly at management level. A national employment equity committee, with oversight over the existing factory-based committees, was established in October 2012 to drive the employment equity agenda.

In its first year of operation the committee: ¼ Concluded a five-year employment equity (EE) plan; ¼ Finalised and submitted a report on all compliance issues raised from the Department of Labour following the director-general review;

¼ Facilitated the Siyaphambili Transformation Project; ¼ Appointed a Women’s EE Forum to drive an increase in female representation in Scaw;

¼ Provided training to all the EE committee members; ¼ Introduced a monthly meeting feedback report in the form of an EE bulletin;

¼ Submitted the EE report for 2013 to the Department of Labour; and

¼ Provided diversity training to all EE committee members and line managers.

The EE committee works with management to ensure that Scaw complies with relevant legislation and achieves the objectives of the group’s five-year EE plan and to develop initiatives of change and transformation under the banner of the Siyaphambili Transformation Project. The aim is to create a high-performing business with which all employees affiliate through shared values and a common vision.

Employees are encouraged to communicate any concerns related to employment equity (diversity, discrimination or harassment) to committee members in their respective areas, or to the transformation and EE manager.

Skills developmentScaw’s commitment to skills development is evident in the annual training provided to employees including the following areas:

¼ Legal compliance and licences; ¼ Safety; ¼ Production operator and competency assessments; ¼ Multi-skilling; and ¼ Management development and learnerships.



Transformation at Scaw group continued

study assistance while nine children of employees received bursaries and 123 received assistance with school fees.

Management leadership training was provided for 38 employees while 202 attended the IR Supervisory Programme.

Engagement with unions on skills developmentIn South Africa, skills development legislation requires significant consultation with labour on training plans. Management consults with trade unions at each operation about development plans and training activities for the year. Skills development is aligned to the business’s strategic key performance indicators (see page 16).

Enterprise developmentScaw actively supports the development of local business by engaging in enterprise development partnerships with entrepreneurs and SETAs. In 2013, the group created 11 entities within its Enterprise Development Programme and partnered with the Small Enterprise Finance Agency (SEFA) to set up an unlimited fund to fund these entities in 2014. Scaw’s Enterprise Development programme supports the growth of exempted micro enterprises (EMEs), which, by their nature, are 100% BEE compliant. The group has recently honed its focus onto EMEs in the scrap metal industry particularly.

The programme’s contributions consist of monetary and non-monetary, recoverable and non-recoverable contributions aimed at assisting or accelerating the development, sustainability and ultimate financial independence of the beneficiary. This is accomplished through the expansion of a beneficiary’s financial and/or operational capacity. Continuous training and skills development form part of all initiatives.

During the year Scaw presented five of its initiatives to SEFA for direct financing to expedite trading. Financing has been approved for one of the entities and we are awaiting approval on the other four entities in due course. Following these the rest of the entities will be finalised for financing. To date two of our initiatives are fully operational.

The group’s focus on scrap metal EME creation is intended to help create a complete service relating to the scrap metal value chain, in order to promote the local beneficiation of scrap. Scaw selects scrap metal EMEs with complementary services, and builds each to promote healthy competition in the industry. A careful selection of EME combinations produces sustainable enterprise development. The employee base of each EME is sourced from the local communities in which these entities trade to promote community integration and job creation.

In the year ahead the group plans to roll out the following training programmes:

¼ Employment equity and diversity development programmes.

¼ First line management programme roll-out ¼ Career ladder-based training for production and engineering.

¼ Structured talent retention and succession development.

¼ Trainee operator programme for external candidates.

¼ Leadership development. ¼ Critical knowledge retention and accelerated skills transfer programme.

¼ Production operators learnerships. ¼ Coaching skills development for line managers. ¼ Competency-based ladder of learning and development of managers at various levels.

¼ A comprehensive induction programme.

In addition to these programmes, the group is planning to establish both an accredited computer training school and a boiler-making and welding school for employees as well as unemployed community members. A further initiative to underpin the group’s commitment to skills development and talent development will be the development of mentors within Scaw itself.

In the year ahead the group is targeting increasing the number of apprentices beyond Scaw’s needs in order to support local economic development.

Technical training and apprenticeshipsPositions with Scaw are highly sought after, especially those offering apprenticeships and learnerships that lead to certification in terms of the Skills Development Act. The business has a proud tradition of technical training, offering apprenticeships in a number of trades and the majority of successful apprentices go on to enjoy long and fruitful careers in the business. During the year Scaw trained 160 apprentices.

Practical training for learner technicians in metallurgy, chemistry and electrical and mechanical engineering is also offered for young technikon graduates who wish to build careers with Scaw. During the year Scaw trained 40 people as learner technicians.

Educational sponsorshipScaw has introduced a number of university bursaries in engineering disciplines. Electrical, mechanical and metallurgical engineers graduating from university who join the group will undergo Scaw-specific training in the group’s operations. During the year there were five external bursary beneficiaries and eight internal beneficiaries. A total of 47 employees benefited from

Group at

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¼ Sports developmentScaw-branded cricket, soccer and athletics teams have contributed to the healthy development of youth, and encouraged a number of its employees to excel in sport.• Cricket

More than 100 youngsters are involved in Scaw’s cricket teams. Coaching, kit, equipment, transportation and meals are provided to both junior and senior sides.

• SoccerSupport is provided to junior, senior and ladies’ soccer teams, totalling 118 players. Seven coaches are involved in the development of these teams.

• AthleticsThe Scaw Harriers Athletic Club is well entrenched. A number of star runners have emerged from this club, including Simon Malindi who has won medals in the Comrades and Two Oceans Marathons, among other races. He has also established an athletics development programme for youth with Scaw’s support, which benefits 70 participants in road running, cross country, and track and field events. Scaw sponsors the sports gear, transport to competitions, entry fees and refreshments on competition days. The athletics programme has produced some emerging champions:

– 38 children qualified and were selected for the National Championships in September 2013 and 10 medals were won.

