Sustainability Overview 2016

The sustainability overview is intrinsic to the Group’s integrated reporting process and expands on the sustainability information addressed throughout the integrated report, offering a more detailed discussion of the six material sustainability topics.

CONTENTSPURPOSE AND SCOP 2

Leadership message 2

Governance of sustainability 2

Frameworks 2

Reporting boundary 2

Request for feedback 2

Navigation 2

Reporting suite 2

Content overview 4

Assurance 5

Board responsibility and approval statement 5

ORGANISATIONAL OVERVIEW 6

Profile 6

Key facts 6

Group structure 7

SAFETY AND HEALTH 8

Context 8

Focus areas 8

Looking ahead 12

HUMAN RESOURCES 14

Context 15

Focus areas 16

Looking ahead 20

TRANSFORMATION 22

Context 23

Focus areas 23

Looking ahead 24

ENVIRONMENT 26

Context 27

Focus areas 27

Looking ahead 29

INNOVATION 30

Context 31

Looking ahead 31

CORPORATE CITIZENSHIP 32

Context 33

Focus areas 33

Looking ahead 33

APPENDICES 34

Code of ethics summary 34

Glossary 36

1 Sustainability Overview 2016

Waco International 2

PURPOSE ANDSCOPELEADERSHIP MESSAGEWaco International Holdings Proprietary Limited’s (Waco International or the Group) sustainability report records the economic, environmental and social impacts of its business activities. Sustainability reporting enables the Group to be more efficient in the treatment of its six material sustainability topics, and more transparent about the risks and opportunities it faces. This sustainability overview is intrinsic to the Group’s integrated reporting process and expands on the sustainability information addressed in the integrated report.

This is Waco International’s second sustainability overview. In line with our commitment to continuous improvement in our reporting, it includes a more detailed analysis of the Group’s main focus areas within each of its six sustainability topics, its management approach to each focus area, and its performance against key performance indicators.

A feature of Waco International’s performance in 2016 is the extent to which the Group has been able to continue growing and creating value despite economic and market downturns. The Group recognises that its ability to maintain this track record in a sustainable manner, to the benefit of all stakeholders, requires the efficient and ethical management of all available resources and relationships. These include the various stakeholders with whom the Group engages in the course of doing business, the people employed in the organisation, and the natural resource inputs at its operations.

GOVERNANCE OF SUSTAINABILITYStructures and processes are in place to develop, implement and monitor the Group’s sustainability topics, which are aligned with the Group’s business strategy. The social and ethics committee is responsible for the governance of sustainability and reports biannually to the board. The committee is also responsible for ensuring compliance with all relevant regulations and legislation. It oversees the implementation of leading practices to manage the Group’s human capital in a manner that promotes a safe and ethical working environment, responsible use of environmental resources, and sound corporate citizenship.

The management of Waco International reports to the board on policy implementation and practices at the operations. It is responsible for managing and strengthening stakeholder relationships. Key focus areas of sustainability performance are proactively managed with lead indicators, such as training, while lag indicators, such as incident reporting, are used to evaluate performance and identify areas that need improvement. This holistic approach enables management to monitor performance while regularly measuring progress against quantitative targets.

The Waco International Code of Ethics governs the way the Group and its employees conduct themselves by determining appropriate behaviour towards employees, stakeholders and the environment. A summary of the values-based Code of Ethics is available on page 34.

FRAMEWORKSThe Group is guided by a number of frameworks in the governance of sustainability:

• The Companies Act of South Africa, 71 of 2008, as amended (Companies Act)

• The Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice

• The Labour Relations Act, as amended (LRA)

• The Waco International business principles

• The Waco International Code of Ethics

REPORTING BOUNDARYThis overview reports on the sustainability approach and performance of Waco International for the period 1 July 2015 to 30 June 2016. Unless otherwise stated, qualitative and quantitative indicators are reported primarily for the Group as a whole, and information on transformation applies to companies within the Waco Africa group.

REQUEST FOR FEEDBACKWaco International welcomes feedback on the contents and presentation of the sustainability overview 2016 to assist the Group in improving the quality and relevance of future reports. Stakeholders are invited to contact Gregory Hart (Group Human Resources Executive) at [email protected].

NAVIGATIONA glossary is provided on page 36 of this report.

Cross-references to information contained in this and other reports are indicated with this icon.


This sustainability overview should be read in conjunction with the following suite of reports:

Integrated report Sustainability overview Annual financial statements

Contents • Concise overview of the Group’s material matters, business model, strategy, performance and prospects

• Corporate governance report

• Remuneration report

• Summarised consolidated financial statements

• Independent assurance report

• Independent auditor’s report

• Greater detail on the Group’s six material social and environmental sustainability topics addressed in the integrated report:

o Safety and health

o Human resources

o Transformation

o Environment

o Innovation

o Corporate citizenship

• Full consolidated financial statements for the year ended 30 June 2016

• Directors’ report

• Statement of corporate governance

• Audit and risk committee report

Frameworks and guidelines applied

• IIRC International Integrated Reporting Framework V1.0

• King Code on Governance Principles for South Africa 2009 (King III)

• IIRC International Integrated Reporting Framework V1.0

• Group social and ethics committee charter

• International Financial Reporting Standards (IFRS)

• The Companies Act

Assurance • Independent auditor’s report on the summarised consolidated financial statements

• Limited assurance on selected financial and non-financial information

• Group executive management oversight

• Audit and risk committee oversight

• Board oversight and approval

• Limited assurance on selected financial and non-financial information


• Social and ethics committee oversight


• Independent auditor’s report on the consolidated annual financial statements


• Audit and risk committee oversight


Available Online at: www.wacointernational.co.za

Print reports are available upon request

Online at: www.wacointernational.co.za

Online at: www.wacointernational.co.za

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SUITEREPORTING


Purpose and scope (continued)

Material sustainability topics

Safety and health Human resources Transformation Environment Innovation Corporate citizenship

High

Med

ium

Low

Impact

Like

lihoo

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Effectiveness of growth initiatives

African expansion

IT effectiveness Hire fleet management

Global market conditions

Reliance on key customers

Liquidity risk

Cost pressures

Credit risk management

Low Medium High

Contract execution

Contract quality

Safety and health

Contract renewal

Labour stability in South Africa

Accessing and retaining skills

Transformation in South Africa

Government effectiveness in South Africa

CONTENT OVERVIEWThe sustainability overview contains six sub-sections, each devoted to a material social and environmental sustainability matter. These matters were identified through a materiality determination process undertaken to determine the content of Waco International’s reporting suite. Material matters are defined as those which, in the board’s opinion, have the potential to substantively affect the Group’s ability to create and sustain value over the short, medium and long term. This report provides additional information on material sustainability matters, supplemented by other sustainability focus areas. While the overview endeavours to report on the Group as a whole, some sustainability matters are specific to South Africa, for example, transformation.

The diagram below demonstrates how the six material sustainability topics covered in this report are linked to the material matters of the Group outlined in the integrated report.


Safety and healthThe safety and health of permanent employees, contract labourers and the public are the responsibility of Waco International. The Group aspires to achieve the ultimate goal of zero harm in the work environments under its control and supervision. The Group has a values-based, common sense approach to safety and ensures that this is supported by appropriate safety management processes and procedures, including training, personal protective equipment (PPE) and supervision. Waco International recognises that safety performance can impact its ability to secure business and maintain the loyalty of customers.

Human resourcesThe ability to attract, retain and develop human capital across the organisation is a critical factor in the Group’s ability to achieve its strategic objectives in the short, medium and long term. Waco International offers its people an employee value proposition that consists of:

• transparency and engagement;

• fair remuneration;

• training and development; and

• a partnership based on shared goals to produce mutually beneficial outcomes.

TransformationTransformation is a strategic objective as it has the potential to impact the Group’s ability to maintain its track record of growth in South Africa. The Group supports the need to transform its South African workforce, in line with the requirements of the B-BBEE Codes of Good Practice, and aims for demographic representation in all jurisdictions in which it operates. Waco International seeks to achieve its transformation goals through a sustainable approach in which human capital is developed and promoted.

EnvironmentWhile Waco International’s impact on the environment is relatively low, the Group accepts that it has a responsibility to safeguard environmental resources, and considers environmental stewardship an opportunity for the development of innovative product offerings. The Group endeavours to minimise its impact with monitoring, incident reporting and continuous operational efficiency improvements. It recognises that reducing its consumption of fuel, power and raw materials has the additional benefit of being cost-effective. Waco International has the capacity to develop products and services that provide environmentally sound solutions to address social needs, such as water-saving sanitation products and portable wastewater treatment plants.

