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Contents

Group at a glance 2 Company profile

4 Milestones and achievements

6 Scope and boundary

7 Group reporting structure

8 Group overview

10 Risk management

14 Stakeholder engagement

15 Material issues

17 Five-year financial review

18 Board of Directors

20 Executive Committee

Reports to stakeholders 24 Chairman and Chief Executive Officer Performance Review

29 Operational review

29 Structures

33 Building

37 Roads, Pipelines and Mining Services

41 Mechanical and Electrical

45 Power

46 Corporate governance report

57 Social and environmental review

57 Social and Ethics Committee

57 Our employees

68 Safety, health and environment

76 Quality management

77 Transformation and CSI

84 Value added statement

85 Remuneration report

Summary of financial statements 92 Chief Financial Officer’s report

94 Preparation of annual financial statements

94 Certificate by the Company Secretary

94 Independent auditors’ report

95 Directors’ responsibilities and approval

96 Audit, Governance and Risk Committee report

98 Directors’ report

99 Financial statements

107 Shareholders’ analysis

108 Shareholders’ diary

109 Notice of annual general meeting

113 Form of proxy

115 GRI index

IBC Corporate information

IBC Definitions and abbreviations

IBC Inserted CD

Definitions and abbreviations

The definitions listed below have been used throughout the integrated report.

“B-BBEE” Broad-based black economic empowerment

“Companies Act” Companies Act, No 71 of 2008, as amended

“CSI” Corporate social investment

“Cycad Pipelines” Cycad Pipelines (Pty) Ltd and its related operations

“DIFR” Disabling injury frequency rate

“Earnings yield” HEPS as a percentage of market value per share

“ED” Enterprise development

“EPC” Engineer, procure and construct

“EPCM” Engineer, procure, construct and manage

“EPS” Earnings per share

“EXCO” Executive Committee

“GRI” Global Reporting Initiative

“HDI” Historically disadvantaged individual

“HEPS” Headline earnings per share

“IASB” International Accounting Standards Board

“IFRS” International Financial Reporting Standards

“IT” Information technology

“JSE” Johannesburg Stock Exchange Limited

“King III” King Report on Corporate Governance for South Africa 2009

“KZN” KwaZulu-Natal

“Listings Requirements” Listings Requirements of the JSE

“LTI” Lost-time injury

“LTIFR” Lost-time injury frequency rate

“MEP” Mechanical, Electrical and Power

“Net asset turn” Contract revenue divided by average total assets

“Net profit margin” Profit after taxation as a percentage of contract revenue

“PPP” Public Private Partnership

“Operating profit” Operating profit before investment income and non-operational item

“Operating profit margin” Operating profit as a percentage of contract revenue

“Return on assets” Profit after taxation as a percentage of average total assets for the period

“Return on equity” Profit attributable to equity holders of Stefanutti Stocks as a percentage of average capital and reserves attributable to equity holders of Stefanutti Stocks

“RPM” Roads, Pipelines and Mining Services

“SADC” Southern African Development Community

“SAFCEC” South African Federation of Civil Engineering Contractors

“SANRAL” South African National Road Agency Limited

“SENS” Stock Exchange News Service

“SHE” Safety, health and environment

“Stefanutti Stocks”; “the Stefanutti Stocks Holdings Limited group” or “the company” and all of its subsidiaries

“the board” The board of directors of Stefanutti Stocks

“the current year” The financial year ended 28 February 2013

“the next year” The financial year ending 28 February 2014

“the previous year” The financial year ended 29 February 2012

“Total assets” Total non-current and current assets

“WACC” Weighted average cost of capital

COMPANY PROFILE

Stefanutti Stocks is one of South Africa’s leading engineering and construction groups and has been listed on the JSE Main Board in the “Construction and Materials – Heavy Construction” sector since 2007. The group offers highly diversified services across the full spectrum of engineering and construction disciplines. The focus areas of the group comprise structures, buildings, roads, open-pit mining, mechanical services, industrial instrumentation, electrical contracting and power distribution equipment.

All group operations are registered with the Construction Industry Development Board (CIDB) as a Category 9 Contractor, which places no limitations on the size of projects on which the group can tender.

The group operates in South Africa, sub-Saharan Africa as well as in the Middle East, in both the private and public sectors. Clients include governments, state-owned companies and local authorities, large industrial and mining corporations, financial institutions and property developers. African countries include Angola, Botswana, Malawi, Mozambique, Sierra Leone, Swaziland and Zambia. The group has offices in Doha and Dubai in the Middle East.

Stefanutti Stocks’ headquarters are based in Kempton Park, Gauteng.

Category 9 Contractor

13 708 Global workforce

11 320 Employees throughout South Africa

2 Stefanutti Stocks Integrated Report 2013 | Company Profile

Our valuesWe continue to create value for all stakeholders through a value-driven culture. This will be accomplished by setting and achieving measurable key objectives to support sustainable earnings growth and, at the same time, maintain a sound financial position while implementing key non-financial objectives to support the growth strategy.

Our mission and strategic long-term goalsWe aim to become the leading construction group in South Africa and the preferred construction partner for all of our stakeholders.

Our professional conduct will establish a track record of industry excellence.

We endeavour to maximise shareholder value by building a sustainable business presence in Africa and within targeted international markets.

We strive to create a desirable place of work, a natural home for creativity, enthusiasm and personal safety.

Our visionA dynamic group delivering complete construction and contracting solutions.

VALUESCandour

frank and respectful discussions with the objective of finding positive outcomes.

Professionalism

the application of a competent, disciplined and meticulous approach to all aspects of business, resulting in performance of high quality and reliability.

People relations

the value, which causes people to treat one another fairly and with respect, and to always be mindful of the human dignity of others.

Enthusiasm

a high level of positive energy and a determination to succeed.

Dynamism

openness and flexibility of mind and an energetic, proactive solution-driven attitude.

