THE AECI GROUP COMPRISES A BROAD SPECTRUM OF BUSINESSES IN SEVERAL COUNTRIES. THERE ARE CURRENTLY 17 OPERATING ENTITIES REPORTING TO THE AECI EXECUTIVE COMMITTEE (“EXECUTIVE COMMITTEE”) AND, VIA THIS COMMITTEE, TO THE BOARD.
THE SPECTRUM OF BUSINESSES IS MATCHED BY A RANGE OF STAKEHOLDERS — THOSE PERSONS OR GROUPS WHO CAN AFFECT OR BE AFFECTED BY THE GROUP’S ACTIVITIES. THESE INCLUDE EMPLOYEES, TRADE UNIONS, INTERNAL AND EXTERNAL AUDITORS, SHAREHOLDERS AND FUND MANAGERS, FINANCIERS, CUSTOMERS, SUPPLIERS, TECHNOLOGY AND BUSINESS PARTNERS, LOCAL AND NATIONAL GOVERNMENT STRUCTURES IN COUNTRIES WHERE THE GROUP OPERATES, INDUSTRY BODIES, THE COMMUNITIES IN WHICH THE GROUP OPERATES, SPECIAL INTEREST GROUPS AND THE MEDIA.
Engagements with certain stakeholders are largely the domain of either AECI or of its businesses, with others being of interest at both levels. The graphic below summarises stakeholder groupings and information flows. The approach to engaging with diverse stakeholder groups and AECI’s efforts in this regard are summarised here.
Two-way interaction between AECI and its businesses occurs on an ongoing basis, both formally and informally. All the operating entities report to the AECI Executive Committee ("Executive Committee") and, via this Committee, to the Board. Formal structures include operating entity Board meetings, business reviews and Executive Committee meetings. AECI's Executives, in their capacity as the Company's Executive Directors and/or Chairmen of businesses, are in attendance at most of these meetings.
Other forums, such as segment-specific or Group-wide conferences and management meetings, also provide opportunities for information sharing and relationship building. Examples are structures such as quarterly Financial Directors' forums that include representatives from all of the Group's international businesses, Human Capital meetings, and the IT forum and Steering Committee.
The Group's strength is enhanced by sharing best practice and experience in all areas of activity. A culture of collaboration across businesses encourages the streamlining and harnessing of efficiencies, including those enabled by centralised Strategic Sourcing. A common drive for excellence leads to better results for the businesses individually and for the Group as a collective.
AECI communicates with these stakeholders by way of a number of processes, including announcements released on the JSE's Stock Exchange News Service ("SENS"), the dissemination of financial results and reports electronically and in print, results presentations, business-specific presentations and site visits and one-on-one or small group meetings.
The Company's Chief Executive, Chief Financial Officer and the other Executives conduct timely presentations on the Group's performance and strategy to institutional investors, financiers, financial analysts and the media in South Africa. The Executive Directors also undertake international roadshows in Europe and the USA, aimed mostly at potential investors. Further, there are regular
one-on-one meetings with this group of stakeholders.
Presentations, corporate actions and financial results, as well as any other information deemed relevant, are published on the Company's website. Stakeholders are advised of such newly-published items via SENS. Additional information on the Company, such as inter alia its management and governance policies and structures, is also available on the website.
To ensure that shareholders without access to electronic communication are not prejudiced, AECI currently publishes and reports on details of its corporate actions and financial performance in at least one daily national English newspaper as required by the JSE.
As an entity listed in South Africa, AECI is required to comply with regulatory frameworks such as the JSE Listings Requirements, the Companies Act and the principles contained in King IV.
Alignment with King IV progressed further in 2018 and the process will continue in coming years.
Compliance is managed largely through the Company’s Legal and Secretariat and Corporate Communications functions. Interaction with the JSE is via Rand Merchant Bank as AECI’s corporate sponsor in South Africa, when such sponsor input is required. Further liaison with the JSE, such as work related to assessments for inclusion in specific Indices, is undertaken directly.
In addition to ordinary shares traded on the JSE, AECI has 3 000 000 cumulative preference shares listed on the London Stock Exchange. To meet its obligations opposite that Exchange, all announcements released on SENS are also released in London via the Company’s London Secretary, St James’s Corporate Services.
The same information that is shared with investors and other financially-based stakeholders is made available to employees Group-wide. This takes place via communication in print, electronic media and personal interactions between the Group’s leadership at all levels and the staff complement as a whole.
Across all businesses, Human Capital departments and Specialists are primarily responsible for the Group’s policies, procedures and practices in employment, benefits and related human resource matters, and for the communication of these via established structures. At Group level, businesses participate in forums and structures dealing with, inter alia, Employment Equity and SHEQ-related strategies and performance tracking. The Chief Executive and the rest of the Executive Committee meet with the Group Employment Equity Committee, which includes representatives from businesses Group-wide in South Africa, on an annual basis.
The AECI Group subscribes to the freedom of association principle and recognises the right of all employees to join a trade union of their choice. Unions participate in various consultative and negotiation structures such as Management/Shop Stewards Consultative Forums, Employment Equity and Skills Development Steering Committees, Wellness Committees and Safety, Health and Environment Committees that deal with issues that affect employees’ interests.