InnovationThe innovation chapter was added to the sustainability overview 2016 because of the significant role it plays as a driver of future growth. Innovation is integral to Waco International’s Alchemy of Growth framework and Continuous Improvement ethos, and is therefore embedded in the Group’s culture and intellectual capital. The Group encourages its businesses and employees to continually identify and exploit growth opportunities through innovation in existing and new markets, and improve the efficiency of its operational processes.

Corporate citizenshipWaco International endeavours to be a responsible corporate citizen and encourages its businesses to invest in social upliftment projects to improve the communities in which they operate. The Group redefines its approach to social investment to align it more closely with its business strategy, and continues to provide support to its beneficiaries, based on the notion of shared value. This notion is also evident in the innovative products it has developed to create financial value for the Group while responding to the socioeconomic needs of communities.

ASSURANCEThe information presented in this report is based on data gathered in the Group’s internal reporting processes. Members of the executive committee and the internal audit function have oversight of sustainability reporting and are guided by the Group’s combined assurance process. The process sets rigorous management controls at various authority levels, from operational executive management to the board. These controls include risk management systems and policies; standard operating procedures; quality assurance processes; internal controls and reporting; management oversight and controls; and internal assurance procedures.

Given these internal governance processes, and the external accreditations of our safety, health, environmental and quality management systems, the board is satisfied that there is no reason to believe that there is any material error or omission in the sustainability information.

BOARD RESPONSIBILITY AND APPROVAL STATEMENTThe board, with the assistance of the social and ethics committee, is responsible for the integrity of the sustainability overview. The board applied its collective mind to the preparation and presentation of this report and is satisfied that it is a fair and accurate representation of Waco International’s performance and prospects in accordance with the IIRC <IR> Framework.

This sustainability overview was approved by the board and signed on its behalf by:

Royden ViceChairman

8 December 2016

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ORGANISATIONALOVERVIEWPROFILEWaco International is a diversified equipment rental and industrial services business with operations in the following key geographies: South Africa, other sub-Saharan Africa, Australasia, the UK and Chile.

KEY FACTS

Footprint Five principal geographies

14 countries

Over 100 branches

Over 14 000 customers

Approximately 107 000 tons of scaffolding

Approximately 48 000 tons of forming

Approximately 26 000 portable toilets

Over 4 400 relocatable modular buildings

People 3 411 contracted employees

3 727 permanent employees

Transformation B-BBEE level 2 (level 4 as at 1 December 2016 per the new B-BBEE codes)

Principal activities Forming, shoring and scaffolding

Suspended and aerial work platforms

Rope access

Insulation, painting and blasting

Relocatable modular buildings

Portable sanitation

Integrated hygiene services

Portable wastewater treatment plants

Principal industries Industrial maintenance – power, utility and other

Infrastructure

Mining and resources

Construction and engineering

Healthcare

Education

Events

Principal markets by geography

South Africa

Other sub-Saharan Africa (nine countries)

Australasia

United Kingdom

Chile


100% 74.9%

Pipes UK Holdings Ltd Kwikform Acquisition (Pty) Ltd

The following diagram is a simplified representation of the operating companies of Waco International and excludes non-material and dormant entities.

25.1%100%

Companies registered in:• Botswana• DRC

• South Africa• Ghana• Mauritius• Mozambique

• Namibia• Swaziland• Zambia

Fund 1 (Pty) Ltd

Africa

Africa

New Zealand Africa

Africa

New Zealand

Australia

Africa

Australia

UK

Chile

GROUP STRUCTURE

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PAGE HEADER

MATERIAL MATTERS• Contract execution

• Safety and health

• Contract renewal

• Hire fleet management

SAFETY ANDHEALTH

FOCUS AREAS• Values-based, common sense approach to safety

• Safety and health training

• Safety, environmental and quality accreditation



CONTEXTThe pursuit of Waco International’s strategic objectives requires hard work and commitment from its people. The Group is responsible for ensuring that its people work in environments that do not expose them to harm.

The safety and health of Waco International’s employees, customers, contractors and the public rely on a high level of awareness and effective collaboration in the implementation of safety procedures. Processes are in place to ensure that these stakeholders understand the safety risks inherent in Waco International’s industry and their role in maintaining safer working environments.

Safety is a key focus of governance, and the Group works continuously to achieve safer working environments through incident reporting, knowledge sharing, weekly safety awareness discussions on site, international peer group monitoring, and pursuit of the ultimate goal of zero harm. Operational managers are empowered with training to carry out their responsibilities and lead by example. Each operating company monitors its safety performance, reports incidents to management as they happen, and submits quarterly reports to the board.

The benefits of this approach are reflected in a record safety performance, with the Group’s target of zero fatalities achieved in 2016, and an improved lost-time injury frequency rate (LTIFR) of 0.42 from 0.85 in 2015. Additional details are available in the Linked performance section on page 10.

The Waco International Employee Wellness Programme (EWP) offers holistic support to employees to ensure that they have the opportunity to function optimally in the physical, spiritual and financial spheres of their work and home lives.

Safety and health is a highly regulated field in many of the Group’s key sectors. Resources are invested in maintaining compliance with occupational health and safety reporting standards. Waco International strives for leading practice in order to retain its legal and social licence to operate.

Stakeholder engagementThe key stakeholders prioritised by Waco International in the fields of safety and health are:

Employees, who are entitled to safe working areas and equipment, safety training and wellness support. The Group fulfils its ethical and legal compliance responsibilities by striving to provide safer working environments, appropriate supervision in high-risk situations, and health and wellness support.

Customers and the public expect safe work sites and incident-free execution of projects. The Group conducts its project activities in accordance with contracted project performance and safety requirements of customers, and recognises that harmful incidents can damage its reputational and financial performance.

Contractors, suppliers and service providers have similar expectations to those of employees, customers and the public, and the Group responds by adhering to the safety standards outlined in contracts and managing the collaboration of multiple role players on project sites.

Regulatory and industry bodies require compliance with occupational health and safety reporting standards. A strong track record of safety compliance and performance affords the Group a competitive advantage in project tenders.

FOCUS AREASThe key safety and health focus areas that support the implementation of Waco International’s strategic objectives are discussed below.

Values-based, common sense approach to safetyManagement approachSafety risk is inherent in many of Waco International’s daily operational activities. The Group seeks to mitigate and manage this risk through the identification of risk areas and routine training and awareness campaigns. The Group appreciates that effective safety management requires a personal commitment from employees to take responsibility for their own safety and that of their colleagues and customers, and for managers to be visible role

models of safe behaviour in the workplace. Waco International considers safety a values-based mindset rather than a procedural application.

Line managers, safety managers and employees have a shared responsibility to:

• identify potentially unsafe activities and conditions;

• take ownership and remedy those activities;

• report incidents when they occur;

• investigate the root causes; and

• ensure that lessons are learned and shared across the Group.

In cases where project sites are under the control of the customer, Waco International engages in a partnership with customers to ensure that its safety standards are maintained. The board is ultimately responsible for ensuring a sustained commitment to safety practices, and it monitors progress against set targets. These targets include lead indicators, such as a potential-for-harm measure, which, through reporting, promotes the effective mitigation of these areas of potential risk; and lag indicators, such as lost-time injuries (LTIs), LTIFR, near-misses, accidents, fatalities and hours lost. These indicators are used to measure the outcome of safety management and monitor the effectiveness of control systems. The Group’s executive committee visits each branch every two to three years and conducts safety visits as part of this process. Safety visits are undertaken to ensure that all basic safety control systems are in place and effective.

The Group decided to cancel the Johannesburg Stock Exchange (JSE) listing of Waco International in response to the collapse of the M1 bridge in Sandton on 14 October 2015, and awaits the conclusions of the Department of Labour’s enquiry into the incident. Waco International offers its condolences to the families of two people who died in the tragic incident and to the 23 people who were injured.

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Safety and health (continued)

Key initiatives in the current yearPotential-for-harmThe identification and management of potential-for-harm situations are key factors in achieving Waco International’s stated safety goal of zero harm. In line with the Group’s values-based, common sense approach, managers and employees are encouraged to “see, fix and report” potentially harmful situations so that actions can be taken to mitigate harmful incidents. The more effective the reporting in this area, the greater the Group’s ability to minimise its incident rate and, ultimately, achieve zero harm.

The Group is implementing the potential- for-harm lead indicator at all its operating businesses to encourage managers and employees to anticipate harmful incidents by identifying, reporting and addressing matters with the potential to cause harm. This differs from near-miss reporting, which retrospectively warns of matters that occurred and did not cause harm, but had the potential to cause harm and may have resulted in a future safety incident.