– Three adult athletes from Scaw Harriers were selected to represent Central Gauteng at the National Cross Country Championships, where one won a medal.

– One male athlete excelled in track and field and was selected to represent Central Gauteng Athletics in the National Championships.

Corporate social investment programmeThe objective of Scaw’s CSI programme is to uplift communities, particularly those in which Scaw operates and from which it sources most of its labour. Scaw believes that CSI commitments have the most sustainable impact when conducted as long-term investments and therefore adopts a holistic approach by managing the life cycle of a project’s needs. During the year the group spent R1,8 million on CSI (2012: R1,3 million) which brings total CSI investment since 2009 to R3,9 million.

Once the CSI committee has approved an application, Scaw commits to an injection of time, funds and/or materials, and implements systems to monitor and evaluate the impact of Scaw’s contribution. In this way the group aims to make a sustained and sustainable difference to communities.

In 2013, responsibility for socio-economic and environmental investment was allocated to the public affairs and communications department, and a new CSI committee was established with representatives from each of the business units. During the course of the year, more than 100 proposals were received. Short-listed applications were tabled at the CSI committee meeting, where projects were selected in line with Scaw’s CSI priorities:

¼ EducationScaw has implemented a flagship project, in terms of which the group is partnering BEE consortium shareholder, Shanduka, in a community development initiative with the Adopt-a-School Foundation. The beneficiary is Eketsang Secondary School in Katlehong.

This includes the award of bursaries, building and renovating institutions of learning, funding extra classroom lessons, resourcing schools with equipment and adult programmes to further the education of teachers, sponsoring learnerships and funding leadership conferences and programmes.

¼ EnvironmentIn addition to managing its own impacts on the environment through mechanical means and managed systems, Scaw seeks to improve the environment in the most indigent communities. Our most recent environmental project is the greening of the township of Katlehong with the distribution of 2 000 fruit trees to households there in partnership with Food & Trees for Africa and the municipality of Ekurhuleni.



Transformation at Scaw group continued

Leadership pipelineBy developing human capital within the business, Scaw has been able to offer long-term careers with appropriate and attractive growth opportunities. Many of the group’s leaders have achieved long service, having moved through technical roles into senior engineering appointments and ultimately into general management. Currently some 8% of senior to middle management roles are occupied by employees who started out as trainees with bursaries from Scaw.

Trade union representationThe group endorses the rights of employees to freedom of association and to collective bargaining. In some countries collective bargaining takes place at enterprise level, but Scaw has a policy of negotiating wages centrally. Scaw South Africa is a member of two associations: the South African Engineers and Founders Association (SAEFA) and the Iron and Steel Producers Association (ISPA), which affiliate to the Steel and Engineering Industries Federation of SA (SEIFSA). Collective bargaining takes place at industry level at the Metal and Engineering Industries Bargaining Council (MEIBC) at three-year intervals. The negotiation process is of extreme importance to achieving a mutually beneficial outcome.

At individual business level, the trade unions represent their members on important matters such as health and safety, job security and work reorganisation, skills development, employment equity, grievances and disciplinary matters. Each business site has its own union composition and shop steward structures representing employees. Management meets and consults regularly with these structures at each factory on shop floor issues.

Presently, around 80% of Scaw’s South African workforce is unionised.

The majority of Scaw employees (approximately 5 500) are based in South Africa, of which most fall under national collective bargaining agreements for the entire metal and engineering sector of the South African economy.

Approximately 1 200 staff and 600 artisans receive regular performance and career development reviews each year, which equates to approximately 28% of permanent employees.

The group employs more than 5 500 people, offering careers with

growth and development opportunities and competitive remuneration packages. Scaw’s employment practices are aligned to the socio-economic, political and legislative context of each of the countries in which the group operates.

Through a careful process of talent attraction and career development Scaw aims to create a high-performance business run by motivated and competent employees.

As most of Scaw’s business units have operated on their current sites for many decades (for instance the Union Junction complex for almost 90 years and the Steel Wire Rope operation for 92 years), the businesses are well-known in their communities as major employers providing security through long-term careers.

In South Africa, Scaw is in the process of implementing a new human resources strategy which encompasses:

¼ introducing continuous improvement principles to raise productivity;

¼ reducing costs and improving quality and customer satisfaction;

¼ training in the well-known international 20 Keys programme;

¼ introducing new, improved technologies; ¼ benchmarking of operations to top performing companies in the industry; and

¼ introducing more intensive in-plant training capacity in critical areas.

The group has continued to meet its employment equity plan targets. HDSAs represent 70% of all management positions, and white males now comprise less than 10% of the total workforce. A significant challenge for the group remains the gender imbalance in the business, a legacy issue across much of the heavy engineering industry sector. With just 7,5% women in the business, this is firmly on the business scorecard for long-term sustainable change and to this end an EE Women’s Forum was established in the year.

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Our people

The size, nature and geographical locations of Scaw’s operations pose significant SHE challenges. A group SHE management framework defines the roles and responsibilities of the corporate centre and business units on the journey towards zero harm, improved occupational and general health, and a reduction in environmental impact. The framework aligns with the international ISO 14001 and OSHAS 18001 standards.

The corporate centre (comprising the board) defines, communicates and reviews requirements in relation to the vision, leadership, principles, policy and standards for SHE. It assures compliance through regular self-assessments, peer reviews and third-party audits.

The group SHE department is based at the Union Junction operation, where Jurgen Theiss, as head of SHE, leads a core team. This team serves the group worldwide in facilitating SHE programmes. In addition, SHE teams are located at the sites to service the specific site requirements.