Group businesses in South Africa are members of the National Bargaining Council for the Chemical Industry (“NBCCI”). Substantive collective agreements for the Bargaining Unit are negotiated on an annual basis with representative trade unions under the auspices of the NBCCI — Industrial Chemical Sector. Senior Industrial Relations Managers from the Group participate in this forum as employer representatives.
In other countries employees also have the right to join representative bodies of their choice, where these exist.
A list of unions with whom formal recognition agreements are in place is available at https:// www.aeciworld.com/pdf/trade-unions/2018- trade-unions.pdf.
This engagement is driven by good governance requirements, through compliance with relevant legislation and standards. It includes the limited assurance, undertaken annually for publication in the integrated report, of selected non-financial indicators which AECI believes are material in view of the nature of its businesses and the environment in which they operate.
The Directors are required in terms of the Companies Act and the JSE Listings Requirements to prepare annual financial statements which fairly present the state of affairs of the Company and the Group as at the end of the financial year period, in conformity with IFRS. The external auditor is responsible for auditing the financial statements of the Company and its subsidiaries and for expressing its opinion on these statements to shareholders. In addition, the external auditor is responsible for confirming whether the financial statements meet the requirements of the Companies Act and IFRS. In 2018, the external auditor was also engaged to carry out an Agreed Upon Procedures Review in respect of the interim financial results to 30 June.
The Directors must ensure that Group entities maintain adequate accounting records, that an effective risk management process and internal controls are in place to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. To enable the Directors to meet these responsibilities, management sets standards and implements systems of risk management and internal control aimed at reducing the risk of error or loss in a cost-effective manner. The Group’s Internal Audit function appraises the internal controls of Group businesses and submits its assessment of these to the Board on an annual basis.
The management team of each business also submits an annual self-assessment of internal control (Internal Control Matrix) to the Audit Committee affirming that the systems of internal control, in entities for which they have responsibility, are adequate for their operations and are functioning effectively. Internal Audit assesses the controls opposite this Matrix and reports thereon to the Audit Committee.
AECI and its businesses are subject to the laws of the jurisdictions in which they operate. This means governments and regulatory authorities are able to have a significant impact on the Group as a whole or on one or more of its entities. As a consequence, the management of the impact through engagement with relevant authorities is a business imperative.
Such engagement may range from advocacy initiatives associated with the development of legislation and standards, to cooperative work with those regulators who have the responsibility of governing the Group’s activities through the application of these laws and standards. To facilitate engagement, AECI and/or its businesses may choose to develop relationships with relevant government and regulatory entities in a proactive manner.
All government engagement by AECI employees is subject to the Group’s Code of Ethics and Business Conduct (“the Code”) as approved by the AECI Board. The Code “is designed to provide clear guidelines for engaging with all stakeholders” and there is an explicit expectation that employees will have zero-tolerance to bribery and corruption. The statement that “AECI will not condone any violation of the law” is unequivocal. With respect to donations, the Code is clear that “no donations will be made to political parties and political candidates under any circumstances.”
A second policy document of relevance is the Delegation of Authority Framework (“the Framework”). This document notes that the AECI Board “is ultimately accountable and responsible for the performance and affairs of the AECI Group of companies … and derives its authority primarily from the (Company’s) MOI as well as the general regulatory framework and common law”. The Framework stipulates that subsidiary Boards and other high-level Committees have been set up to ensure, inter alia, “that the business entity is run in accordance with good corporate governance practices”. The Framework is clear that “no delegation of authority may be exercised for any immoral or unlawful purposes”. While naturally silent on the details of government engagement, the document clarifies governance roles and responsibilities in the Group.
AECI’s engagement with government may take place at the level of national, provincial and local or municipal entities. It may also involve a range of regulatory bodies in jurisdictions where the Group operates.
In South Africa, the points of contact set out in the table on page 38 are current priority areas for government engagement. This view is informed by AECI’s risk registers and the Group Compliance Framework.
Engagement is usually directly between Group personnel and the respective government official(s). In certain cases, though, it is deemed more effective and/or more practical for engagement to take place under the auspices of industry forums. The main such forum is the Chemical and Allied Industries’ Association (“CAIA”), of which AECI is a founder member and on whose Board AECI is represented in the person of its Chief Executive.
In jurisdictions other than South Africa, it is not appropriate to tabulate such a set of priorities based on functional areas. These priorities differ from country to country based on the nature of AECI’s operations, country-specific factors and the level of maturity of the business in each country.
Accountability for government engagement in these jurisdictions lies with the in-country Managing Director. The Managing Director ascertains the priority areas of engagement and is expected to form relationships with government officials and regulators accordingly. Where appropriate, Managing Directors are encouraged to leverage existing relationships established by their customers’ businesses. Managing Directors may also call on diplomatic staff at South African embassies, including but not limited to Department of Trade and Industry representatives.
Under conditions of uncertainty, and in accordance with the Framework, issues can be escalated to Head Office functions or more senior Executives.