The focus on reporting potential for harm incidents had a positive impact on safety performance during the first quarter, particularly in the minor incidents category. By the end of the second quarter, the identification of potential-for-harm situations had contributed to a reduction in the all-accident frequency rate (AFR) to a record low of 2.82.

Return to workTo ensure that employees who have experienced minor injuries do not stay away from work longer than is warranted by the nature of the injury, the Group introduced an initiative to manage the process with medical reviews. Employees will be temporarily assigned to lighter tasks where possible. The initiative has contributed to a reduction in LTIs, but unfortunately resulted in a corresponding increase in the severity of LTIs.

Linked performanceThe following table provides a summary of the Group’s KPIs for safety performance:

20162016

target 2015 2014

Formalised health and safety policy Yes Yes YesHealth and safety board agenda item (% of operating units) 100 100 100Lost man hours 3 057 4 762 6 788LTIs 34 66 74LTIFR 0.42 0.75 0.85 0.91AFR 3.45 7 4.54 4.96Fatalities 0 0 2 3

Waco Africa (Form-Scaff and SGB-Cape) reported a 45% decline in the number of LTIs from 33 in 2015 to 18; Sanitech achieved a 69% decrease in LTIs to five (2015:13); Abacus reported one LTI (2015: 0); and SkyJacks maintained its 2015 achievement of zero LTIs. In the international operations, Waco Kwikform reported 10 LTIs (2015: 10); Premier Modular achieved zero LTIs (2015: 10); and Form-Scaff Chile maintained its 2015 achievement of zero LTIs.

The main causes of all accidents during the current period were:

• Struck by: 24%

• Manual handling: 23%

• Workplace hazards: 21%

Q1/

2012

Q2/

2012

Q3/

2012

Q4/

2012

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Q2/

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LTIs over five years

5

10

15

20

25

30

Num

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LTIs

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Q2/

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Q3/

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LTIFR over five years

0.0

0.2

0.40.60.81.01.21.4

1.61.82.0

Rat

io

Actual 12 month Target


Safety and health trainingManagement approachWaco International provides continuous training in safety to all employees. The level of training is linked to operational roles, and the Group ensures that all employees are trained in the safe use and application of equipment, tools and personal protection equipment. Responsibility for health and safety training cascades throughout the organisation, from operational to supervisory managers in each business. Regular training to promote the Group’s safety culture or focus on a specific safety issue is conducted through Toolbox talks (informal group discussions at the beginning of each work shift). Risk assessments are conducted at Toolbox talks and serve as a valuable feedback mechanism. A daily agenda is established to ensure that matters arising from the assessments or feedback are addressed.

Linked performanceTrainingThe Group considers safety and health training a lead indicator to enable improved performance by guiding current actions. The Group invested R12.7 million in formalised training of its people in 2016 (2015: R13.0 million).

Safety, environmental and quality accreditationManagement approachWaco International’s operating companies are accredited to a number of management standards intended to protect employees, safeguard the environment and ensure quality management systems. These accreditations are audited and assessed regularly to ensure that high standards are maintained in each of the areas of management. The Waco Africa businesses comply with the Waco Africa safety, health, environmental and quality policies and procedures. Compliance is monitored during regular branch visits.

Linked performanceThe following table provides a summary of the accreditations of the Waco Africa operations:

OHSAS 18001: International safety standard

ISO 14001: International environmental standard

ISO 9001: International quality system standard Local accreditations

Form-Scaff All South African branches have been audited and certified

All potential high-impact branches (nine) have been audited and certified

All South African branches have been audited and certified

SGB-Cape All branches adhere to Waco Africa SHEQ policies and procedures

All branches adhere to Waco Africa SHEQ policies and procedures

All branches have been audited and certified

NOSA Risk Management Systems

Member of Institute for Working at Heights

Member of South Africa Quality Institute

Sanitech 17 branches out of 20 have been certified

Eight branches out of 20 have been audited with the remainder planned over a three-year cycle

Abacus Head office accredited Head office accredited

SkyJacks Planned for 2017

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Safety and health (continued)

The international businesses are accredited to management standards with relevant international bodies in their jurisdictions:

Waco Kwikform Premier Modular (United Kingdom)

OHSAS 18001: International safety standard

AS/NZS 4801:2001 Accredited by the Australia and New Zealand Occupational Health and Safety Management System (SMS) Standard: head office, Sydney, Newcastle, Port Kembia, Canberra, Brisbane, Sunshine Coast, Mackay, Darwin, Perth, Geraldton, Adelaide, Traralgon, Geelong, Melbourne, Karratha and Hire West.

No

ISO 14001: International environmental standard

No Yes

ISO 9001: International quality system standard

ISO 9001:2008 Accredited by the International Quality Management System (QMS) Standard: head office, Sydney, Newcastle, Port Kembia, Canberra, Brisbane, Sunshine Coast, Mackay, Darwin, Perth, Adelaide, Traralgon, Geelong, Melbourne, Karratha and APL Kwikform.

Accredited ISO 9001: 2015

Local accreditations Waco Kwikform operates an SMS and QMS that are both certified and regularly assessed by an accredited third-party certification body.

Audits are conducted by British Standards Institute (BSI), a management systems certification body in 150 countries. BSI is certified by approximately 20 local and international bodies.

Achilles Utilities Vendor Database – United Kingdom utilities contractor approval scheme

Contractors Health and Safety Scheme – Local government pre-qualification scheme

FSC – Forestry Stewardship Chain of Custody Certification

LOOKING AHEADWaco International will continue to manage safety and health performance to ensure continuous improvement in its key performance areas.

Given that current safety and health targets are

being met or exceeded, the Group is considering revising key performance indicator (KPI) targets and introducing stretch targets in order to achieve a further reduction in LTIFR.

A KPI target of 60 potential-for-harm reports for every one LTI reported was applied in 2016. The Group will focus on improving the recording systems related

to potential-for-harm incidents to better understand their impact as a lead indicator.

Safety and health training will remain a key focus area in 2017 to ensure that the Group maintains high standards of safety.

PAGE HEADER

MATERIAL MATTERS• Labour stability in South Africa

• Accessing and retaining skills

HUMANRESOURCES

FOCUS AREAS• Human resources function

• Talent management framework

• Performance management framework

• Employee Wellness Programme

• Responsible use of labour brokers in South Africa

• Industrial relations



CONTEXTWaco International instils a high-performance culture based on sound ethical practices to ensure that employees are adequately equipped and motivated to fulfil the Group’s strategic objectives. The Group assigns responsibility for human resources management at operational level to line managers. The Group Human Resources Executive is jointly responsible for ensuring that line managers have the necessary capacity and capability to perform this function; and providing opportunities for capacity building, where necessary.

Waco International employs 3 727 permanent employees and 3 411 contractors in its business operations across a range of geographic and sectoral markets. Waco International considers its people a significant competitive advantage. The Group’s ability to attract, develop and retain the required expertise at all levels is key to remaining competitive in its markets. All employees are required to commit to the Code of Ethics, which governs the behaviour and practices required for the business to function ethically and sustainably.

The Group Human Resources Executive, a member of the Waco International executive committee, has executive responsibility for human resources management across the Group and reports to the board. The board’s remuneration committee is mandated with oversight responsibility for the remuneration and incentivisation of employees, while the social and ethics committee has oversight of the ethical conduct, training and development of employees.

Leadership and management teams at Waco International are stable and long-serving. When positions become available, the Group favours internal candidates for promotion. This achieves commitment, targeted skills development and acceptance within the organisation. However, this is not always possible as the growth agenda of the Group has made external appointments a necessity in several new key positions.

Waco International relies on human capital to maintain the Group’s reputation by fulfilling customer expectations and

executing all contracts safely and within specification. The Group invests in a range of training initiatives to develop core and specific skills aligned to its business requirements. Employee development programmes are offered at different levels of the organisation and are structured to achieve specific outcomes. They contribute to the development of a pipeline of talent to meet the Group’s management and leadership succession requirements. The outcome of these programmes has contributed significantly to the Group’s growth agenda; many innovative growth initiatives have emerged from ideas and business plans developed from them.

Sourcing labour to fulfil customer requirements for large-scale projects across Waco International’s markets requires the use of short-term contract labour. In South Africa, the Group contracts responsible labour brokers to provide labour on a short-term basis from local communities near operational sites. In some instances, the Group enters into a joint venture, in which it provides operational or technical expertise in return for labour that becomes a permanent workforce of the joint venture. The Group continues to convert contracted workers to permanent employment status, in line with the amendments of the Labour Relations Act (LRA).