The SHE team makes use of an ongoing communication programme that includes specialised campaigns. The communication tools include The Junxion (the group’s employee magazine), the group’s website and internal portal, notice boards, posters, memos, meetings and conferences, visible felt leadership walkabouts, manuals, and pocket-sized cards of the group’s Golden Rules providing a quick reference. The business units implement the corporate requirements in business-specific programmes.

SHE fast facts

¼ Safety performance is a main agenda item in all forums in the group and a KPI at all levels of the organisation.

¼ Throughout the group worldwide, health risk assessments are updated annually and linked with hygiene surveys.

¼ The target of 80% of employees being voluntarily counselled and tested for HIV/Aids has been consistently achieved.

¼ Energy consumption is monitored on monthly and annual bases with a focus on reducing consumption, particularly of electricity and natural gas, where possible.

¼ With respect to the scarcity of water in South Africa, the group continues to strive for a reduction in water consumption.

¼ Scaw retains OHSAS 18001 and ISO 14001 certifications at its main sites.

Vision: Achieve zero harm through the effective management of SHEScaw believes that all employees should be able to return home fit and well at the end of each shift armed with knowledge to educate their families and communities regarding SHE issues. To this end its operations should have fundamentally safe, well-designed plant, equipment and infrastructure with risk-based SHE management systems driving desired outcomes and behaviours.

SHE principles ¼ Zero mindset: An acceptance of and responsibility for the premise that all injuries and occupational illnesses are preventable and that the group can avoid, minimise and mitigate environmental impacts arising from its operations.

¼ No repeats: All unsafe practices and incidents and environmental incidents and poor environmental practices will be investigated to determine the root causes and the steps necessary to prevent recurrences.

¼ Strict rules and standards: Scaw has adopted SHE standards to ensure that minimum standards are maintained throughout the group. Divisional line management at all levels has the responsibility of implementing and maintaining these.

Continuous improvement is driven through various communication platforms and by celebrating outstanding efforts and achievements made by employees. Zero harm certificates are awarded to business units that work an entire calendar year


SHE


without experiencing any LTIs. The award ceremonies are generally hosted by Scaw’s divisional managing directors. Other significant safety improvements are celebrated with the achieving teams.

Legal compliance audits are conducted on a regular basis, external auditors for those sites are certified to OHSAS 18001 and ISO 14001. During prior audits certain legal non-compliances were identified in respect of machine guarding and certificates of compliance of electrical installations. In respect of the machine guarding, projects were initiated and are expected to be completed during the 2014/15 financial year. On the certificates of compliances only the Union Junction site is still in progress and this is expected to be completed during the next financial year.

Twelve safety management system standardsThese standards form the basis for the development, enhancement and application of the SHE management system in the group. They have been derived from existing Scaw standards, industry practice and internationally recognised standards such as OHSAS 18001.

In addition, Scaw has implemented the fatal risks standard (FRS), which determines minimum requirements for managing certain high risks. These apply to all Scaw business units and operations, including contractors and visitors involved in controlled activities. The manual was originally introduced in December 2007. By September 2013 most divisions had achieved an average of 90% compliance and some had exceeded 95%. Self-assessments of compliance are reviewed during audits.

The Golden Rules also form part of the management of fatal risks. Further, a manual, Scaw Health Way outlining the Scaw occupational health standards and their application, is currently being compiled.

Management of change has become a focus area in recent years, instigating the review of procedures designed to address the risks as a result of changes and ensure continued and uninterrupted legal compliance. Enforcement campaigns are then designed and implemented.

Continual improvement

POLICY1. Policy, leadership

and commitment

PLANNING2. Risk and change management3. Legal and other requirements

4. Objectives, targets and performance

IMPLEMENTATION AND OPERATION5. Training, awareness and competence

6. Communication, consultation and participation7. Documentation and control of documents

8. Operational control9. Emergency preparedness and response

10. Contractor and business partner management

CHECKING AND CORRECTIVE ACTION11. Incident reporting and investigation

MANAGEMENT REVIEW12. Monitoring, audits and reviews

These are published in the Scaw Safety Way and contained in OSHAS 18001.

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Scaw’s SHE management framework

Corporate

The corporate centre will define and communicate what is required, including clear, non-negotiable standards. This will require, inter alia, resourcing, communication, setting of executive KPIs and an overarching safety plan.

DivisionsThe divisions will implement the Scaw corporate policy and add their own business-specific standards and rules to these.

This will require resourcing, communication, setting of business-specific KPIs and operational safety plans.

Scaw vision, principles and policyScaw safety management system

standardsScaw fatal risk standards

Scaw safety Golden Rules

Scaw Metals SA

Scaw boardExecutive committee

Corporate SHE

Audits

Peer reviewThird party

Leadership

Scaw metals’ vision and principlescorporate and divisional policy

and standards

Operational locations

Procedures

Training

Behaviour

(including contractors)

Audits

Self-assessmentDivisionalThird party

Behavioural

Leadership

TrainingThe group human resources department manages the roll-out of training. A training matrix and schedule have been developed that include operational, technical and safety-specific training for employees.

Training has been held group-wide on the FRS and a modification of training material is under way to accommodate low literacy levels. An example of this process is the lengthy review of the lockout and isolation training.

The safety risk management programme (SRMP) is aimed at developing higher levels of capability in managing risks safely. As part of this programme, level 3 risk management training is provided to managers, and level 2 risk management training is provided to supervisors, while level 1 is provided to team members.

Specialised training held during the year, all of which is competency-based, included:

¼ Gas safety (shop floor and classroom). ¼ Slinging and safe lifting practices training (basic level, shop floor and classroom).

¼ Transport Education Training Authority (TETA) accredited pendant and overhead crane training.

¼ TETA accredited forklift training. ¼ Vienna testing for all mobile equipment operators. ¼ Safety fundamentals training formalised in the updated employee induction programme.