AECI has formal structures in place for engaging with its neighbouring communities. In the mid-1990s, the Umbogintwini Industrial Complex (“UIC”) was the first site or business in the Group (and South Africa) to sign a formal charter with its neighbours. The charter sets out principles, responsibilities and procedures to serve as a framework for interaction between the parties.
Communities living within the footprint of influence of manufacturing and storage sites are most often concerned about the potential effects of site incidents and the management of these. Emergency preparedness and emergency response information, therefore, is shared with neighbours using channels such as local print and social media, site performance reports and invitations to participate in site-based emergency exercises. Their participation is via representatives mandated by communities to represent them in these matters.
Structures in place at AECI’s largest operating sites include:
Other interactions include local socio-economic development projects in the areas of education, health, the environment, charitable contributions, and skills and enterprise development. Often, contributions are not only in cash but also in the form of expertise and guidance. This is also true for a number of businesses beyond South Africa’s borders.
Communities in which the Group operates or has an interest in South Africa are the primary intended beneficiaries of the AECI Community Education and Development Trust.
|PRESIDENCY||Minister||Chairman and Chief Executive, via CAIA and directly|
Chief Inspector Health and Safety
|Group Transformation Manager and Group Executive: Human Capital
Group Transformation Manager and Group Executive: Human Capital
Group SHE Manager
|WATER AND SANITATION||National — Director
|Group SHE Manager, via CAIA
Group SHE Manager
Business Operations Managers
|POLICE||Chief Inspector Explosives||AEL Safety Manager|
|SARS||Large Business Centre
|Group Financial Manager/Group Tax Manager
Chief Financial Officer
|TRADE AND INDUSTRY
(including Competition authorities)
|National — Director-General||Chief Executive, via CAIA and directly
Group Company Secretary
|ENVIRONMENT||National — Director-General
National — Director
Provincial — various
|Chief Executive, directly and via CAIA
Group SHE Manager
Group SHE Manager
Business Operations Managers
These stakeholders are often, but not always, aligned with communities in which the Group operates.
Although their engagement requirements often overlap with those of communities, their needs are recognised separately.
Wherever possible, these stakeholders are encouraged to participate in the Group’s affairs via existing structures (liaison forums and the like). Where this is not possible separate arrangements are made to meet the needs of the stakeholders who, as a rule, are concerned mainly with matters broadly classified as being environmentally- and health-based. Arrangements include meetings, site/business visits and participation in/support of interest group initiatives.
Examples of interest groups in South Africa include the Modderfontein Conservation Society, the Wildlife and Environment Society of South Africa and residents’ associations.
All issues pertaining to the Group and its stakeholders are of potential interest to the media in its role as a conduit for public information.
AECI’s Corporate Communications function maintains contact with the media by disseminating relevant information proactively or in response to enquiries. Group businesses also interact with the media regarding matters specific to their sites or businesses. Other than in instances where media comment/ coverage relates to marketing or product news, businesses are required to keep the AECI Head Office informed of likely coverage.
This is particularly true in instances where potentially controversial or negative comment is expected, or when it is possible that coverage will impact on/refer to the Group as a whole. Where businesses do not have the necessary resources to deal with media requests or enquiries on their own, AECI’s Corporate Communications function provides guidance or responds on that business’ behalf after having confirmed the content of the response with management.
For communication in any situation which can be defined as a crisis or potential crisis (operational, industrial action, legal issues etc.), the preparedness of each business for such an eventuality is confirmed by annual Letters of Assurance submitted by the Managing Directors of Group businesses to the AECI Chief Executive.
Depending on the type and scale of an emergency, AECI Head Office resources are made available to assist the affected site or business. The hierarchy for escalating notifications of incidents, and subsequent progress reports, is clearly defined and has been communicated to all businesses.
In addition to its involvement in CAIA, AECI and its businesses participate in a number of initiatives and associations pertinent to all or some of their business activities. In this way, issues relevant to the sustainability of the Company or that of one or more of its businesses are addressed.
Initiatives include but are not limited to:
Customer service and engagement is at the heart of the daily business of AECI’s operating entities. It is fundamental to the value-add business model and, as such, it embraces the spectrum of business-related issues that could affect performance and also addresses external considerations such as labour relations, socio-political imperatives and, in South Africa, B-BBEE matters.
Each Group business has a robust system in place to ensure that changes in customers’ needs are met quickly and efficiently. Equally, relationships with suppliers are monitored continually and are modified as required. Terms of engagement with customers and suppliers are clearly defined and, where appropriate, Group-wide policies and procedures guide the businesses to ensure that customer- or supplier-related risks are properly understood and managed in line with AECI’s risk appetite.
Long-term technology and other agreements, as well as strategically advantageous partnerships, are one of the bases for the AECI Group’s growth. Individual businesses engage with their principals and partners as a matter of course. Major changes, developments or opportunities are escalated to the Executive Committee and then to the Board, depending on the significance of the real or proposed change, development or opportunity.
This ensures that issues such as competitor and customer trends, economic conditions and industry trends, and the appropriateness of technologies, products and services are addressed.