PERFORMANCE IS DRIVEN BY A CULTURE BASED ON THE FOLLOWING VALUES:

3Stefanutti Stocks Integrated Report 2013 | Company Profile

MILESTONES AND ACHIEVEMENTS

1970s 1980s

1971Gino Stefanutti and Ivo Bressan founded Stefanutti & Bressan

1974First bridge construction awarded

1988 › Opened offices in Swaziland

› Roads and Earthworks: established a new operation

4 Stefanutti Stocks Integrated Report 2013 | Milestones and Achievements

1990s 2000s 2010s

1992Contract for the Tugela River Bridge awarded

1994Opened office in Mozambique

1996 › Opened Gauteng office in Kempton Park

› Three major cooling towers for Eskom’s Majuba power station awarded

Revenue: R84,0m

2003Geotechnical operation: specialising in reinforced piling and lateral support

2005

Revenue: R1,0bn

2006 › Opened office in Cape Town

› Introduced Moputso Investments (Pty) Ltd (part of Mowana Investments group) as BEE partner

2007 › Listed on the Johannesburg Stock Exchange

› Environmental, Civil and Mining Projects (Pty) Ltd acquired

2008 › Merged with Stocks Limited and gained

entry into UAE markets

› Majority stake in Skelton & Plummer Investment Holdings Company (Pty) Ltd acquired

› New BEE shareholder Leswikeng Building (Pty) Ltd

› Majority stake in Civil & Coastal (Pty) Ltd acquired

› Rebranded as Stefanutti Stocks

Revenue: R2,6bn

2010Business operations of Waste Energy Recovery and Management (Pty) Ltd, Apollo E&I Construction (Pty) Ltd and RGF Power Projects CC acquired

Revenue: R7,5bn

2012 › Cycad Pipelines (Pty) Ltd acquired,

effective March 2012

› Implemented a perpetual employee participation plan known as the Stefanutti Stocks Participation Plan in 2012

2013 › The group achieved a DIFR of 0,18,

the lowest recorded rate to date.

› Level 2 B-BBEE certification achieved

Revenue: R9,4bn

5Stefanutti Stocks Integrated Report 2013 | Milestones and Achievements

SCOPE AND BOUNDARY

This report, for the financial year ended 28 February 2013, is Stefanutti Stocks’ second integrated report to stakeholders. It aims to provide a balanced, understandable and complete view of the group by reporting on the material issues, risks and opportunities it faces as well as the group’s environmental, social and governance responsibilities.

This integrated report was prepared in accordance with the International Financial Reporting Standards, the requirements of the South African Companies Act, No. 71 of 2008, as amended, the Listings Requirements of the JSE Limited, the principles of the King Report on Governance for South Africa, 2009, the Global Reporting Initiative’s G3.1 Reporting Guidelines and the Discussion Paper on Integrated Reporting released by the South African Integrated Reporting Committee. For additional financial information and recent announcements please visit our website: www.stefanuttistocks.com.

The Stefanutti Stocks’ integrated report is published with a summary of the financial statements contained in this integrated report. The integrated report, which includes the comprehensive annual financial statements and investor presentations for the year ended 28 February 2013, are available on the company’s website and on the CD inserted in this integrated report (the inserted CD).

There are no material changes to the content of this integrated report when compared to the 2012 integrated report, other than a greater emphasis on providing additional information on the group’s strategic direction, risk and sustainability initiatives.

This integrated report may contain certain forward-looking statements concerning the group’s key business units’ strategy, financial conditions, growth plans and expectations. Such views include both known and unknown risks, assumptions, uncertainties and important factors that could materially influence the actual performance of the group. No assurance can therefore be given that these will prove to be correct and no representation or warranty expressed or implied is given as to the accuracy or completeness of such views.

This integrated report has not been independently assured. The group, however, reviews all internal and external assurances already in place and co-ordinates this with its risk management profile. The annual financial statements have been audited and the Independent auditors’ report can be found in the comprehensive annual financial statements on the inserted CD and the group’s website: www.stefanuttistocks.com.

Approval of the integrated report

It is the board’s responsibility to ensure the integrity of this integrated report. The board has applied its mind to the integrated report and in its opinion this report addresses all the material issues and fairly represents the integrated performance of the group.

Gino Stefanutti Willie Meyburgh Chairman Chief Executive Officer

16 July 2013

Assurance and comparability

6 Stefanutti Stocks Integrated Report 2013 | Scope and Boundary

GROUP REPORTING STRUCTURE

STRUCTURES BUILDING RPM MEP

CIVILS

CIVILS KZN

GEOTECHNICAL

MARINE

INLAND

HOUSING

COASTAL

AFRICA (SADC)

MIDDLE EAST

AL-TAYER STOCKS

ZENER STEWARD

CONSTRUCTION

ROADS AND EARTHWORKS

PIPELINES

BUILDINGS, ROADS AND EARTHWORKS SWAZILAND

TAILINGS OPERATIONS

OPEN-PIT CONTRACT MINING

MATERIALS HANDLING

MECHANICAL (OIL AND GAS)

ELECTRICAL AND INSTRUMENTATION

MECHANICAL (MINING INFRASTRUCTURE)

POWER LINES

LIVE LINE MAINTENANCE

SUBSTATIONS

STEFANUTTI STOCKS

Stefanutti Stocks has revised its reporting structures for the group, effective 1 March 2012, whereby Mining Services, previously reported as part of Mechanical, Electrical and Power (MEP), is now reported as part of Roads and Earthworks. The Pipelines business is reported as part of Roads and Earthworks, with the business unit now known as Roads, Pipelines and Mining Services (RPM).