¼ Hazard identification and risk assessment (HIRA) training for shop floor level.

¼ SHE representative training. ¼ First aid training.

All licences are reissued every second year. Contractor training is provided by an external service provider.


SHE continued


¼ Antiretroviral therapy (ART) is commenced when the CD4 count is at 350.

¼ Excluding the Dimbaza site, a significant reduction in the number of reportable noise induced hearing loss (NIHL) cases to two for 2013 from seven in 2012. This is more than a 50% reduction. The Dimbaza site, of which Scaw took ownership during 2008, was decommissioned and all employees had to undergo exit medicals, during which 32 NIHL cases were diagnosed. These have all been referred to the Compensation Commissioner.

¼ No cases of tuberculosis in silica areas were diagnosed at the Union Junction site, Standard Foundry, Eclipse East and Boksburg Foundry.

¼ 2013 was the first year in the history of Scaw that the Steel Wire Rope operation had no reports of elevated blood lead levels.

¼ An introduction of regular, post-traumatic stress counselling for all significant injuries and occurrences in the workplace.

Scaw has a holistic, integrated and sustainable occupational healthcare system for all employees. Scaw’s healthcare system is geared towards total wellness of the workforce and incorporates annual medical surveillance and primary healthcare. This includes the treatment of minor illnesses, the management of chronic illnesses (communicative and non-communicative), a work-related injury management programme, psychological counselling and HIV awareness and testing. The occupational healthcare system tracks the entire lifecycle of an employee’s career with Scaw, so that any potential deterioration in the employee’s health status can be detected early and managed proactively. The system is advancing with the introduction of a consolidated database of individual employee health management.

The system begins with the provision of a healthy workplace through the identification, elimination or reduction of health risks at source through engineered methods (as per the Hierarchy of Controls). Physical safeguarding of the working environment goes beyond the provision of personal protective equipment (PPE). The system continues with the tracking of the health of injured or ill employees at the group’s occupational clinics on a daily or weekly basis, depending on the need, and providing medical attention, including trauma counselling, until employees are well enough to resume normal duties.

ReviewsScaw has a number of mechanisms that are used to monitor and review safety performance across the organisation. The types of audits and reviews to be conducted are determined primarily by the risk profile of the respective business units.

Annual reviews ¼ Scaw’s Exco reviews the group’s SHE objectives, targets and standards annually to ensure that they remain current and valid. The objectives and targets are used as key performance indicators (KPIs) for performance management within the group.

¼ Occupational hygiene surveys are conducted every two years to measure workplace exposure. In 2012, 97% of employees scheduled for medical surveillance attended the consultations.

Peer review programme (PRP)The PRP provides assurance that fundamentally sound, risk-based management systems are in place at all operations, but also work to build core competence and act as a mechanism for learning and sharing across Scaw. The group recently commenced with the reintroduction of PRP by using the SHE personnel in certain plants to cross-audit other plants. This will be expanded to more sites in the coming years. Management is responsible for implementing actions arising from the PRPs.

Self-assessment and safety plansKey to the successful implementation of continuous improvement is the requirement for business units to carry out annual self-assessments of the implementation of FRS. The gaps between full compliance and the self-assessed reality provide a focus for annual safety improvement plans. Reporting on self-assessments forms part of the assurance process required by Exco.

Our employees’ wellbeingFY2013

¼ No new HIV/Aids cases were diagnosed at three sites, including Union Junction.

¼ The introduction of a once-a-day HIV tablet to Scaw employees who are on ARVs. This tablet is a combination of all three treatment protocols into one daily dose, and is highly effective in the treatment of co-infections such as TB in HIV-positive employees.

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Supporting optimal medical surveillance of employees, Union Junction’s medical centre is equipped with X-ray equipment which complements Scaw’s permanent database of employee health records. The facility is available to other medical centres within Scaw where the need arises.

Medical surveillance includes hearing tests, spirometry (lung function testing), visual acuity and biological monitoring, where indicated. Various programmes and awareness campaigns are conducted to reduce the number of NIHL cases because Scaw recognises that prevention is best achieved by educating employees about occupational health risks. Those who are identified with NIHL are monitored regularly to protect them from further hearing loss. In some areas engineering measures have been implemented to reduce exposure to excessive noise.

Health daysAnnual health days are conducted at most Scaw sites to educate employees about health resources external to Scaw which are available to them within their communities. Employees are free to attend the exhibits that interest them and share the advantages of this extended health service with family members.

During the health days employees also have access to cholesterol level and kidney function tests, and blood type analyses. The South African Blood Bank, the Virgin Active fitness group, Weigh-Less lifestyle service, and Alcoholics Anonymous and Elim clinics for assistance in overcoming substance abuse, all participate. For many employees the health days represent their first exposure to external health services.

Employees in appropriate cases are either placed on sick leave or light duty until they are well enough to return to work. If they do not recover sufficiently to resume normal duties, alternative responsibilities within the group are sought for them. Medical boarding of employees is the last resort. Scaw holds to this approach because it takes into account the whole person, not simply the visible injury, and it understands that the injured or ill employee is an income earner for his or her family who needs the proper time and attention to recuperate fully in order to be restored as a contributing member of the group and the family.

Health clinicsScaw’s occupational health clinics (also known as medical centres), equipped with professional medical staff and equipment, are the first ports of call in dealing with employee disease and injury and have the responsibility of monitoring employee treatment until recovery.

These clinics have been in place in most of Scaw’s South African operations for many years. More recently, Life Occupational Healthcare, a member of the private Life Healthcare Services in South Africa, has taken over managing most of these clinics.

Both the Union Junction and Steel Wire Rope clinics, being at the two largest sites in the group, are open 24/7 and provide occupational healthcare and a monitoring service for employee health. This is in addition to providing primary healthcare for minor ailments, and chronic monitoring and medication for hypertension, diabetes, asthma and epilepsy. Medical personnel treat injury-on-duty cases, manage a wellness HIV/Aids clinic, and will arrange for the evacuation of South African employees who are injured while on duty overseas.