Stakeholder engagementWaco International has identified its key human resources stakeholders:

Employees expect:


• skills development and career advancement;

• performance recognition and reward;

• ethical treatment and two-way communication;

• job security; and

• safe working environments.

The Group fulfils its ethical and legal compliance responsibilities by employing effective leaders to ensure that the business achieves its strategic objectives sustainably. It deploys employees to projects, equips them with the skills to deliver against the Group’s standards for quality and safety, and engages with them to foster the positive labour relations necessary for project execution.

Labour broker employees expect:


• fair treatment while on contract;

• safe working environments; and

• permanent jobs.

The Group bases its relationships with labour broker employees on ethical and compliance practices. All employees receive appropriate training and are remunerated fairly and equitably. The conversion from a short-term contract to permanent employment takes place in a controlled manner, in line with labour relations legislation.

For their members, trade unions expect:

• fair remuneration and career advancement opportunities;

• non-discriminatory and safe work environments; and

• demonstrable employment equity initiatives.

The Group has recognition agreements in place with major trade unions. It conducts formal and ad hoc meetings to negotiate fair and equitable terms and conditions for the employment of members.

Customers expect:

• safe and responsible business practices;

• responsible and reliable labour practices; and

• safe work sites.

The Group conducts its project activities in accordance with contracted project performance and the safety and labour requirements of customers. The Group recognises that harmful incidents can damage its reputational and financial performance. Employees deployed on customer sites are equipped with skills and training to operate safely and efficiently, as required by the Group and its customers.

Regulatory and industry bodies require compliance with labour relations regulations and reporting standards. The Group adheres to sound labour practices. Transformation is a key focus in South African operations.

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Human resources (continued)

FOCUS AREASThe key human resources focus areas supporting the implementation of Waco International’s strategic objectives are discussed in this section.

Linked performanceNew jobs createdJob creation from 2013 to 2016 is shown below. This demonstrates the growth of Waco International over that period.

June 2016 June 2013 % growth

Salaried 1 108 841 32Waged 2 619 2 355 11LDC 820 2 >100

Total Waco International employees 4 547 3 209 42

Labour broker employees 2 591 2 389 8

Total 7 138 5 598 28

Human resources functionManagement approachThe human resources functions within the businesses provide transactional and administrative human resources services such as payroll. As the businesses grow and their human resource requirements increase, it has become necessary to strengthen the human resources

professional support across the Group. Premier Modular in the UK follows this approach, but it has become necessary to strengthen human resources capacity in Australia and the Group’s sub-Saharan African operations (excluding South Africa).

The table below describes the frameworks through which the Group manages its human resources.

Organisational (three Cs)These guide the way Waco International organises and rewards work and implements formal human resources programmes and activities

People competencies (three Cs)These are characteristics that the Group values in individual employees, as they support employees’ ability to work effectively

Business principlesThese are the primary behavioural tools management uses to close the gap between aiming for and achieving a high-performance culture

• To ensure that the organisation has the capacity to deliver strategic objectives and promises to customers

• To ensure that employees are competent to do the work they are appointed to do

• To ensure that all employees are committed to do the work assigned to them

• Commitment

• Curiosity

• Courage

Referred to as TAP the Best Team, these are:

• Transparency

• Accountability

• Performance

• Best practice

• Teamwork

Key initiatives in the current yearManagement of high employee turnover at SanitechThe Group’s overall retention of senior and middle management tends to be high. However, Sanitech is an exception, as it experiences high employee turnover in some categories of staff. Management has reviewed the root cause and plans are in place to mitigate the problem.

Implementation of a human resources scorecardWaco International has introduced a scorecard to measure the overall

effectiveness and efficiency of the Group’s human resources management. The scorecard collects data on headcount; payroll costs of salaried and contract employees; salary and wage increases relative to revenue and turnover; and absenteeism and employee turnover.

The Group uses this data to measure a range of performance indicators that may differ from one business to another. These include:

• the overall return on human resources costs, where value is driven most effectively in the organisation;

• the overall wellness of the organisation and willingness of its employees to come to work;

• the process of defining critical roles, matching competencies to them, undertaking training to fill gaps in skills or competencies, and recognising acquired competencies; and

• the impact of industrial actions on productivity and financial performance.

The scorecard, which previously only collected data from some businesses, was implemented across the Group in January 2016, and will be refined in 2017.


Talent management frameworkManagement approachWaco International continuously identifies talented individuals in the Group for promotion into positions that are strategically important or require unique skills. Talent management fulfils a risk management function as it ensures that specifically identified positions have a supply of successors to support current and future business objectives. Each business has a talent management committee, comprising managers or functional experts, to develop succession plans. Filling successor roles from within the Group achieves commitment, targeted skills development, transformation and acceptance.

Employee development programmes, offered at different levels of the organisation and structured to achieve specific outcomes, contribute to the development of a pipeline of talent to meet the Group’s management and leadership succession requirements. Customised management and Executive Development Programmes play a key role in the development of innovative growth initiatives.

Employee development programmes offered by Waco International include:

Waco Africa Cadet SchemeThe scheme is designed to provide high-potential individuals from previously disadvantaged backgrounds with core business skills. Through this scheme, 48 candidates have been permanently appointed to date, 27 of whom were appointed in 2016. Although the scheme has historically recruited only internal candidates, it expanded this opportunity to two external recruits in 2016. The scheme offers candidates different access points:

• Existing employees who do not have a matric certificate or NQF level 4 qualification are enrolled in a learnership. The learnership involves practical work and after-hours study

towards an NQF level 4 in general management, followed by on-the-job mentorship, during which candidates are exposed to different elements of the business on a rotational basis.

• Internal and external candidates with a matric certificate or NQF level 4 are enrolled in the Waco Africa Cadet Scheme and receive on-the-job mentorship and the opportunity to study towards a tertiary qualification.

Business Leadership Development ProgrammeThe programme is designed to afford high-performance or promising managers the opportunity to enhance their business leadership skills and strengthen their management capabilities. A six-month curriculum is geared to develop skills in key areas of leadership, such as finance for non-financial managers, contract management, project management, change management, and people management. The programme culminates in a team challenge, where teams present Action Learning Projects derived from ideas for improving the business and enhancing growth.

Executive Development ProgrammeThe Group partners with the Gordon Institute of Business Science to offer high-performing managers and senior managers with exposure to leading global strategic thinking and the operational tools to execute strategic goals. The programme is customised to serve Waco International’s specific needs. Each business has the opportunity to nominate middle management candidates for the programme. As with the Business Leadership Development Programme, a valuable outcome of this programme is the development and presentation of new business ideas. Several of these ideas, some of which are starting to realise value, were included the Group’s growth initiatives, including integrated hygiene services, wastewater treatment plants and new modular buildings.

Operational training interventionsThese are daily on-the-job training interventions to ensure that employees are adequately equipped with functional and technical skills and are able to upskill and empower themselves within the organisation.

Key initiatives the current yearSupervisory Development ProgrammeTwelve employees attended the first pilot Business Management for Supervisors training course in 2016. The programme included an introduction to the functions of management (planning, organising, directing and controlling) and their application in a simulated scaffolding project. A facilitative style of training and role play enabled higher levels of interaction between participants and the facilitator.

Converting labour broker supervisory-level employees to permanent staffLabour broker employees are deployed in entry-level positions and given the training and skills necessary for the work they undertake. The Group monitors labour broker employees and identifies high-performing individuals who have the potential to add value to the business. Where possible, skilled and supervisory labour broker employees are converted to permanent, salaried employees. This was a focus area during the year, particularly for supervisory employees.

Recruiting externally for the Waco Africa Cadet SchemeWaco Africa began a tertiary recruitment process to increase the number of B-BBEE candidates enrolled for the scheme. The scheme recruited the first two external candidates in 2016.

Linked performanceWaco International invested R12.7 million (2015: R13.0 million) in training to develop core and specific skills. This ensures that its operating businesses are more representative of the demographics in the markets within which they operate.

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Waco Africa Cadet SchemeBusiness Leadership Development Programme Executive Development Programme

48 cadets enrolled to date 221 managers enrolled to date 125 managers enrolled to date

27 cadets enrolled in 2016 27 managers enrolled in 2016 25 managers enrolled in 2016

48 cadets permanently appointed to date

27 cadets permanently appointed in 2016

Seven cadets appointed as branch managers to date

Two cadets appointed as branch managers in 2016

Waco International has a succession plan for senior management to ensure leadership continuity. Based on the role and how critical it is to the organisation, two to three people are identified and developed as leadership candidates for each position.