7Stefanutti Stocks Integrated Report 2013 | Group Reporting Structure

StructuresBuilding (including Middle East)

GROUP OVERVIEW

Order book

R1,8 billion Structures

R3,1 billion Building incl Middle East

R3,1 billion RPM

R0,5 billion Mechanical, Electrical and Power

Key operations › Civils

› Civils KZN

› Geotechnical

› Marine

Business unit capabilities › Mining infrastructure

› Bridges and transport infrastructure

› Fossil and renewable energy power plants

› Petrochemical plants and related infrastructure

› Bulk materials handling infrastructure

› Marine infrastructure, ports and harbours

› Heavy industrial plants and structures

› Geotechnical construction, piling and lateral support

› Effluent and water treatment plants

› Structural rehabilitation, concrete repair and waterproofing

› Dams

Key operations › Inland

› Housing

› Coastal

› Africa (SADC)

Middle East:

› Al-Tayer Stocks

› Zener Steward

› Construction

Business unit capabilities › Commercial buildings

› High-rise buildings

› Industrial and service buildings

› Property development facilitation

› Hotels

› Shopping centres

› Mass housing

› Township and residential developments

› PPPs

Middle East:

› Construction

› Interior fit-out

› Refurbishment

› Electromechanical installations

Contribution to:

Revenue (%) Operating profit (%)*

Contribution to:


29

60

38

(17)

See Building operational review page 33See Structures operational review page 29

* Excluding Head Office * Excluding Head Office

8 Stefanutti Stocks Integrated Report 2013 | Group Overview

Roads, Pipelines and Mining Services

Key operations › Roads and Earthworks

› Pipelines

› Mining Services

› Africa (SADC)

Business unit capabilities › Roads

› Bulk earthworks

› Mining surface infrastructure

› Pipelines for water and other products and materials

› Trenched optic fibre

› Design, construction and operation of mine waste residue disposal and recovery facility

› Hydraulic mining and dredging

› Bulk materials handling

› Coal discard and fines disposal and recovery

› Open-pit contracting

› Drilling and blasting for mines

› Crushing and screening at mines

› Rehabilitation and closure of mines

› Transport infrastructure

› Township infrastructure including all services

› Commercial and industrial infrastructure

› Large diameter steel and High Density Polyethylene pipelines

› Pipeline refurbishments and linings

› Environmental infrastructure

Contribution to:


25

76

See RPM operational review page 37

Power

Key operations › Power lines

› Live line maintenance

› Substations

Business unit capabilities › Overhead line construction (22kV to 765kV)

› Substation construction (22kV to 765kV)

› Optic fibre installation – OPGW and ADSS

› Live line maintenance (22kV to 765kV)

Power’s contribution to revenue and operating profit is included in the Mechanical and Electrical graph to the left.

See Power operational review page 45

Mechanical and Electrical

Key operations › Mechanical (Mining infrastructure)

› Electrical and Instrumentation

› Mechanical (Oil and Gas)

Business unit capabilities › Structural steel erection

› Mechanical equipment installation

› Pipe spool fabrication

› Installation of process piping systems

› Maintenance work during shutdown

› Water treatment plants

› Switchgear and motor control centre installation

› Control system installation

› Electrical field device installation

› Field instrumentation installation

› Commissioning assistance

Contribution to:


8

(22)

See M&E operational review page 41

* Excluding Head Office * Excluding Head Office

9Stefanutti Stocks Integrated Report 2013 | Group Overview

RISK MANAGEMENT

Stefanutti Stocks’ board of directors bears the ultimate responsibility for the governance of risk including the determination of risk appetite and tolerance levels and the approval of the risk strategy, policy and framework. The Audit, Governance and Risk Committee assists the board with monitoring the group’s risk management. Stefanutti Stocks is still in the process of refining the reporting relating to risk management within the group, and has made good progress during the year under review.

Stefanutti Stocks’ philosophy is to be “risk aware” and not “risk averse” and to recognise potential opportunities flowing from selected risks. The group endeavours to minimise risks by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints, as determined by the board’s risk parameters.

The group recognises that managing risk is an integral part of generating sustainable stakeholder value and protecting stakeholder interests. It acknowledges that an appropriate balance should be struck between entrepreneurial endeavour and sound business practice.

The Group Risk Officer, is responsible for establishing, updating and maintaining the group risk framework based on internationally recognised standards, providing guidance, supporting and coordinating the identification and documentation of risk areas group-wide and implementing the risk management system. The Group Risk Officer reports to the Audit, Governance and Risk Committee, presenting a risk report at each committee meeting.

A combined assurance model in line with King III requirements is being developed to ensure that all risks identified are subjected to the appropriate level of control and assured by internal and external providers as appropriate. The Audit, Governance and Risk Committee interrogates the internal and external audit plan to ensure that no overlap occurs.

The group risk register has been reviewed and is being updated and aligned to the group’s strategic plan.

10 Stefanutti Stocks Integrated Report 2013 | Risk Management

High-impact risksRisk Controlling strategies/mitigations

EXTERNAL ENVIRONMENT: MARKETS

Significant changes in pricing levels (margin pressure) › Diversification and expansion of group offering

› Identification of opportunities: external to existing markets

› New geographical territories

› New markets

› Alternative procurement approaches and methods

GROWTH STRATEGIES

New geographical expansion › Rigorous estimating and tendering process with appropriate authority levels

› Due diligence to ensure understanding of new conditions

› Development of policies and procedures in support of strategy

› On-the-ground commitment to gain practical experience

› Assistance of advisory firms and consultants

Acquisitions and mergers › Alignment with group strategy

› Comprehensive/ongoing market research

› Detailed due diligence/use of professional advisors

› Profit warranties

› Carefully managed integration process/merger integration plans

› Mergers, Acquisitions and Disposals Committee

New markets › Comprehensive/ongoing market research

› Detailed due diligence/use of professional advisors

› Development of policies and procedures in support of strategy

› Appropriately skilled management

LEGISLATIVE COMPLIANCE

Competition law › Ongoing training and awareness of programmes for all management on Competition Act requirements

› Risk management and legal compliance reviews

› Compliance overseen by Audit, Governance and Risk Committee

Laws governing health and safety › Rigorous health and safety programmes across the group, including management forums

› Monitoring of health and safety and ensuring corrective action is taken

› Social and Ethics Committee established in 2012

Other laws relevant to the group › Identification of core Acts applicable to the group and key controls to ensure compliance

› Risk management and compliance reviews

11Stefanutti Stocks Integrated Report 2013 | Risk Management

RISK MANAGEMENT continued

Medium level risksRisk Controlling strategies/mitigations

EXTERNAL ENVIRONMENT: MARKETS

Loss of market share › Client and relationship marketing strategies

› Quality on-time and within client budget performance

› Process of continuous improvements and cost control

› Growing market share in selected business areas

EXTERNAL ENVIRONMENT: SOCIO-POLITICAL

B-BBEE › Employee Share Ownership Plan

› Structured process to increase management representation at various board levels