The Union Junction medical facility is the largest clinic within the group and is staffed by:

¼ a business unit manager; ¼ three occupational health practitioners; ¼ six registered nurses; ¼ an occupational medical practitioner; ¼ a radiologist; ¼ a clinical psychologist; ¼ an optometrist (weekly); ¼ a clinical psychologist (weekly); ¼ a GP; and ¼ two full-time paramedics per shift who are equipped with an onsite ambulance and access to advanced medical emergency vehicles including a helicopter.


SHE continued


participants to get tested and use Scaw’s wellness programme.HIV committeesA number of employees have joined Scaw’s volunteer HIV/Aids education programme as peer educators. HIV committees formed by the peer educators at most of the large sites are integral to the HIV/Aids management programme. Committee members and other employees participate in the annual World Aids Day activities.

Occupational disease occurrenceThe principal occupational health risks in Scaw are NIHL, illness due to dust exposure, and dermatitis or asthma due to chemical exposures. During the year under review, a total of 35 occupational diseases were reported. The majority, 32, related to the Dimbaza Foundry which had been decommissioned during 2012 and all employees were required to undergo an exit medical examination as part of the retrenchment process. All these cases were reported to the Compensation Commissioner. It was concluded that the cause of these cases was due to the period prior to Scaw taking ownership of the Eclipse Group of Foundries, when very few employees wore the appropriate personal protective equipment that would be necessary in such working environments. In the rest of the group, only three other occupational diseases had been identified, ie one case at the Steel Wire Rope division and two at Standard foundry, which were all lung related.

HIV/AidsScaw’s HIV/Aids programme is showing signs of winning the battle against the pandemic in the workplace as the result of continual education about prevention, treatment (including nutrition), family and social impacts, and destigmatisation of the disease. Specifically the programme includes:Voluntary counselling and testing (VCT)Monthly testing targets are set to achieve annual testing targets of 80%.Wellness programmeWhen an employee has been diagnosed with HIV, he/she is enrolled in a wellness programme unless the employee refuses participation. Testing of the CD4 count is repeated at set intervals. In addition, the employee is counselled and general health is monitored.ARTThe provision of ART has proven to be greatly successful, with the result that nearly all employees who have been treated are performing their normal duties. The critical importance of adhering to therapy requirements and the continuance of treatment forms the thrust of ART counselling.TrainingTo improve employee understanding about the impact of HIV on individuals and society, Scaw conducts HIV/Aids awareness campaigns and training on an ongoing basis. One of these programmes is facilitated by HIV-positive persons as trainers, who encourage

SHE objectives 2014

ObjectiveTarget

2013/14Performance

2013/14Target

2014/15

Employees to participate in VCT (including previously tested)

85% 79% 80% (including previously positively

tested)

Known HIV-positive cases to be enrolled on a recognised wellness programme

90% 81,5% 90%

Uptake of employees for risk-based medical surveillance 100% 98% 100%

Reduction in RSA of level 3 and level 4 NIHL cases 40% reduction Excluding the exit medicals for Dimbaza,

40% reduction was achieved

<10 cases

Group health improvement plan To be maintained

Ongoing improvements

made

To be maintained

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The environment programme is the responsibility of the head of SHE based at Scaw’s Union Junction site. However, all employees at Scaw are expected to take responsibility for environmental management. Each business unit’s line management is responsible for the full implementation of the Scaw environmental management framework and participation in the Scaw assurance programme. This requires:

¼ the allocation of appropriate resources and the provision of training, education, consultation and auditing to ensure compliance;

¼ the development, implementation and maintenance of programmes and procedures; and

¼ effective environmental impact identification, assessment and control, designed to achieve proactive management.

Managing environmental risksThe group is mindful of the impact of global warming and the pressing need to conserve finite resources. Scaw maintains control of the resources it uses to manufacture its range of steel products by setting targets for natural resource consumption. Energy consumption and water use per tonne of steel produced are being continually reduced year-on-year wherever possible throughout the group.

Most of Scaw’s operations are ISO 14001 certified.

Scaw is also actively investigating a number of environmental projects to reduce the impact of its activities. These include:

¼ A co-generation project at the DRI plant, which would entail the generation of electricity from the off-gases from the kiln.

¼ A waste recycling project for the recycling of slag generated at the melt shops.

¼ The reuse of other waste streams. ¼ Removal of alien vegetation species from all sites.

In terms of monitoring, Scaw’s Exco reviews the environmental objectives, targets and standards annually to ensure that they remain current and valid. The objectives and targets are used as KPIs for performance management within the group and include objectives for energy consumption, water consumption and waste reduction.

Interested and affected partiesThe group continues to hold constructive dialogue with interested and affected parties by convening forums and engaging with community members on an ad hoc basis. The Union Junction site hosts an annual environmental stakeholder forum meeting. Stakeholders in this instance include local residents, national, provincial and local government authorities such as the Department of Environmental Affairs, the Gauteng Department of

As a manufacturer of value-added steel products from steel scrap and directly reduced iron, Scaw is active in one of the world’s most sustainable industries. Steel is the most recyclable material on the planet. Scaw procures and processes its own steel scrap requirements and recycles significant volumes of scrap steel in its steelmaking operations.

One of Scaw’s environmental objectives is to complete the actions to address all directives and compliance notices that were issued to the group at the start of 2013. Significant progress was made during the year, with 40 of the 48 issues having been closed out at a significant capital expenditure of R48,9 million (which does not include the costs associated with the smaller projects).