Senior managers who have the ability to influence the Group’s long-term financial performance are placed on a retention plan based on participation in the Group’s management share purchase and/or Waco Growth Appreciation Rights (WGAR) Scheme.

Performance management frameworkManagement approachWaco International seeks to instil a high-performance culture throughout the Group, with a results-driven approach to performance management. Line managers are responsible for managing the performance of their employees; and the Group Human Resources Executive ensures they have the necessary skills required for their position. Employees are managed and rewarded on an individual basis.

The Group’s approach to performance and talent management is underpinned by the balanced scorecard incentive mechanism. The structure of the balanced scorecard encourages individuals to contribute to specific initiatives that support the Group’s overall growth and profitability. The scorecard has been highly successful in benefiting

high-performing individuals throughout the business.

The Group seeks to achieve two primary outcomes from its performance management process: it should build a productive relationship between manager and employee; and address the needs of the business. These outcomes are achieved through interactions that take place during the annual performance management cycle, as follows:

Goal settingThis is a formal process in which the manager and employee agree on goals, objectives, tasks and standards to be performed in the year ahead. The manager’s role is to ensure that goals are linked to the Group’s strategy and that the employee has the necessary resources and support to achieve them. Targets for the business unit or operating company are included in the overall goals, which make up the employment contract to which the employee agrees and commits.

SupportOnce the goals, objectives, tasks and standards are agreed to, the manager will provide support to ensure that the employee achieves the targets. Support takes the form of discussions during day-to-day work and progress reports intended to provide early warning of concerns. The manager is then able to address concerns by providing motivation or direction to assist the employee in achieving these targets.

Review and assessmentDuring this formal process, the manager reviews the employee’s performance and the employee conducts a self-assessment against set goals to identify areas of strength and areas that require improvement. Following the review process, new goals are jointly agreed for the next performance cycle. At the end of each cycle, the manager rates the employee on a five-point scale, and the rating determines the employee’s financial reward.

More information on remuneration and reward, including the balanced scorecard, is available in the remuneration report beginning on page 62 of the integrated report.

Linked performanceAll salaried employees of Waco International receive a performance rating that is taken into consideration when awarding bonuses or other financial rewards.

Employee Wellness ProgrammeManagement approachWaco International accepts that employees are affected by pressure from their work and private lives. An established Employee Wellness Programme (EWP), managed by an external service provider, is available to all employees of South African operations. The EWP offers support and assistance to South African employees impacted by challenging


personal matters, most of which are related to relationships, life management, drug or alcohol abuse, stress and financial management. The EWP offers employees and their direct family members access to a 24-hour toll-free number. Calls are guaranteed to be treated confidentially. Access to the EWP is either by self-referral or referral by a manager. Services are provided to assist managers in the support and management of troubled employees.

Linked performanceThe table below shows the KPIs for the EWP in South Africa. The Group has no specific measure for the impact of the EWP on productivity or profitability.

2016 2015

Employees with access to the EWP 1 500 1 400Employees who used the EWP 473 517Employees who used the EWP (%) 34 37Individual cases 116 128Work-related cases 96 124Private cases 262 370Formal referrals 35 28

Key initiatives in the current yearWaco Kwikform initiated a counselling and wellbeing programme for its employees in July 2016.

Responsible use of labour brokers in South AfricaManagement approachWaco International secures adequate labour resources to achieve its operational objectives while managing labour efficiency and profit margins. A significant number of people are employed by Waco Africa in the South African economy. With average employee complements in excess of 4 000, SGB-Cape is the operating group’s largest employer. As the nature of its work is largely project-based, the location and duration of SGB-Cape’s labour requirements are variable.

For the Group to achieve the required levels of labour efficiency, it is necessary to use contracted labour supplied by labour brokers. This is undertaken in compliance with the LRA, which limits the duration of labour broker employee contracts to three months. The relationship with labour brokers is managed through a central database of accredited labour brokers who have passed a supplier evaluation process and comply with the criteria of the LRA, the Basic Conditions of Employment Act and the Pension Funds Administration Act. For its part, Waco Africa contracts responsibly with labour brokers to achieve optimal outcomes consistent with its operational and ethical values.

Key initiatives in the current yearJoint venture partnerships with labour brokersWaco International has historically limited its use of labour broker employees to variable project work. However, as the size and duration of projects increase and their labour requirements grow, the nature of the relationship with labour brokers is changing to a joint-venture arrangement. In such an arrangement, Waco International supplies technical expertise and equipment, and the labour broker supplies employees who become the permanent labour force of the joint venture.

This approach is consistent with the Group’s aim to employ skilled and supervisory labour broker employees on a permanent basis, and to extend this approach to a core of semi-skilled employees who can move between projects.

Linked performanceThe ratio of permanent to contracted employees is shown in the table below:

2016 2015

Permanent employees 3 727 3 456Contracted employees 3 411 3 083Contracted to permanent employees (%) 92 89

Industrial relationsManagement approachWaco International recognises the right of its employees to belong to labour unions and participate in collective bargaining. The Group conducts its contractual relationships with employees in line with relevant labour regulations and sound business practices. Procedures are in place to facilitate positive industrial relations. Primarily, these involve weekly workplace forums, where line managers and industrial relations officers within each operating business engage with employees and their representatives to discuss matters such as their conditions of work. This helps to identify and address matters before they escalate. Line managers and industrial relations officers are provided with the necessary skills and are jointly accountable to the Group Human Resources Executive for the management of industrial relations in their businesses. Their mandate is to develop productive working relationships with labour unions and employees.

Many of the Group’s primary operating environments, most notably South Africa, are characterised by challenging labour conditions in terms of stability and access to skills. Legal and illegal industrial action in South Africa in particular, represents a significant challenge to domestic businesses, and one that has been exacerbated in recent years by the impact of the economic downturn on labour and the increasing politicisation of labour unions. Waco International seeks to mitigate this by structuring contracts to minimise the potential negative impact of labour disruption, and developing individual relationships and performance assessments with employees.

Wage increases are governed by bargaining council agreements or direct negotiations with the relevant union representatives. Given that wage rates based on individual performance are not possible under these circumstances, the Group prefers branch-based negotiations with unions, where it is more able to manage or remove the influences of third-party agendas. However, it is proving to be increasingly difficult to achieve this, and the Group’s wage rates are increasingly being set by industry bargaining council agreements. High wage rate demands have become common and, as a result, the Group has had to engage with labour unions in an attempt to keep wage rates at acceptable levels.

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Key initiatives in the current yearContinuous focus is placed on ensuring functional procedures to facilitate positive labour relationships and high levels of productive line management engagement with labour.

In particular, the Group has focused on strengthening relationships with individual employees by ensuring their objectives are aligned with those of their employer, and maintaining open lines of communication between employees and their line managers.

Linked performanceThere was one case of industrial action reported by Sanitech in 2016. This low level of industrial action took place largely because two-year or three-year labour agreements were not due for renewal during the year. The international operations did not report any cases of industrial action.

Industrial action

2016

South African employees who are members of a trade union or collective bargaining council (%) 34%Industrial actions– Direct 1– Indirect 0Days lost due to industrial action 15Revenue lost due to industrial action R600 000

LOOKING AHEADWaco International will focus on strengthening human resources management capacity in Australia and sub-Saharan Africa. The Group will implement its human resources strategy and values-based approach in these operations and identify operations that require additional capacity to navigate specific areas of human resources management, such as salaries, that need to be market-related.

The high level of employee turnover in Sanitech remains an area of concern. Plans to reduce turnover will be implemented and monitored in 2017.

The Group places continuous emphasis on stretch targets to drive improvement in performance and ensures it has adequate capacity to achieve its strategic objectives. The human resources scorecard will be refined and implemented in all businesses in 2017, enabling the Group to be more effective in identifying areas of strength, and addressing areas of weakness in human resources management.

an increase from 473 to 500 in the number of employees in 2017.

The Group will focus on improving the variability of its permanent work force in 2017 to enable higher levels of mobility between projects and to avoid retrenchment of permanent employees upon completion of large projects.

Waco International will maintain its continuous focus on ensuring that procedures to facilitate positive labour relationships are functional, and that line managers maintain high levels of productive engagement with labour to reduce the number of work days lost to industrial action. This is particularly important as some longer-term labour agreements approach a period of renegotiation and renewal.

As part of its talent identification process, Waco International is strengthening the availability of identified internal talent throughout the Group by allowing transfers between businesses. For example, Form-Scaff has strong junior administrators who were recommended as potential branch managers for other businesses in Waco Africa.