› Procurement with qualifying B-BBEE suppliers

› Appropriate measurement and reporting systems to be strengthened/implemented

STRATEGIC MANAGEMENT: GROWTH STRATEGIES

New client sectors › “Know Your Client” due diligence

› Maintenance of private/public sector client proportions

› Marketing/business development initiatives

› Established client relationship programme

STRATEGIC/BUSINESS MANAGEMENT: BUSINESS MODEL/APPROACHES

Partnering/strategic alliances/joint ventures › Seeking compatible cultures/approaches

› Building strong interpersonal relationships at correct management levels

› First establishing new arrangements on small scales

› Ensuring joint-venture partners are a good fit in terms of skills, quality and financial capability

ESTIMATING, CONTRACTING AND EXECUTION: MAJOR PROJECTS/DIFFERING CONTRACTED PROJECTS

Estimating risk › Well developed estimating systems

› Experienced estimators

› Regular reviews of rates

› Structured tender finalisation process

› Complex, large, new type of projects to be subject to particular focus

Contractual terms › Commercial skills capacity

› Contracting to standard (industry) terms

› Deviations subject to professional advice and senior management sign-offs

› Transferring/avoiding high risks (price risks-indexation, provisional sums, fixed prices, etc.)

12 Stefanutti Stocks Integrated Report 2013 | Risk Management

Medium level risksRisk Controlling strategies/mitigations

Project delivery (problem contracts) › Project management controls covering all aspects of the project processes are devised and implemented covering items such as: contract award, start-up site management, monthly contract reviews, monthly forecasting, site asset controls, quality management plans, health and safety plans, commercial plans, valuations and payment management, sub-contracting and supplier management, other project operating controls, purchase controls, handover and completion certificates controls, financial performance reviews and record keeping

› Skills development, capacity building and human capital

HUMAN CAPITAL MANAGEMENT

Employment equity › Focused recruitment preference for HDIs

› Focus on total B-BBEE scorecard

FINANCIAL MANAGEMENT

Financial gearing › Appropriate financial gearing levels determined and reviewed regularly

INFORMATION TECHNOLOGY

IT failure › Adequate service level agreements with IT service providers

› Disaster recovery strategy developed by group IT

› Contingency plan with respect to network connectivity

Achievements in 2013

The group maintained focus on its risks and mitigation strategies during the period and is currently in the process of finalising the coming year’s risk listing.

Pursuant to the annual Audit, Governance and Risk Committee’s risk assessment, a new formal risk model was adopted which provided additional focus in developing the risk universe.

The risk manual, which has been in place since 2009, has been communicated and implemented throughout the group. The group’s risk management and internal audit functions focused on the roll out of the group’s risk management policies to the business units, assessing the need for enabling software and the ongoing performance of internal audit reviews throughout the group. Thirteen audit projects were undertaken and reported on and two different software options were assessed. The overall reporting formats of the department were also revised during the year and the duration of the projects were shortened through efficiencies being experienced by the teams.

Risk tolerance levels are being developed and rolled out with levels being set at group, business unit and divisional level.

Goals and strategies for 2014

The focus for 2014 will be to:

› Ensure the roll-out of the revised group risk register;

› Finalise the assessment of legal compliance risk separately, develop a group-wide risk reporting mechanism to incorporate financial, legal, health and safety risk issues;

› Continue to refine and focus the internal audit effort and reporting in the key value-adding areas; and

› Formalise and document a combined assurance model.

13Stefanutti Stocks Integrated Report 2013 | Risk Management

Stefanutti Stocks engages with stakeholders in open, constructive and transparent communication. The Social and Ethics Committee, human resources and investor relations functions within the group, maintain regular contact with existing and new stakeholders.

Company announcements are published on SENS where required by the JSE Listings Requirements and posted on the group’s website. Relevant financial results announcements are mailed to shareholders in compliance with the statute and regulations. The Chief Executive Officer and Chief Financial Officer are available through a structured medium to answer queries from shareholders and industry analysts, and engage with the financial media to ensure accurate reporting.

Biannual road shows to the investor community and senior management of the group are conducted and the presentations are made readily available on the company’s website. The group hosts investor days for those interested in the operations of the company.

As a listed entity, Stefanutti Stocks is required to comply with the provisions of the JSE Listings Requirements, the Companies Act and King III. Compliance is overseen by the Audit, Governance and Risk Committee.

Engagement with group employees occurs by way of internal newsletters and various other campaigns keeping them updated on all relevant issues pertaining to the company. Specific communication is undertaken when performance evaluations are carried out. Regular toolbox talks are held on all sites to communicate any new information to employees and to address day-to-day queries and questions.

STAKEHOLDER ENGAGEMENT

Annual general meetings, annual and interim reports, analysts road shows, investor days, corporate advertising and website

SHAREHOLDERS, INVESTORS, ANALYSTS AND THE JSE

Scheduled project meetings, email updates, telephone calls, formal functions and website

SUPPLIERS

Ongoing meetings, letters, email updates, formal functions, personal visits, telephone calls and website

CLIENTS

Ad hoc liaison meetings, formal functions and website

COMMUNITIES

Ongoing internal newsletters, training sessions, performance reviews, staff meetings, email announcements and website

EMPLOYEES

STAKEHOLDER GROUP

COMMUNICATION CHANNELS

14 Stefanutti Stocks Integrated Report 2013 | Stakeholder Engagement

As recommended by King III and sound business practice, the board reviews the group’s material issues on a regular basis. It classifies these issues according to the material impact they have on key operations. Insight is gained from stakeholder feedback received from the various channels of engagement as well as the assessment of risk. An integrated discussion of the group’s material issues takes place throughout this report. A summary of the company’s material issues is as follows:

MATERIAL ISSUES

Material issues Stakeholders impacted Response to issue

GOVERNANCE AND LEADERSHIP:

To ensure that there is adequate governance in place throughout the group

› Employees

› Shareholders

› Investors

› Analysts

The company has various board appointed committees, namely, the Audit, Governance and Risk Committee, Social and Ethics Committee, Remuneration and Nominations Committee, Mergers, Acquisitions and Disposals Committee. The Social and Ethics Committee was constituted with effect from 1 March 2012.