Substantial focus is being placed on finalising closure of historic legal non-conformances. At the end of the financial year 89% of those non-compliances identified during 2011 had been addressed. The remaining items are dependent on completion of the authorisation process or require substantial capital investment. An example of this is the R210 million secondary emission extraction systems for the Union Junction Foundry, which is in progress and expected to be completed in 2015. Many of these non-compliances were also the subject of the directives and compliance notices referred to above.

The perceived non-compliances that required authorisations included 10 listed activities and the necessary section 24G rectification applications, in terms of the National Environmental Management Act (NEMA) were submitted. Six of these applications were closed by the relevant authorities because the activities were undertaken prior to 1998 and hence prior to the implementation of NEMA or that the activity is not listed or no longer listed as an activity requiring authorisation. On the remaining applications (of the four, three were issued; one is being amended (HCBP) and one is being appealed (East); an environmental authorisation was received and the fines were paid. An application for amendment to the conditions of one of these authorisations was submitted to the authorities.

Apart from the above non-compliances and directives no other penalties such as fines or sanctions have been imposed on the group for contraventions of environmental regulations.



Protecting our environment

Particulate emissions at Union Junction are continuously monitored at certain stacks and a dust fallout sampling programme is also in place at the site. This consists of dust buckets placed in strategic locations on the boundary of the site and in the surrounding communities. In addition, external consultants undertake quarterly and annual emission surveys.

Air emission licence applications were submitted to the air quality authorities for all Scaw plants that are subject to the legislation. A provisional licence has since been issued for the Boksburg Foundry.

Every year projects are implemented for continuous progress in the reduction of emissions:

¼ In 2012 diesel was replaced with natural gas for the start-up of kiln 3 at the DRI.

¼ A canopy was installed for the extraction of fugitive emissions at the ladle furnace in Melt Shop number 3

¼ DRI bag filters were replaced with more efficient bags, substantially reducing particulate emissions

¼ As a temporary measure until the upgrade of the fume extraction system is implemented, a hood was installed on a furnace at Melt Shop 2. A capital cost of R210 million was approved for the upgrade of the total emission control system of the Union Junction Foundry, including Melt Shop 2.

WasteCurrently the largest producer of process waste in the group is the Union Junction site. A phased approach to process waste has been adopted with the initial focus on large volumes of waste streams, both in terms of viable recycling options and in terms of the quantities produced. At Union Junction process waste recycling initiatives were implemented with a focus on the recycling of char and dust. All the slag from the furnaces is now also recycled and the metal extracted and reused in the furnaces.

Scaw ultimately aims to recycle as much waste produced on site and therefore negate the need for disposal at a waste site. However, since this is not yet possible, two sites have been secured for waste disposal. Scaw has been issued with a waste licence that allows for the recovery of metals from the existing waste disposal sites. Not only will Scaw be able to utilise recovered metal within its process but this will also “free” up air space for future disposal on an already disturbed footprint.

Agriculture and Rural Development (GDARD) and the Department of Water Affairs, as well as Ekurhuleni Metropolitan Municipality.

Complaints from the community are recorded and addressed. Feedback is provided to the complainant after investigation.

None of the group’s activities had a significant impact on biodiversity in a protected area.

EnergyThe group is focused on improved energy management and has been tracking improvements since 2005. Scaw has achieved a reduction of 15% over 10 years commencing from a base level in 2004.

Energy is regarded as a key environmental performance indicator and measurable targets have been set at group and operational level. Data is recorded on a central database. The group has a number of short and long-term initiatives to reduce electricity consumption which include, at the Union Junction site:

¼ Variable speed drives for arc furnace regulation. ¼ Energy-efficient motor survey. ¼ Energy-efficient lights around Scaw’s perimeter and in the Directly Reduced Iron (DRI) plant.

¼ Heat pumps for change houses.

Other initiatives under consideration are: ¼ Melt Shop number 3 scrap pre-heating. ¼ Static VAR compensation for voltage stabilisation at 33 kV incoming supply.

¼ Co-generation plant at the DRI – a feasibility study is under way.

Currently the group primarily uses coal as a reductant in the production of DRI in rotary kilns at the Union Junction site. The process involves the use of coal to reduce the iron oxide to an iron rich product. The carbon in the coal fulfils two objectives: it serves as a heat source and acts as a reductant by reacting with the oxygen in the iron ore to produce carbon dioxide.

EmissionsFor the first time Scaw participated during the year under review in the Carbon Disclosure Project, where companies were invited to complete a questionnaire regarding their carbon emissions.

Greenhouse gas emissions, specifically carbon dioxide emissions, are managed as part of the energy-efficiency targeting.

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Appendices


Appendices

Audit and risk committee report 64GRI index 65Contact details 73


The information below constitutes the report of the Scaw audit and risk committee.

The report is provided by the audit and risk committee in respect of Scaw South Africa Proprietary Limited in compliance with section 94 of the Companies Act, 71 of 2008, as amended (the Act). The audit and risk committee’s function is guided by a detailed charter that is informed by the Act and the King Report on Corporate Governance (King III) and approved by the board.

The committee comprises three members. It is chaired by Nkosemntu Nika, and further comprises Vusi Twala and Ashley Ally.

The committee met five times in the year in review and attendance is set out on page 47. Special meetings are convened as required. The external auditors and executive management are invited to attend every meeting. The committee is governed by a formal audit and risk committee charter, which was complied with in full during the year.

In terms of the new South African Companies Act, the audit and risk committee has considered and satisfied itself of the appropriateness of the expertise and experience of Shaw Manyema, acting chief financial officer of Scaw. Further, the audit and risk committee has satisfied itself that Deloitte & Touche, the external auditors and designated auditor respectively, are independent of Scaw thereby able to conduct their audit functions without any influence from the group. The auditor’s independence was not impaired by any consultancy, advisory or non-audit services undertaken by the auditor.