Waco Africa commenced a tertiary recruitment process to increase the number of B-BBEE candidates enrolled for the scheme, and will extend its Cadet Scheme to university graduates from 2017. Candidates will be sponsored at university and recruited into the scheme as graduates on tied bursaries. Unfortunately, due to the “fees must fall” movement, no candidates have been identified for the 2017 year.

Waco Africa will continue to provide support and assistance to employees through the EWP. The Group intends to maintain 100% access to the EWP for South African employees and is targeting

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MATERIAL MATTERS• Transformation in South Africa


• Contract renewal

TRANSFORMATION

FOCUS AREAS• Bopa Moruo, equity partner of Waco Africa

• Joint ventures and small, micro and medium enterprises (SMMEs)



CONTEXTWaco International considers transformation a strategic objective, as it has a significant impact on the Group’s ability to maintain growth in South Africa. The Group applies appropriate measures to facilitate progress towards achieving its transformation targets. While the need to transform the South African workforce in line with the requirements of the B-BBEE Codes of Good Practice is the main priority, the Group also aims for demographic representation in other jurisdictions in which it operates. The Group seeks to achieve its transformation goals through a sustainable approach in which human capital is developed and promoted within the Group.

The Group’s performance against government’s B-BBEE targets has a bearing on its ability to operate sustainably in South Africa, because these scores play an important role in the award of tender contracts. Waco Africa currently has a level 2 B-BBEE contributor status, but anticipates a reduction under the revised codes, which are more stringent and place greater emphasis on procurement and enterprise development. The Group is implementing measures to achieve a level 4 status under the revised codes by 1 December 2016. Employment equity and skills development remain key focus areas in this regard.

Waco International promotes black economic empowerment (BEE) candidates to leadership positions where appropriate and enters into partnerships with black-owned businesses in mutually value-adding joint venture arrangements.

Historically disadvantaged South Africans benefit from mentorship and learnership programmes through the Waco Africa

Cadet Scheme, while adult basic education and training (ABET) empowers individuals with core skills that improve their employment opportunities.

Stakeholder engagementWaco International has identified its key transformation stakeholders:

Employees expect a work environment that is free of discrimination; that offers them fair remuneration, skills development and career advancement; and performance recognition and reward. The Group responds by providing an equitable working environment where there is no discrimination and all employees are able to fulfil their potential. Previously disadvantaged employees receive training in skills required to apply for senior positions.

For their members, trade unions require employers to provide fair remuneration and career advancement opportunities in non-discriminatory work environments that show evidence of employment equity and other transformation initiatives. Transformation boosts employee morale and contributes positively to the stability of industrial relations.

Customers expect responsible, legally compliant labour practices and progress towards the achievement of the highest B-BBEE rating to improve their own supplier evaluations and thereby improve their B-BBEE rating. The Group is implementing measures to ensure that it makes continuous progress towards achieving the requirements of the revised B-BBEE Codes of Good Practice in order to maintain its good relationships with customers.

Regulatory and industry bodies require South African companies to transform in line with the country’s demographic

profile. The Group complies with B-BBEE requirements, employment equity regulations and reporting standards to maintain its licence to operate, and to avoid reputational damage and the financial penalties associated with non-compliance.

FOCUS AREAS The key transformation focus areas that support the implementation of Waco International’s strategic objectives are discussed below.

Bopa Moruo, equity partner of Waco AfricaManagement approachBopa Moruo, a 100% black-owned company, has a 25.1% equity interest in Waco Africa and has been its empowerment partner since 2014, contributing significantly to the ownership score in Waco Africa’s B-BBEE rating.

Key initiatives in the current yearCreation of a Waco Training AcademyWaco International reached an agreement with Bopa Moruo to establish a Waco Training Academy with effect from 1 August 2016, to provide all training required by Waco Africa. Bopa Moruo owns 51% and Waco International 49% of the new academy, which qualifies as an enterprise development initiative.

The academy is managed by Waco International employees, who were deployed for this purpose. The academy will enable the Group to achieve more targeted training for previously disadvantaged candidates and have greater control over the cost of training.

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Transformation (continued)

Linked performanceAn overview of the key transformation performance indicators in the Group’s South African operations is provided in the following table:

2016 2015

B-BBEE rating (at August 2016) 2 2B-BBEE scorecard (at August 2016) 85.77 85.49Black ownership (%) 43.06 43.06Workforce (% by race)– White 23 20– Black 68 71– Coloured 4 4– Indian 4 4– Asian 0 0– Other 1 1Workforce (% by gender)– Male 87 90– Female 13 10Executive committee (% by race)– White 75 82– Black 9 9– Coloured 1 2– Indian 13 5– Asian 0 0– Other 2 2Executive committee (% by gender)– Male 91 92– Female 9 8

Joint ventures and small, micro and medium enterprisesManagement approachWaco International forms mutually beneficial joint-venture partnerships to improve its competitive position when bidding for tenders. Both parties contribute value to these partnerships: Waco International provides training, skills transfer and equipment; and the other party generally provides labour.

Key initiatives in the current yearThe Group has extended its joint venture strategy to labour brokers, by supplying technical expertise and equipment, while the labour broker supplies employees who become the permanent labour force of the joint venture.

The creation of the Waco Training Academy with Bopa Moruo has resulted in the development of a new small enterprise that is jointly owned by Bopa Moruo and Waco International.

Linked performanceWaco International engaged with the same three SMMEs in 2016 as in 2015.

Additional information on employment equity is available in the talent management framework on page 17.

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LOOKING AHEADAs at 1 December 2016, the new B-BBEE scorecard will come into effect. The Group anticipates moving to a level 4 rating and will focus on improving this to a level 3 rating by the next ratings period.

The Group will continue to focus on developing partnerships in the form of joint ventures with labour brokers and transferring skills to these SMMEs to strengthen their ability to become sustainable over the long term.

Waco International is developing a policy to govern its SMME joint ventures to ensure they are managed according to standards that uphold ethical relationships to the advantage of both partners.

MATERIAL MATTERS• Contract execution


ENVIRONMENT

FOCUS AREAS• Environmental audits

• Resource management

• Sanitation and water solutions



CONTEXTIn a world where the sustainable supply of critical resources is becoming more uncertain, Waco International is committed to safeguarding global environmental resources. Although the Group operates a vast fleet of equipment, its impact on the environment is relatively low as it only requires replacement or refurbishment after lengthy intervals. Nevertheless, the Group endeavours to minimise its impact with monitoring, incident reporting and continuous operational efficiency improvements. The cost benefit of reducing its consumption of fuel, power and raw materials is an additional incentive for the Group to minimise its impact.

Waco International’s environmental management is governed by a Group environmental policy. Each operating group develops an annual environmental plan to ensure continuous improvement of environmental management in its area of operation. Any serious environmental impacts are reported to the relevant member of the peer group and lessons learnt are shared.

Stakeholder engagementThe key stakeholders prioritised in the area of environmental management are as follows:

Customers expect Waco International to apply responsible business practices and secure the necessary accreditation for products and services. The Group commits to professional environmental management in its contractual agreements with customers; manages equipment and services deployed to customer sites jointly with the customer; and undertakes responsible resource and waste management as part of its high-quality service to customers.

Communities expect that Waco International will be responsible in its use of environmental resources on site and offer innovative solutions to resource constraints. The Group’s mutually beneficial contractual arrangements take into account: the interests of surrounding communities and environmental impacts; access to natural and labour resources;

and the deployment of products to meet certain needs in communities.

Contractors, suppliers and service providers expect responsible supply chain management and responsible use of environmental resources. Waco International uses collaborative methods to minimise environmental impacts, including waste disposal, recycling and efficient use of energy and water. The Group requires contractors, suppliers and service providers to participate in its efforts to improve environmental management to the benefit of all.

The Group complies with the requirements of regulatory and industry bodies by maintaining accreditation to environmental management standards.

FOCUS AREASKey focus areas in the implementation of Waco International’s environmental management are discussed below.

Environmental auditsManagement approachOperational management is encouraged to conduct self-directed environmental audits and submit the results in a formal report to the board. The audits consider specific requirements of individual sites relative to local and international environmental policies. Compliance with the Group environmental policy and plans is reviewed regularly by senior management and employees responsible for environmental programmes.