The codes of conduct and ethics are applied across the group.

Commitment by the group to the adherence of the recommendations and guidelines as set out in King III.

Leaders within the group have been identified to ensure succession planning.

The B-BBEE codes are being applied throughout the group’s businesses.

EARNINGS GROWTH:

To ensure sustainable growth in earnings to compensate the stakeholders of the group

› Shareholders

› Investors

› Analysts

› Clients

› Suppliers

› Employees

› Financiers

The group has an EXCO that monitors and reviews operational performance against business plan objectives, budgets and financial targets. The EXCO will take corrective action in the event of non-performance by a business unit.

HUMAN CAPITAL:

To attract (by excellent benefits and opportunities), retain (by recognition, development and career prospects), develop and motivate employees to their full potential. To ensure adequate succession planning is in place

› Employees

› Shareholders

› Investors

› Analysts

› Clients

› Communities

The human resources function assesses capacity requirements, employment and development of skills, B-BBEE scorecard, compensation and benefits as well as the culture of the organisation. Leaders within the group have been identified to ensure succession planning. A share scheme has been put in place to attract and retain employees.

15Stefanutti Stocks Integrated Report 2013 | Material Issues

Material issues Stakeholders impacted Response to issue

OPERATIONAL:

Operational issues associated with the securing of tenders, assets, credit, fraud and reputation

› Employees

› Shareholders

› Investors

› Analysts

› Clients

› Communities

› Suppliers

These issues are addressed by applying vigilant controls and measures within the group to monitor success and occurrences.

Comprehensive IT systems have been put in place to monitor all areas of the business.

Ongoing training.

HEALTH, SAFETY AND ENVIRONMENT:

To ensure that the company provides a healthy and safe environment for its employees and subcontractors to operate in, while considering the environmental impact of group operations

› Employees

› Shareholders

› Investors

› Analysts

› Clients

› Communities

Group Health, Safety and Environment Framework.

Ongoing health and safety training across the group.

The use of energy-saving products and fuel optimisation is considered; recycling of resources is applied where appropriate. Rehabilitation of the environment where the group has projects is undertaken to the best of the group’s abilities.

MATERIAL ISSUES continued

16 Stefanutti Stocks Integrated Report 2013 | Material Issues

FIVE-YEAR FINANCIAL REVIEW

2013 2012 2011 2010 2009

PROFIT INFORMATIONContract revenue R’million 9 330 7 991 6 896 7 365 6 213

Operating profit R’million 234 359 442 501 392

Operating profit margin % 2,5 4,5 6,4 6,8 6,3

(Loss)/profit after income tax R’million (162) 264 333 389 319

Net (loss)/profit margin % (1,7) 3,3 4,8 5,3 5,1

Headline (loss)/earnings R’million (168) 264 331 392 299

FINANCIAL POSITIONTotal assets R’million 6 199 5 911 5 071 5 028 5 024

Total equity R’million 1 996 2 114 1 854 1 684 1 613

Total liabilities R’million 4 203 3 797 3 217 3 344 3 411

Cash from operations before working capital movements R’million 387 900 306 948 1 094

ASSET MANAGEMENTReturn on assets % (2,7) 4,8 6,6 7,7 9,3

Return on equity % (7,9) 13,3 18,8 23,6 27,5

Net asset turn times 1,5 1,5 1,4 1,5 1,8

SHAREHOLDERS’ RATIOSEarnings per share cents (93) 153 194 220 184

Headline (loss)/earnings per share cents (96) 153 192 224 185

Dividend per share cents – 24 45 70 58

STOCK EXCHANGE STATISTICSMarket capitalisation – close R’million 1 691 2 031 1 956 1 862 1 580

Market value per share

– At year end cents 899 1 080 1 040 990 840

– Lowest for the year cents 720 980 900 600 725

– Highest for the year cents 1 250 1 310 1 311 1 225 2 195

Weighted number of shares ’000 173 941 172 448 172 051 174 788 161 465

year ended 28/29 February

17Stefanutti Stocks Integrated Report 2013 | Five-year Financial Review

BOARD OF DIRECTORS

Executive DirectorsWillem (Willie) Meyburgh (59)

Chief Executive Officer

Refer biography on page 20.

Dermot Quinn (61)

Chief Financial Officer


Schalk Ackerman (54)


Non-executive DirectorsBiagino (Gino) Stefanutti (65)

Chairman and co-founder

National Diploma Civil Engineering

Appointed: April 1996

Gino has over 40 years’ experience in the engineering and construction industry. He co-founded Stefanutti Stocks with Ivo Bressan as Stefanutti & Bressan (Pty) Ltd in 1971. With the listing in 2007, Gino became the Non-executive Chairman of the group.

Bridgman Sithole (50)

Appointed: July 2007

Bridgman is currently Executive Chairman of Mowana Investments (Pty) Ltd (Mowana), a black empowerment investment holding company invested in Stefanutti Stocks. Prior to joining Mowana in 2005, Bridgman was an Executive Director of Strategy and Business Development at Business Connexion. He has also held various senior positions within the ANC, provincial governments and ABSA Bank Limited. Bridgman currently serves on the boards of numerous private companies.

Joseph Fizelle (42)

Alternate to Bridgman Sithole

BCom, HDip PrAcc, CA (Ireland) Fellow of the Irish Institute of Chartered Accountants

Audit, Governance and Risk Committee member

Appointed July 2007

Joseph is an Executive Director of Mowana, a black empowerment investment holding company invested in Stefanutti Stocks. Prior to joining Mowana in 2004, Joseph was employed in corporate finance at JP Morgan and Standard Bank for a period of six years and before that at PricewaterhouseCoopers. He currently serves on the boards of numerous private companies.

18 Stefanutti Stocks Integrated Report 2013 | Board of Directors

Independent Non-executive DirectorsNomhle Canca (47)

BA (Political Science), BA (Economics)

Audit, Governance and Risk Committee chairman until end June 2012, Mergers, Acquisitions and Disposals Committee member and Social and Ethics Committee chairman

Appointed July 2007

Nomhle has over 21 years’ experience in the financial services industry, having started her career as a stockbroker in Atlanta (USA) and later registered with the New York Stock Exchange. She was the co-founder of Women Investment Portfolio Holding (Wiphold) and Women’s Development Bank. She has held various directorships at private and state-owned companies.

