Management of sustainability
Value added statement
The measure of the value created by the group is the amount of value added by its diverse manufacturing, distribution and other activities to the cost of raw materials, products and services purchased. This statement shows the total value created and how it was distributed.
* Income from investments include interest received, dividend income and share of associates’ profits.
** CSI includes education, training and social upliftment projects.
***These are permanent group employees.
Altron’s sustainability philosophy
In our annual report we have emphasised the importance of sustainable growth and our long-term commitment to our business relationships. In this sustainability report, we set out to explore these relationships more closely, understand the impacts we have on the environment and the stakeholder groups we interface with, and report fairly and transparently on the most material issues that we have identified as being important to the long-term survival and success of our business.Arriving at our most material issues
Altron is a diversified business operating in the power electronics, telecommunications, multi-media and information technology industries:- Multi-media designs and manufactures among others satellite and terrestrial digital set-top decoders.
- Telecommunications sells, distributes and services cellular network operators and designs, instals and manages Motorola radio systems and operates in data distribution as an operator and manufactures telecom copper and fibre optic cables.
- The IT division deals with telecommunications middleware, payment systems and solutions, secure solutions and smartcard technologies and the full integrated spectrum of IT products, solutions and services.
Economic impact by size and value contribution
Altron has an employee complement of 11 586 permanent employees in South Africa. Of these 2 535 employees are in Altech, 5 000 employees are in Powertech, 3 968 are employed by Bytes and 83 at corporate. (Worldwide, the Altron group has 14 217 employees including non-permanent workers.) The Altron group has an annual revenue in excess of R21 billion and has operations based in South Africa and in over 20 foreign countries including among others the African continent, the United Kingdom, the Iberian Peninsula, France and Australasia.Considering the diversified nature of our business, we recognise that the Altron group of companies has a range of impacts on society and the environment ranging from the exploitation of resources in the supply chain to the responsible stewardship of our products in the marketplace. For the purposes of this report we have chosen to categorise our material issues in three broad sections:
- Business stakeholders – shareholders, customers, suppliers, partners and employees
- Transformation – the seven issues (dti CoGP) relating to broad-based black economic empowerment (BBBEE)
- Environment
This classification encompasses all the major stakeholder groups with which the company engages in a format that facilitates the easy interrogation of information pertinent to readers from any specific stakeholder group. The full list of material issues are contained in the table.
Management of sustainability
Issues that can be applied broadly across the Altron group, such as transformation and corporate governance, are dealt with centrally at group level. Other issues, such as specific environmental impacts, are managed directly by the operations concerned, although in all cases, ultimate leadership and responsibility vests with the leadership of Altron.The link between operational management and board responsibility when it comes to sustainability issues is achieved through regular appraisal by the Altron risk management committee in conjunction with the relevant responsible body, be it internal audit, secretarial, legal, the transformation committee, executive committee, etc. This structure ensures that the appropriate steps and processes are put in place to mitigate against the risks associated with these issues. All these risks are consolidated at the Altron risk management committee level and reported to both the Altron audit committee and board for noting and/or action.
Evaluation of the financial implications of sustainability challenges, risks and opportunities is the purview of the Altron risk management committee. The head of Altron legal reports into this committee as an invitee and detailed legal reports are tabled at the meeting. Likewise the transformation committee chairman reports into the risk management committee and tables the Altron group’s compliance with EE and BBBEE requirements. The risk management committee chairman is a member of the Altron audit committee and provides feedback to the audit committee in terms of any material risks and potential liabilities to the Altron group which may require the making of provisions, or the tabling of contingent liabilities in the balance sheet. The chairmen of both the Altron audit and risk management committees are required to table the findings of these committee meetings at the board meeting following the previous committee meetings. Minutes of these committee meetings are also tabled with the board packs. All material issues are brought to the attention of the Altron board and relevant remedial action plans put in place, as necessary.
Material issue
Integration of corporate ethics
As highlighted in the corporate governance report (see page 95) the integration of corporate ethics is an important and material issue that receives the highest levels of stewardship at Altron. The Altron chief executive is responsible for implementing the code of ethics. The Altron policy manual, which includes the corporate code of conduct, is made available to every employee joining the Altron group and forms part of their terms and conditions of employment. This sets out the high risk areas which employees should be aware of in their business dealings for and on behalf of the Altron group.Employee training occurs regularly through poster and marketing campaigns and there is a continuous drive to enforce the code of ethics throughout the Altron group. In-house magazines and publications frequently make reference to the code of ethics.
The code of ethics was reviewed in 2007 and the code of conduct in February 2008 by the Altron audit committee (see governance report).
Compliance monitoring
Altron is committed to managing whistleblowing, fraud reports and other concerns over ethics in a non-discriminatory and confidential fashion, through a secure communication channel for employees to seek advice or voice concerns. The Altron group recently engaged Deloitte Tip-Offs Anonymous to manage an independent and confidential fraud and theft hotline. This has been widely communicated to staff members both in terms of poster campaigns, training sessions, and in-house magazines and publications. Monitoring compliance with ethical practices takes place both through the external and independent fraud and theft hotline managed by Deloitte and filtered through the Altron internal audit department and relevant subholding group security officers.Bribery and corruption
Altron is aware of the detrimental effects that bribery and corruption have on the security of the business environment and takes proactive measures to counter this threat. Contained within Altron’s corporate code of conduct is our policy towards bribery and corruption, and we make it clear to all parties that the company adopts a zero tolerance approach towards the same. This policy applies to all operations within the Altron group.Guidance on the level of sanctions to be applied in the event of a violation of the policy is dealt with in terms of the Altron policy manual, in terms of general staff information notices, and through poster and marketing campaigns dealing with the Altron group’s ethics and the Deloitte Tip-Offs Anonymous hotline. Regular updates by the Altron legal department are also provided, which deal with prevailing legislation in terms of bribery and corruption.
Among the systems Altron has in place is the due diligence process, conducted before the acquisition of businesses or the establishment of joint ventures by the relevant legal and secretarial departments. Likewise, due diligence in evaluating prospective contractors and suppliers is facilitated through the Altron group purchasing and export council.
The company’s vulnerability and exposure to bribery is regularly assessed at Altron risk management committee meetings. We are aware that we operate in countries identified as presenting a high risk environment for bribery and corruption, including Kenya, Lesotho, Mozambique, Nigeria and Uganda. Likewise, we are involved in various government contracts that may require government licensing.
Incidences of criminal activity reported and dealt with by the Altron group during the period under review are detailed in the corporate governance report.
Risk and crisis management
Altron makes use of a variety of instruments to offset the risk of crises that could befall the company, impact on operations, or cause significant loss. These include: insurance, self-insurance, disaster recovery and business continuity planning. The company has insurance cover for:- product liability;
- key managerial staff/directors;
- acts of terrorism;
- loss of data;
- natural disasters;
- theft, including theft of infrastructure; and
- director liability (including environmental liability and professional indemnity).
Business continuity plans are in place should the systems and networks go down or be lost. Furthermore, disaster recovery plans are in place in the manufacturing operations should a factory be burnt down or production be hindered in any way. This includes incidents such as civil unrest or rioting, flood, fire, prolonged strike or terrorism.
For further details on Altron’s risks and how we manage them, refer to the corporate governance report.