• Introduction
• Update on 2007 targets
• Management of sustainability
• Shareholder analysis
• Corporate governance report
• Remuneration report

• Shareholders
• Customers
• Partners
• Employees
• Transformation
• Environment
• Health & safety

• A: JSE SRI issues
• B: 2007 Environmental Survey
• C: GRI content index

   SUSTAINABILITY OVERVIEW   |   STAKEHOLDERS    |   APPENDIXES   |   CONTACT DETAILS

Shareholders

 

Relationship to the annual report

The annual report, of which this sustainability report is a subsection, reports on the company’s performance to shareholders and investors, while offering an appraisal of the company’s future ability to continue generating returns on shareholders’ equity. The responsible stewardship of the company is dealt with in the corporate governance report. Subject areas listed in that report include:

• compliance with King II;
• the board – leadership, role, transparency, effectiveness and meetings;
• strategy and policy over operational activities of the Altron group (executive committee);
• responsible stewardship of the company’s finances (audit committee);
• safeguarding assets, preventing and detecting error and fraud, reporting controls (audit committee);
• risk management (risk management committee);
• fair remuneration of the Altron group’s directors and senior executives (remuneration committee);
• appointments to the board and succession planning (nomination committee);
• planning and guidance with respect to transformation (transformation committee);
• code of conduct (audit committee);
• ethics (corporate governance);
• communication with shareholders and investors; and
• share dealings.

 

Engagement with shareholders

Certain forms of communication with shareholders, investors and analysts offer opportunities for two-way interaction – the essence of engagement is reported in the corporate governance report on page 107.

 

Independent report on investment analyst poll

Aside from these forms of proactive engagement, Altron has also sought to obtain structured feedback from analysts – representing the majority of shares outside of the Venter family holding – on its performance. To this end, Altron engaged an independent firm (College Hill) to conduct an analyst poll on the company during 2007, following the release of the company’s annual results. Analysts were asked to rate Altron in terms of its quality of management, leadership, strategy, earnings growth potential, sustainability of earnings, liquidity, dividend policy, cost controls, corporate governance and investor communications. The comments were non-attributable to encourage frank comment.

 

Summary of analyst feedback to investor-related questions

 

Corporate Governance Accreditation

CGA provides a formal certification of conformance with the good corporate governance practices as recommended by King II and the Code and Guidelines published by the King Committee. The independent certification provided by CGA validates the self-evaluation score achieved by the company utilising a software questionnaire that measures the implementation of the King II Codes and Guidelines.

 

Overall, Altron scored exceptionally high, being placed in the Silver class at 79%. Two general areas were identified for attention:

• Stakeholder relationships – the disclosure of voting issues by institutional investors and their ability to influence corporate strategy.
• Integrated sustainability – issues relating to corporate ethics.

Altron’s response to the issue of corporate ethics is detailed both in the corporate governance report, as well as within the sustainability section of this report. Altron’s response to the treatment of minority investors is dealt with hereunder.

Material issue

Altron’s treatment of minority investors

Altron is aware of the concerns of minority shareholders. These concerns arise mainly as a result of the company being a business that is largely family owned and are thus systemic. Nevertheless, we believe the company has shown good faith by its actions and governance policies to invite the influence of minority shareholders on its material affairs. Taking the subissues in turn:

• Disclosure of voting by institutional investors – While this is not a legal requirement in South Africa (as opposed to the requirements of the LSE), we do in all of our minutes of general meetings, as well as in the AGM minutes, disclose how shareholders voted in respect of each resolution. These minutes are available to shareholders at any time. We do not, however, publish on SENS how each specific institution voted in respect of resolutions.
• The ability of minority shareholders to influence corporate strategy – The failed scheme of arrangement to acquire the outstanding shares held by minorities in Altech illustrates Altron’s approach to its engagement with all its stakeholders. Altron took the decision not to vote its shareholding (in which the family has a majority interest) in respect of the Altech offer, despite there being no legal impediment to doing so. Minority shareholders were able to exercise their rights and managed to block the scheme, thereby influencing Altron’s corporate strategy. On the other hand, Bytes shareholders voted in favour of Altron’s proposal. Bytes delisted in January 2008 and became a 100%-owned subsidiary of Altron. Altron also took steps to ensure parties with vested interests recused themselves from making decisions on behalf of minority shareholders in respect of both schemes. Altech and Bytes formed board subcommittees consisting only of independent directors and the respective company chief executive officers (CEOs). These directors were advised by their respective financial advisors and took their decisions on the Altron offer to their respective boards.

The company endeavours to engage large institutional minority shareholders prior to annual general meetings on resolutions that it proposes passing, in order to get feedback and comment. Any objections and material concerns made by these minority shareholders are also taken into consideration and efforts made to accommodate these wherever possible.

Material issue

Transformation at ownership level

ABB South Africa, part of the global power and automation group, and Powertech are keenly aware of and acknowledge South Africa’s need for broad-based black economic empowerment at all levels of society. To facilitate the inclusion of an empowerment partner, ABB took the decision to sell its 50% stake in Powertech Transformers to Powertech. Powertech, in turn, has agreed to sell 25.1% to black economic empowerment investors. Discussions with BBBEE partners, already involved in Powertech companies, are progressing and a further announcement will be made as soon as these negotiations have been finalised. Unconditional approval has been received from the Competition Tribunal for the acquisition by Powertech of ABB’s 50% of Powertech Transformers for R320 million, effective 1 April 2008.

 

Continued commitment from ABB

ABB has confirmed its continued commitment to the African market and has signed a long-term technology agreement with Powertech to support the realignment to promote transformation. This will allow the transformer company to maintain its leadership position through full access to ABB’s leading technology for power transformers ranging from 20 MVA to 795 MVA. Powertech Transformers is the only transformer company that manufactures almost the entire range of power transformers in sub-Saharan Africa.