Annual financial statementsThe audit and risk committee has reviewed the financial statements of Scaw South Africa Proprietary Limited for the period ended 31 March 2014. The audit and risk committee is of the view that in all material respects they comply with the relevant provisions of the Act and the International Financial Reporting Standards, and fairly present the group and company’s financial position at that date and the results of operations and cash flows for the period ended 31 March 2014.

The audit and risk committee has also reviewed an assessment by management of the going-concern premise of the group before recommending to the board that the group will be a going concern in the foreseeable future.

The audit and risk committee recommended the annual financial statements for the year ended 31 March 2014 for approval to the board. The audit and risk committee has reviewed for completeness and accuracy the 2014 integrated report.

Nkosemntu NikaCommittee chairman


Appendices

Audit and risk committee report

Scaw is committed to the G3.1 Guidelines, which continues to provide a valuable framework for citizenship reporting. Our 2014 reporting applies a self-declared GRI Application Level C.

Indicator Description Page

1. Strategy and analysis

1.1 Statement from the most senior decision-maker of the organisation. 35, 37

1.2 Description of key impacts, risks, and opportunities. 24 – 26

2. Organisational profile

2.1 Name of the organisation. 73

2.2 Primary brands, products, and/or services. 10 – 12

2.3 Operational structure of the organisation, including main divisions, operating companies, subsidiaries and joint ventures.

17

2.4 Location of organisation’s headquarters. IFC

2.5 Number of countries where the organisation operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report.

4 – 5

2.6 Nature of ownership and legal form. IFC – 1

2.7 Markets served (including geographic breakdown, sectors served and types of customers/beneficiaries).

4 – 5, 10 – 12

2.8 Scale of the reporting organisation. IFC

2.9 Significant changes during the reporting period regarding size, structure, or ownership.

IFC – 1

2.10 Awards received in the reporting period. Not applicable

3. Report parameters

3.1 Reporting period (eg fiscal/calendar year) for information provided. IFC

3.2 Date of most recent previous report (if any). IFC

3.3 Reporting cycle (annual, bi-annual, etc). IFC

3.4 Contact point for questions regarding the report or its contents. 1

3.5 Process for defining report content. 1

3.6 Boundary of the report (eg countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers).

1

3.7 State any specific limitations on the scope or boundary of the report. 1

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations and other entities that can significantly affect comparability from period to period and/or between organisations.

3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the indicators and other information in the report. Explain any decisions that do not apply, or substantially diverge from, the GRI Indicator Protocols.

Not reported

3.10 Explanation of the effect of any restatements of information provided in earlier reports, and the reasons for such restatement (eg mergers/acquisitions, change of base years/periods, nature of business, measurement methods).

1

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3.11 Significant changes from previous reporting periods in the scope, boundary or measurement methods applied in the report.

Not applicable

3.12 Table identifying the location of the standard disclosures in the report. GRI Index

3.13 Policy and current practice with regard to seeking external assurance for the report.

Not reported

4. Governance, commitments and engagements

4.1 Governance structure of the organisation, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight.

44 – 48

4.2 Indicate whether the Chair of the highest governance body is also an executive officer.

44

4.3 For organisations that have a unitary board structure, state the number and gender of members of the highest governance body that are independent and/or non-executive members.

44

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body.

20 – 21, 49

4.5 Linkage between compensation for members of the highest governance body, senior managers, and executives and the organisation’s performance (including social and environmental performance).

54, 57, 60

4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided.

45

4.7 Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organisation’s strategy on economic, environmental, and social topics.

44

4.8 Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

16, 33

4.9 Procedures of the highest governance body for overseeing the organisation’s identification and management of economic, environmental and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct and principles.

48

4.10 Processes for evaluating the highest governance body’s own performance, particularly with respect to economic, environmental, and social performance.

45

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation.

23 – 25, 46

4.12 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organisation subscribes or endorses.

1

4.13 Memberships in associations (such as industry associations) and/or national/international advocacy organisations.

20 – 21, 53

4.14 List of stakeholder groups engaged by the organisation. 20 – 21

4.15 Basis for identification and selection of stakeholders with whom to engage. 20

4.16 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group.

20 – 21, 49, 60

4.17 Key topics and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key topics and concerns, including through its reporting.

20 – 21, 49, 60


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Disclosures on management approach (DMAs)

DMA EC Economic performanceMarket presenceIndirect economic impacts

41

DMA EN Materials EnergyWaterBiodiversityEmissions, effluent and wasteProducts and servicesComplianceTransportOverall

22, 54, 60, 61

DMA LA EmploymentLabour/management relationsOccupational health and safety Training and educationDiversity and equal opportunityEqual remuneration for women and men

49 – 52, 57 – 59

DMA HR Investment and procurement practicesNon-discriminationFreedom of association and collective bargainingChild labourPrevention of forced and compulsory labourSecurity practicesIndigenous rightsAssessmentRemediation

49 – 50, 53

DMA SO Local communitiesCorruptionPublic policyAnti-competitive behaviourCompliance

14, 33

DMA PR Customer health and safetyProduct and service labellingMarketing communicationsCustomer privacyCompliance

Not reported

Economic

EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings and payments to capital providers and governments.

41

EC2 Financial implications and other risks and opportunities for the organisation’s activities due to climate change.

Not reported

EC3 Coverage of the organisation’s defined benefit plan obligations. Not reported

EC4 Significant financial assistance received from government. Not applicable

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Market presence

EC5 Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation.

Not reported

EC6 Policy, practices and proportion of spending on locally based suppliers at significant locations of operation.

27

EC7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.

51

Indirect economic impacts

EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind or pro bono engagement.

52

EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts.