Linked performanceThe Group’s operations are at different stages of adopting environmental audits, and peer groups are being established to determine the necessity and required frequency of audits at certain operations. Currently, Premier Modular and Kwikform conduct environmental audits at all sites, in compliance with regulatory requirements in the UK, Australia and New Zealand. SGB-Cape undertakes annual audits at all sites, while Sanitech and Form-Scaff aim to conduct audits on three and five-year rolling cycles, respectively. SkyJacks and Abacus plan to commence audits in 2017.

Adverse audit findingsTwo minor findings were raised at the Form-Scaff National Distribution Centre regarding:

• failure to demonstrate that the levels of polychlorinated biphenals (PCB) in the transformer oil had been determined and identified as required in terms of GNR 849 of 2013; and

• failure to take into consideration the environmental impacts and aspects of installing a temporary diesel tank at the generator with regard to the prevention of any possible related pollution.

No adverse findings were raised in any other environmental audits undertaken in 2016.

Resource managementManagement approachAll Waco International operating businesses implement air, water, noise and waste management programmes using technologies, operating processes and treatment alternatives that reduce or eliminate waste and emissions. They endeavour to minimise energy used directly or indirectly.

The Group recycles materials where possible, and prefers to refurbish equipment rather than manufacture or purchase new stock. Waste is disposed of by accredited contractors whose performance and compliance with sound environmental practice are routinely validated.

Hazardous waste is disposed of at reputable waste disposal plants in accordance with the relevant environmental regulations. SGB-Cape offers its customers a responsible commercial asbestos removal service.

Key initiatives in the current yearAn environmental peer group made up of operational executives responsible for safety, health and environmental management was established and will be implemented in 2017 to ensure the operations’ environmental management plans are compatible with Group policy and that best practice is shared across the Group.

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Linked performanceEnvironmental incidentSanitech experienced one major environmental incident on 30 March 2016, when a pump truck driven by a labour broker employee overturned while travelling at high speed, resulting in a small amount of waste spillage. Sanitech reported the incident to the South African Police Services and Spill Tech responded to the site to ensure that the road was cleaned and reopened for traffic. The waste was removed and taken to a designated landfill site. Sanitech incurred a cost of R11 607 as a result of the incident.

Key environmental mattersThe management of environmental matters that, should they occur, represent potential risk for each of the Group’s businesses, is discussed below.

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Vehicle emissions Vehicles are inspected and serviced regularly to reduce emissions to an acceptable level. SGB-Cape has installed a MiX Telematics system in all company vehicles to detect misuse. Where companies are engaged with external contractors, we communicate with the contractors to monitor emissions.

✓ ✓ ✓ ✓ ✓

Water and electricity usage

The Group encourages the responsible use of our natural resources. Several branches have begun using harvested rainwater to flush toilets, and low water usage toilets have been installed. A communication campaign has been rolled out across SGB-Cape, encouraging the responsible use of natural resources, including switching off lights and air conditioners when not in use.

✓ ✓ ✓ ✓ ✓ ✓ ✓

Hazardous and other waste

Service level agreements have been entered into with various third parties for the safe removal and disposal of hazardous waste. The Group encourages the reduction of other waste and using recycling service providers where possible.

✓ ✓ ✓ ✓ ✓ ✓ ✓

Disposal of sanitary waste

A service level agreement has been entered into with a third party for the disposal of sanitary waste, and dumping permits have been obtained to dispose of waste.

✓

Water contamination Spray painting the fleet is done in an enclosed area and paint is stored securely to prevent contamination. Abacus has further installed and maintained oil traps. Excess waste is disposed of safely.

✓ ✓ ✓


Sanitation and water solutionsManagement approachIn 1990, South Africa was categorised as “water stressed”. By 2025, the country is expected to be categorised as “water scarce”. It is estimated that two out of every three people will live in water-stressed areas by 2025. In Africa alone, 25 countries will be water stressed.

Sanitech is developing environmentally sound solutions to this problem as sub-Saharan Africa becomes increasingly water stressed. An innovative new informal concept (NIC) toilet introduced by Sanitech in 2015 is safe, healthy and environmentally sound. It reduces water usage to 100 times less than a conventional domestic toilet. The design of the NIC toilet guarantees the safety of users, particularly children who are at risk of falling into open-pit toilets. Sanitech’s retro-fit toilet is designed for installation on existing open-pit toilets and new units. The REPIT toilet prevents contamination

of ground water and air contamination by airborne human waste, both common hazards of open-pit toilets.

Apart from the social and environmental challenges they address, these and other innovations introduced by Waco International also represent cost saving and commercial opportunities for the Group.

With a rental stock of 26 000 toilets in remote mining and industrial project sites, Sanitech uses 180 trucks at an annual cost of R70 million and an additional R2 million in dumping expenses to dispose of waste. To reduce this logistical cost, Sanitech is developing a series of portable wastewater treatment plants to enable it to treat waste on site. In remote locations, mobile plants will be powered by solar panels. An expert in environmental systems was appointed to co-ordinate the marketing of the plant, which will save costs and provide potential new revenue streams, particularly in the public water treatment

sectors in sub-Saharan Africa where wastewater treatment facilities are severely under-maintained.

Linked performanceThe Group’s first wastewater treatment plant was piloted at the Kendal site in Witbank. It primarily receives waste from Eskom’s Kusile power station in Kendal and Abacus’ build, own, operate camp site. The plant processes an average of 1.2 million litres of waste per month, resulting in at least a 50% saving in transport costs to dump the waste. A second unit is being installed at Coega, Port Elizabeth for the Group’s own use and that of other businesses in the complex, and will process an average of 300 000 litres monthly, resulting in a monthly saving of approximately R80 000/month in dumping costs. Negotiations are underway for additional units to be installed in various sectors in South Africa, Botswana and Zambia.

LOOKING AHEADWaco International actively pursues and researches ideas for innovative opportunities to maintain its growth momentum, while serving a need in the markets in which it operates.

The implementation of an environmental peer group made up of operational executives responsible for safety, health and environmental management will take place in 2017. The peer group will ensure that

best practice is shared across the Group and oversee the compatibility of the operations’ environmental management plans with Group policy.

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MATERIAL MATTERS• Effectiveness of growth initiatives

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• Cost pressures


INNOVATION

FOCUS AREA• Peer group



CONTEXTWeak economic growth and the limited growth potential of Waco International’s core businesses in mature markets have made the pursuit of growth opportunities a key contributor to the Group’s longer-term sustainability and its capacity to conduct business in a more sustainable manner. Innovation plays a key role in maintaining the momentum of the Group’s growth strategy. The Alchemy of Growth strategy and the Continuous Improvement ethos are key elements of the Group’s intellectual capital and promote a culture of innovation. The Group encourages its businesses and employees at all levels of the organisation to continually identify and exploit growth opportunities in existing and new markets, and improvements in the efficiency of operational processes. A key mechanism to unlock innovative thinking is Executive Development Programmes that result in the development and presentation of new business ideas. Innovative ideas for new products or services that have the potential to sustain our future growth, and that of the markets we serve, are supported and funded so that their full potential can be realised.

Innovation is a valuable differentiator for all of the Group’s businesses. Some have achieved notable successes in the execution of innovative ideas, such as Sanitech, Abacus and Premier Modular in the UK, all of which generated innovative new products in niche markets, including modular building technology and environmentally sustainable hygiene and sanitation products. The challenging economic environment in many of the Group’s markets is a driver of innovation in other businesses, as they respond by improving efficiencies or developing niche opportunities linked to their existing markets. These include: the extension of rope access to existing customers of SGB-Cape and Kwikform; SkyJacks’ offering of aerial work platforms as an extension of its suspended access offering; and Form-Scaff’s expansion into small plant hire.

Stakeholder engagementThe key stakeholders prioritised in the area of innovation were:

Shareholders expect a return on capital invested. Employees expect job security and to be remunerated fairly. By investing in innovative business ideas that will

contribute to future growth, the Group becomes sustainable in the longer term, and is able to provide a reasonable return on investments, retain employees and continue remunerating them fairly.

Customers expect product and service solutions that meet their needs for cost-effectiveness, efficiency and quality. By improving the efficiency of its operations and innovating new improved products and services, the Group is able to meet its customers’ needs in a value-adding manner.

Communities have an expectation of employment and the development of solutions to socioeconomic problems they encounter, such as water and electricity shortages and inadequate sanitation services. By growing and strengthening its financial sustainability, the Group is able to continue providing employment for communities, and its approach to innovation enables it to develop solutions that address socioeconomic problems in communities while generating a new revenue stream, such as renting REPIT or NIC toilets to municipalities.