Kevin Eborall (68)

Nat Dip Prod Eng (Industrial Engineering)

Audit, Governance and Risk Committee and Remuneration and Nominations Committee member and Mergers, Acquisitions and Disposals Committee chairman


Kevin graduated as an industrial engineer in 1965. He has held senior management positions at Dorbyl, ICL and Fraser Alexander. Kevin has served on the boards of various private and public companies and continues to hold a number of directorships both in South Africa and Australia. Kevin provides consulting services to companies in the mining and industrial sectors. He is the Chairman of Skygistics, an international satellite communications company.

Herman Mashaba (53)

Remuneration and Nominations Committee and Mergers, Acquisitions and Disposals Committee member


Herman founded the cosmetics company Black Like Me Products in 1984. He served as Non-executive Chairman of Stocks Limited from 2005 until the merger with Stefanutti & Bressan Holdings Limited in 2008. Following the merger he was appointed to the board as Non-executive Director. Herman is Deputy Non-executive Chairman of Growthpoint Properties Limited and is also the past Chairman of the Institute of Directors in South Africa and the Executive Chairman of his investment company, Lephatsi Investments (Pty) Ltd.

Mafika Mkwanazi (59)

Lead Independent Non-executive Director

BSc (Maths), BSc (Electrical Engineering)

Remuneration and Nominations Committee chairman


Mafika is currently the Non-executive Chairman of Hulamin Limited and Transnet SOC, and sits on the board of Eskom. He has previously held senior positions at South African Breweries Limited, Bristol Myers (Pty) Ltd as a production manager for the Consumer division, and BMW as an engine plant manager. Mafika has served on the boards of various companies including Nedbank Limited, Transnet (1996 to 2003 as executive director), Western Areas Limited, the Industrial Development Corporation, Letseng Diamonds and Metrorail.

Zanele Matlala (49)

BCom, BCompt (Hons), CA (SA), Advanced Management Programme (Insead)

Audit, Governance and Risk Committee chairman as of July 2012, Social and Ethics Committee member

Appointed: February 2012

Zanele was appointed Chief Executive Officer of Merafe Resources Limited on 1 June 2012, having served as its Chief Financial Officer from 1 October 2010. She has extensive financial service experience gained in various roles – as Group Financial Director of Kagiso Trust Investments and Chief Financial Officer and Executive Manager: Private Sector Investments of the Development Bank of Southern Africa (DBSA). She also held various positions at the Industrial Development Corporation, including heading the Wholesale Venture Capital Funds. She is non-executive Chairman of Dipula Income Fund and a board member of Business Partners Limited (member of the Audit Committee).

of Dipula Income Fund and a board member of Business Partners Limited (memberof the Audit Committee).

19Stefanutti Stocks Integrated Report 2013 | Board of Directors

EXECUTIVE COMMITTEE

1. Willem (Willie) Meyburgh (59)

Chief Executive Officer

National Diploma Civil Engineering, BCom

Appointed: April 1996

Willie has over 35 years’ experience in the construction industry with several large projects covering the full spectrum of construction activities. Prior to joining Stefanutti & Bressan Civils (Pty) Ltd as Managing Director in 1996, he held a number of executive management positions for leading construction companies in South Africa. Willie was appointed to his present position of Chief Executive Officer when the group listed in 2007.

2. Dermot Quinn (61)

Chief Financial Officer

BScEcon, CA(SA)

Appointed: November 2005

Dermot qualified as a chartered accountant in 1984 with audit firm Arthur Young. He joined the group in 1992, after having spent five years with Grovewalk Holdings Limited as Chief Financial Officer. He was appointed as Chief Financial Officer of Stefanutti & Bressan (Pty) Ltd in 2000 and, on the restructuring of the group in 2005, was appointed to the board in the same capacity.

3. Schalk Ackerman (54)

Managing Director Structures

BEng (Civil)

Appointed: March 2010

Schalk has over 30 years’ experience in the civil engineering construction industry. Prior to joining Stefanutti & Bressan (Pty) Ltd as Managing Director in July 2007, he was Managing Director of the Civil Engineering business unit and an EXCO member of Grinaker-LTA group. He was appointed to the position of Managing Director of the Stefanutti Stocks Structures business unit in September 2008 and became an Executive Director of Stefanutti Stocks in March 2010.

4. Jan Oberholzer (54)

Managing Director Power

BEng (Electrical), MDP, MBL, Executive Leadership (University of Michigan)


Prior to joining the group, Jan spent 26 years with Eskom in various executive leadership positions. These included leading Eskom’s major capital investment programme as well as managing one of the largest electrification programmes in the world. He was appointed as Managing Director in January 2009 and joined the EXCO in March 2010.

1

2

3

4

20 Stefanutti Stocks Integrated Report 2013 | Executive Committee

6. Luc Jacobs (54)

Managing Director Building

Industrial Engineer in Civil Engineering (Masters degree – Belgium)


Luc has 28 years’ experience in the Southern African construction industry having previously worked for Murray & Roberts Engineering and Stocks Construction. His expertise covers industrial engineering and commercial building projects. In 2000 he became an Executive Director of the newly formed Stocks Building Africa and Managing Director of the Inland region in 2006. He was appointed Managing Director of the Building business unit of Stefanutti Stocks in 2010 and joined the EXCO in March 2011.

5. Frik Venter (60)

Managing Director Roads, Pipelines and Mining Services

National Diploma Civil Engineering

Appointed: October 2010

Frik has 36 years’ experience in the civil engineering industry, mainly in the construction of roads and large dams. He started his career with Savage & Lovemore (later part of Group Five) and was later appointed Managing Director of the African operations for Group Five’s Roads division. He managed the Roads and Opencast Mining divisions at Concor before joining Stefanutti Stocks in October 2010.