52

Environmental

Materials

EN1 Materials used by weight or volume. Not reported

EN2 Percentage of materials used that are recycled input materials. Not reported

Energy

EN3 Direct energy consumption by primary energy source. 61

EN4 Indirect energy consumption by primary source. Not reported

EN5 Energy saved due to conservation and efficiency improvements. 61

EN6 Initiatives to provide energy-efficient or renewable energy-based products and services and reductions in energy requirements as a result of these initiatives.

Not reported

EN7 Initiatives to reduce indirect energy consumption and reductions achieved. 61

Water

EN8 Total water withdrawal by source. Not reported

EN9 Water sources significantly affected by withdrawal of water. Not reported

EN10 Percentage and total volume of water recycled and reused. Not reported

Biodiversity

EN11 Location and size of land owned, leased, managed in or adjacent to protected areas and areas of high biodiversity value outside protected areas.

Not reported

EN12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas.

61

EN13 Habitats protected or restored. Not reported

EN14 Strategies, current actions and future plans for managing impacts on biodiversity.

Not reported

EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk.

Not reported


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Emission, effluents and waste

EN16 Total direct and indirect greenhouse gas emissions by weight. Not reported

EN17 Other relevant indirect greenhouse gas emissions by weight. Not reported

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. Not reported

EN19 Emissions of ozone-depleting substances by weight. Not reported

EN20 NO, SO, and other significant air emissions by type and weight. Not reported

EN21 Total water discharge by quality and destination. Not reported

EN22 Total weight of waste by type and disposal method. Not reported

EN23 Total number and volume of significant spills. Not reported

EN24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally.

Not applicable

EN25 Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organisation’s discharges of water and run-off.

Not reported

Product and services

EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.

60 – 61

EN27 Percentage of products sold and their packaging materials that are reclaimed by category.

Not reported

Compliance

EN28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations.

60

Transport

EN29 Significant environmental impacts of transporting products and other goods and materials used for the organisation’s operations, and transporting members of the workforce.

Not reported

Overall

EN30 Total environmental protection expenditures and investments by type. Not reported

Social

Employment

LA1 Total workforce by employment type, employment contract and region. 49

LA2 Total number and rate of employee turnover by age group, gender and region.

Not reported

LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations.

Not reported

LA15 Return to work and retention rates after parental leave, by gender. Not reported

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Labour/management relations

LA4 Percentage of employees covered by collective bargaining agreements. 53

LA5 Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements.

Not reported

Occupation health and safety

LA6 Percentage of total workforce represented in formal joint management –worker health and safety committees that help monitor and advise on occupational health and safety programmes.

53

LA7 Rates of injury, occupational diseases, lost days and absenteeism, and number of work-related fatalities by region and by gender.

36

LA8 Education, training, counselling, prevention and risk control programmes in place to assist workforce members, their families, or community members regarding serious diseases.

58

LA9 Health and safety topics covered in formal agreements with trade unions. Not reported

Training and education

LA10 Average hours of training per year per employee by employee category. Not reported

LA11 Programmes for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

50 – 51

LA12 Percentage of employees receiving regular performance and career development reviews.

53

Diversity and equal opportunity

LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership and other indicators of diversity.

49

Equal remuneration for women and men

LA14 Ratio of basic salary of men to women by employee category. Not reported

HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening.

Not applicable

HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken.

Not applicable

HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

Not applicable

Non-discrimination

HR4 Total number of incidents of discrimination and actions taken. 49

Freedom of association and collective bargaining

HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights.

14, 26

Child labour

HR6 Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour.

Not applicable


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Prevention of forced and compulsory labour

HR7 Operations identified as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of forced or compulsory labour.

Not applicable

Security practices

HR8 Percentage of security personnel trained in the organisation’s policies or procedures concerning aspects of human rights that are relevant to operations.

Not applicable

Indigenous rights

HR9 Total number of incidents of violations involving rights of indigenous people and actions taken.

Not applicable

Assessment

HR10 Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments.

Not applicable

Remediation

HR11 Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms.

Not reported

Local communities

SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programmes.

52

SO9 Operations with significant potential or actual negative impacts on local communities.

Not reported

SO10 Prevention and mitigation measures implemented in operations with significant potential or actual negative impact on local communities.

60 – 61

Corruption

SO2 Percentage and total number of business units analysed for risks related to corruption.

Not reported

SO3 Percentage of employees trained in organisation’s anti-corruption policies and procedures.

33

SO4 Actions taken in response to incidents of corruption. 33

Public policy

SO5 Public policy positions and participation in public policy development and lobbying.

Not reported

SO6 Total value of financial and in-kind contributions to political parties, politicians and related institutions by country.

Not reported

Anti-competitive behaviour

SO7 Total number of legal actions for anti-competitive behaviour, anti-trust and monopoly practices and their outcomes.

33

Compliance

SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-monetary sanctions for non-compliance with laws and regulations.

33

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Customer health and safety

PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement and percentage of significant products and services categories subject to such procedures.

Not reported

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their lifecycle, by type of outcomes.

Not reported

Product and service labelling

PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.

Not reported

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes.

Not reported

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction.

20 – 21

Marketing communications

PR6 Programmes for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion and sponsorship.

Not reported

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship by type of outcomes.

Not reported

Customers’ privacy

PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data.

Not reported

Compliances

PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision of products and services.

60


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BASTION GRAPHICS

Our head officePhysical addressLower Germiston Road Heriotdale Johannesburg Gauteng Republic of South Africa

Postal address PO Box 61721 Marshalltown 2107 Gauteng Republic of South Africa

Phone: +27 (0) 11 621 1555Fax: +27 (0) 11 621 1590Email: [email protected]

Website: www.scaw.co.za

FeedbackWe welcome your feedback on this report. Comments, suggestions or queries should be directed to:

Dudu NdlovuExecutive Head: Public Affairs and CommunicationsPhone: +27 (0) 11 621 1524Email: [email protected]

Contact details

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