LOOKING AHEADWaco International’s approach to innovation has historically been needs-based and project-focused. The Group is developing a more comprehensive, managed approach to ensure that research and development funding achieves specific outcomes, with the objective of profitable growth. Promoting innovation within the Group is the responsibility of a number of senior managers or executives, but because

none are primarily tasked with this role, it has become necessary to establish an innovation peer group.

The mandate of the peer group is to ensure a consistent approach to innovation, to promote the Continuous Improvement ethos, and sharing best practice across the Group. The peer group will develop an innovation agenda and performance measures. It will meet regularly to ensure that innovation is

being adequately managed and that the Group is not unduly exposed to disruptive activity in its markets. New initiatives will be submitted to an innovation register and the peer group will ensure that the initiatives make progress and are recorded.

Purpose and

scopeO


Safety and health

Hum


ationE

nvironment

InnovationC


ppendices

MATERIAL MATTERS• Government effectiveness in

South Africa

• Transformation in South Africa

CORPORATECITIZENSHIP

FOCUS AREAS• ABET (Waco Africa)

• Corporate social investment projects

• Waco International Charitable Foundation



CONTEXTWaco International recognises the need for businesses to be active role players in society and to identify opportunities within their means to share value with a broad group of stakeholders. The Group encourages its operations and employees to play a role in social investment activities, and creates opportunities for them to participate in these activities.

Waco International is defining a more structured approach to social investment that is aligned with its business strategy and offers a sustainable and transformative solution to beneficiaries.

Stakeholder engagementThe key stakeholders prioritised in the area of corporate citizenship are:

Employees expect access to skills development and training. Waco International believes in developing its employees, and offers training and development opportunities across all employee levels, from ABET to the Executive Development Programme. These opportunities foster employee commitment and enhance the Group’s reputation as a responsible employer.

Communities expect Waco International to be responsible in its use of environmental resources on site and to offer innovative solutions to resource constraints. The Group’s contractual arrangements take the interests of surrounding communities and environmental impacts into account.

Access to natural and labour resources and the deployment of products to meet certain needs in communities can be mutually beneficial.

FOCUS AREAS Waco International invested R8.3 million in social upliftment projects, as detailed in the table below.

Project 2016 2015

Corporate social investment (CSI) projects R6.2 million R850 000ABET R1.2 million R750 000Waco International Charitable Foundation R0.9 million R0.7 million

ABET (Waco Africa)Employees of Waco Africa benefit from an ABET programme offered by Waco Africa. The programme aims to improve basic literacy and numeracy skills. 122 employees were enrolled in the ABET programme, 76 of whom passed, and the balance will remain in the programme in 2017.

CSI projects In South Africa, the Group and its operations support a number of CSI projects, including a golf day to raise funds for charity, and the Growing Up Africa initiative to build an education campus in the Devland community in Soweto. Employees are encouraged to donate items or volunteer their time in support of charities of their choice.

Premier Modular in the UK supports causes promoted by its employees or the Group. The company sponsored a female tri-athlete in line with its approach to a healthy lifestyle. Waco Kwikform initiated a counselling and wellbeing programme for its staff in July 2016.

Waco International Charitable Foundation The foundation oversees an education fund that was established in 2007 with a donation from management to provide the children of permanent full-time employees with tertiary education bursaries. The bursaries are awarded based on financial need and academic excellence. The fund prefers courses of study aligned with its business activities, as the bursars tend to work for the Group for a minimum period equal to the period during which they received support.

Since its inception in 2007, the education fund has awarded bursaries to the value of R3.7 million. In total, 114 students have benefited from the fund.

LOOKING AHEADWaco International will strengthen its commitment to the upliftment of local communities by focusing on CSI initiatives to address socioeconomic challenges in the communities in which it operates.

Purpose and

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APPENDICES

CODE OF ETHICS SUMMARY A summary of Waco International’s Code of Ethics is provided below. This is an adaptation of the summary sent to all employees of the Group in an effort to make the Code of Ethics accessible, and emphasise its values-based approach. It outlines the required behaviour, relevant to a range of stakeholders, which the Group views as critical to the sustainable and ethical functioning of the business. All senior and key managers and employees have signed the Code of Ethics.

The companyWe will act at all times in the best interests of and for the benefit of the company and its shareholders.

CustomersWe strive to serve our customers and stakeholders by exceeding their expectations in terms of product offering and service at the agreed price.

SuppliersWe will always apply sound ethical and good purchasing practices.

CompetitorsWe will be fair, ethical and lawful in our dealings with competitors or communication with others about our competitors.

Environment and societyAll our business dealings will be conducted with due consideration to the environment and the societies in which we operate.

Employees and co-workersWe will treat all our employees and co-workers with dignity, integrity and honesty; we will respect our diversity and the human rights of others. As managers, we must strive to ensure that our employees are trained to do the job for which they are employed, that their workplace is safe, and that work expectations are clearly communicated. Employees are obliged to give a fair day’s work that is safe and free of any conflict of interest.

IndividualsYou take personal responsibility for your actions.


GLOSSARY

ABET Adult Basic Education and Training

AFR All-accident frequency rate

Africa South Africa and other sub-Saharan Africa

Australasia Australia and New Zealand

B-BBEE Codes Broad-Based Black Economic Empowerment Codes of Good Practice

CSI Corporate social investment

EWP Employee Wellness Programme

FTE Full-time equivalent employees

GIBS Gordon Institute of Business Science

IFRS International Financial Reporting Standards

ISO International Organization for Standardisation

LDC Limited duration contract

LRA Labour Relations Act

LTIFR Lost-time injury frequency rate

LTIs Lost-time injuries

NIC New informal concept toilet

OHSAS Occupational Health and Safety Standards

QMS Quality Management System

SMME Small, micro and medium enterprise

SMS Safety Management System

Appendices (continued)

GREYMATTER & FINCH # 10080

WACO INTERNATIONAL Registered office and business addressPhysical address: 2 Harrowdene Office Park 128 Western Service Road Woodmead, Johannesburg, 2148 Postal address: PostNet Suite #108 Private Bag X23 Gallo Manor, South Africa, 2052 Switchboard: + 27 11 461 1400 Web: www.wacointernational.com

Contact detailsChief Executive Officer: Stephen Goodburn Email: [email protected]

Chief Financial Officer: Eben le Roux Email: [email protected]

Company Secretary: Mark Towler Email: [email protected]

Registered auditorsKPMG Inc. 85 Empire Road, Parktown, Johannesburg, 2193 Switchboard: +27 11 647 7111

Principal bankerThe Standard Bank of South Africa Limited

BUSINESS UNITSWaco AfricaPhysical address: 181 Barbara Road, Elandsfontein Johannesburg, 1601 Switchboard: +27 11 842 4000 Web: www.wacoafrica.co.za

AbacusPhysical address: 1 Fonda Place, Yaldwyn Road, Jet Park Johannesburg, 1459 Switchboard: +27 11 397 8150 Web: www.abacusspace.co.za

SanitechPhysical address: Unit 9 Lakeview Business Park Yaldwyn Road, Jet Park, Johannesburg, 1459 Switchboard: +27 11 823 6060 Web: www.sanitech.co.za

SkyJacksPhysical address: 5 Geertsema Road, Jet Park Johannesburg, 1459 Switchboard: +27 11 397 2730 Web: www.skyjacks.co.za

Waco KwikformPhysical address: 12 Pike Street, Rydalmere NSW, Australia, 2116 Switchboard: +61 2 9684 8888 Web: www.wacokwikform.com.au

APL KwikformPhysical address: 604 Rosebank Road, Avondale Auckland, New Zealand, 1026 Switchboard: +64 9 828 0211 Web: www.aplkwikform.co.nz

Premier ModularPhysical address: Catfoss Lane, Brandesburton, Driffield East Yorkshire, United Kingdom, Y025 8EJ Switchboard: +44 1964 545 000 Web: www.premiermodular.co.uk

Form-Scaff ChilePhysical address: Las Acacias 1031, Parque Industrial Estrella del Sur, San Bernardo, Santiago, Chile, 9801Switchboard: +562 738 5019 Web: www.formscaff.cl

ADMINISTRATION

Africa

Africa

New Zealand

Africa

Africa

New Zealand

Australia

Africa

Australia

UK

Chile

www.formscaff.cl

www.premiermodular.co.uk

www.wacokwikform.com.au

www.sgbcape.co.za

www.sanitech.co.za


www.aplkwikform.co.nz

www.skyjacks.co.za

www.abacusspace.co.za

www.formscaff.cl

www.premiermodular.co.uk

www.sanitech.co.za



www.skyjacks.co.za

www.abacusspace.co.za

www.formscaff.com


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