7. Vince Olley (50)

Managing Director Mechanical and Electrical

National Certificate Light Current, MSc (Change Management & Coaching)

Appointed March 2012

Vince has 23 years’ construction experience. Prior to joining the group, Vince spent 17 years with Aveng Grinaker-LTA. He was Managing Director of Aveng Grinaker-LTA M & E prior to being appointed as an Executive Director. Vince was appointed Managing Director of Mechanical and Electrical in March 2012 and joined the EXCO during the year.

8. Mark Snow (53)

Group Risk Officer

BCom (Hons), CA(SA)

Appointed November 2012

Mark qualified as a chartered accountant in 1986 with Deloitte Haskins & Sells and was admitted as a partner in 1992. He has 30 years experience in statutory auditing, risk management and controls, governance consulting and managing outsourced internal audit functions with an industry specialisation in construction and mining. Mark joined the EXCO when appointed as Group Risk Officer in November 2012.

5

6

7

8

21Stefanutti Stocks Integrated Report 2013 | Executive Committee

CHAIRMAN AND CHIEF EXECUTIVE OFFICER: PERFORMANCE REVIEW

Global markets have an enormous influence on the domestic market and investment confidence levels, and while market conditions in Europe and America remain volatile and China’s economic slowdown continues, world demand for commodities will remain subdued for an extended period. Under these circumstances, it is understandable that international mining companies have indicated their intention to further reduce their medium-term capital expansion plans.

Due to the lower demand for minerals, the South African mining sector has cut back on capital expenditure. The knock-on effect of this, coupled with ongoing labour unrest in mining and other sectors will have a further effect on capital investment decisions for all companies.

The most important domestic drivers for our industry are private investment decisions and government decision making on its proposed infrastructure roll-out plan. The impact of project postponements, cancellations and delayed contract awards could further aggravate the situation which is already cause for concern.

Against this background the company achieved a respectable level of operating profitability, albeit short of the standards which we set for ourselves. A number of loss-making contracts combined to tarnish what would otherwise have been strong financial performance.

The penalty imposed on the company by the Competition Commission has led to the company posting the only loss in its history.

On behalf of the board and the executive team of Stefanutti Stocks, we express our regret for the prohibited practices which have taken place and apologise for the distress which this has caused to our stakeholders.

Introduction

Gino StefanuttiChairman

Highlights

R9,4 billion contract revenue

0,18 DIFR best safety record ever

Level 2 B-BBEE contributor

24 Stefanutti Stocks Integrated Report 2013 | Chairman and Chief Executive Officer: Performance Review

We are alert to the risk of anti-competitive behaviour, and the effect this can have on the sustainability of our operations. Most importantly, this type of behaviour is a thing of the past within the group and in recent years a great deal of time and energy has been spent to ensure that our staff is fully aware of, and has received comprehensive compliance training, on matters relating to anti-competitive behaviour.

During the past financial year, the South African construction market was extremely quiet with few large projects coming to the marketplace. Government, municipal and state-owned companies spend contracted. Surface infrastructure work on mining projects was almost non-existent, although, petrochemical, renewable energy and power line projects offer promising opportunities over the medium term.

Financial and operational performance

The financial year ended February 2013 was extremely challenging for Stefanutti Stocks. The South African construction market remained very competitive. In addition to the tough trading conditions, the group sustained a number of loss-making projects in most of its business units.

We have taken the necessary corrective action on these projects and are in the process of finalising all associated commercial matters. Furthermore, some of these businesses have been restructured, either to optimise resources and/or to improve profitability and long-term sustainability.

Unfortunately, there is a continuing tendency amongst some key clients to delay certified and agreed payments. This has put tremendous pressure on our working capital as well as downstream payments to sub-contractors and suppliers. Notwithstanding this, our total cash position at financial year-end was a satisfactory R929 million.

Contract revenue increased by 17% to R9,4 billion (2012: R8,0 billion). Due to the operational circumstances mentioned above, operating profit before the provision for the Competition Commission penalty, decreased by 35% to R234 million (2012: R359 million). The group however, posted an after tax loss of R162 million (2012: profit after tax of R264 million) after having provided for the full Competition Commission penalty of R323 million.

The above after tax loss has converted into a loss per share of 93,2 cents (2012: earnings per share of 153,2 cents) and diluted headline loss per share of 89,2 cents (2012: diluted headline earnings per share of 140,6 cents).

The financial performance of the group is discussed in more detail in the Chief Financial Officer’s report commencing on page 92 of this integrated report.

Notwithstanding the difficult trading conditions over the past number of years, it is encouraging to note that our order book has grown at a steady pace to R10 billion as at the end of April 2013.

Ongoing industrial unrest in the country is of serious concern. The direct and indirect affects of strike action has impacted negatively on the group’s operations and results during the past year.

Willie MeyburghChief Executive Officer

25Stefanutti Stocks Integrated Report 2013 | Chairman and Chief Executive Officer: Performance Review

We expect the South African construction industry to remain competitive over the next 12 to 18 months with only a limited number of large construction contracts becoming available. We have, however, recently secured a R1,5 billion open-pit mining contract and a high rise apartment block in Maputo with a value of US$90,0 million. In addition, we are expecting the award of a number of medium-sized projects in our Roads, Building and MEP businesses.

Some solid medium- to long-term opportunities exist in sub-Saharan Africa which are well-suited to Stefanutti Stocks’ diversified multidisciplinary capabilities and our well-established geographical footprint, especially in SADC countries.

The Building and Structures business units have established a presence in Namibia where they are executing a number of projects. The Structures business unit has started work on the rehabilitation of six steel bridges in Brazzaville, Congo while the Roads and Earthworks division has priced a number of large road projects in Zambia. The development of the large natural gas deposits in northern Mozambique is expected to open up construction opportunities, and we are well placed to compete in this sector.

Health, safety and environment

In line with our evolving approach to sustainability reporting, we have disclosed the group’s material sustainability information in accordance with the GRI G3.1 Guidelines for the third consecutive year. We strive to provide a safe and healthy work environment for all employees, contractors and stakeholders in general with the ultimate aim of “Zero Harm”. During the period, we achieved our best-ever safety performance, with a DIFR of 0,18 (Feb 2012: 0,23), the lowest rating since the group commenced recording statistics. This positive progress was unfortunately overshadowed when the RPM business unit recorded a fatality with the tragic death of Vusi Nkonyo. Our sincere condolences are extended to Mr Nkonyo’s family and friends.

Please refer to The Social and Environmental Review commencing on page 57 of this integrated report for a review on all our health, safety and environmental initiatives and performance.

Employee development and leadership

Without the dedication and continuous efforts of our staff, our vision of being a dynamic group delivering complete construction and contracting solutions would be in vain. Similarly, our mission of becoming the leading construction group in South Africa and the preferred construction partner for all of our stakeholders could not be achieved without the valued teams of people who commit themselves to our cause through their actions.

We endeavour to attract, retain, develop and motivate our employees to their full potential. In this regard, please refer to The Social and Environmental Review commencing on page 57 of this integrated report, as well as the Remuneration Report.

For these reasons, training and upliftment of our staff at all levels remains high on our group agenda. In January our first intake of delegates successfully completed and graduated from our Site Leadership Development Programme. In addition we have registered another new intake of Stefanutti Stocks bursary students and look forward to assisting them along their chosen career paths.

Positive progress was made during the year on our succession planning strategy, which continues identifying and developing leaders within the various group businesses.

B-BBEE

Transformation within the group is managed in accordance with the Construction Charter and our contributor status improved to a Level 2 in terms of the Charter’s rating system. Continuous, proactive management of our scorecard is a priority within all the group’s business units.

Acquisitions

At the beginning of the financial year, the group acquired 100% of Cycad Pipelines, a specialised pipeline infrastructure construction company and its related operations, at a cost of R261 million. The acquisition was in line with the group’s growth strategy to broaden its service offering in the construction sector.

Competition Commission

The investigation by the Competition Commission into anti-competitive behaviour by companies within the construction industry is being finalised. On 24 June 2013, the company advised shareholders that it had reached a final settlement for all contracts included in the Fast Track Settlement Process. In addition to this, the company has now also finalised penalties with respect to known contracts falling outside the Fast Track Settlement Process. All penalties have been provided for in these financial statements. These penalties are subject to confirmation by the Competition Tribunal.

The group’s guiding principle is that it will “do the right thing” to protect the interests of the company, its directors, employees and stakeholders. We have accepted responsibility for our past actions, including full disclosure to the relevant authorities.

We believe that strong competition is in the best interests of the industry and pledge to ensure that the company continues to grow sustainably on the basis of delivering quality and value in a competitive market place.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER: PERFORMANCE REVIEW continued

26 Stefanutti Stocks Integrated Report 2013 | Chairman and Chief Executive Officer: Performance Review

We subscribe to the principles of good corporate governance as a cornerstone of a sustainable business. We, as a group, are committed to and are responsible for applying these principles to ensure that the group is being managed within acceptable risk parameters.

During the 2013 financial year, the risk management and internal audit departments focused on the roll-out of the group’s risk management policies to the business units. The overall reporting formats of the department were also revised during the year and the duration of the audit projects were shortened due to efficiencies now being experienced by the teams.

Refer to the Risk Management and Corporate Governance reports presented in this integrated report commencing on pages 10 and 46 respectively.

Outlook and strategy

Market conditions in the South African construction industry remain challenging and are only expected to slowly recover from the middle of the next financial year. However, ongoing industrial action continues to pose a threat to the industry.

Future growth will depend on the general health of both the global and local economies together with the government’s future capital expenditure plans. Some of the sectors that still show some positive signs of growth over the medium to long term are the oil and gas market, both locally and in Mozambique, as well as some projects from state-owned companies. The government’s committed infrastructure roll-out plan is still in its early stages of development. Consequently, new projects of substance will be scarce in the near future, which renders recovery of the construction market very fragile.

The group will continue to pursue opportunities in sub-Saharan Africa, specifically in the roads, rail, marine and oil and gas markets and expanding the group’s footprint in Africa remains part of the growth strategy. The group will also focus on areas where it already has an established presence and will venture into new markets only where it has existing relationships with clients in the commercial, industrial or commodity sectors.

While the Building business unit has a reasonable order book, the RPM business unit is the best placed for the forthcoming financial year. The Structures business unit commenced the year with a depressed order book due to it being largely dependent on government infrastructure work and mining capital investment projects. Despite the order books of the Mechanical and Electrical and Power business units being low, there are nonetheless positive signs of potential growth in their respective markets.

Tender prices will remain extremely competitive and will continue to depress operating margins throughout the business and we expect this to continue over the short term.

Despite the financial underperformance for the year ended 2013, the business fundamentals in the group remain strong. We are well placed to manage the economic challenges of the short term and are well positioned to optimise opportunities in the construction industry in the medium to long term.

The board welcomes Ms Tina Eboka as an independent non-executive director with effect from 17 May 2013.

Acknowledgements

We would like to take this opportunity to thank all the members of the board and the EXCO team for their dedication and support during what has been a particularly difficult year. On behalf of the board and all the operating management teams we would like to thank each and every employee for their continued dedication and commitment during these challenging times and trust we can continue to rely on this going forward. We also express our gratitude to all our clients, suppliers, service providers and shareholders for their ongoing support.

Gino Stefanutti Willie Meyburgh Chairman Chief Executive Officer

16 July 2013

Corporate governance and risk management Directorate

27Stefanutti Stocks Integrated Report 2013 | Chairman and Chief Executive Officer: Performance Review

Despite difficult market conditions, this business unit ended the financial year with an increase in revenue to R2,7 billion (Feb 2012: R2,5 billion), and an operating profit of R141 million (Feb 2012: R181 million). Profit margins declined from 7,1% to 5,2%. Tender margins remain below historically reported levels due to fierce competition, and with the current lack of large concrete projects, this trend is expected to continue into the foreseeable future. This is evidenced by the medium-sized tenders that have come to market during the reporting period, all having been priced at highly competitive margins.

Due to the scarcity of government infrastructure projects and limited mining surface infrastructure work, confidence levels in the South African civil engineering industry are low and are expected to remain so for the short to medium term. However, marine and rail infrastructure projects offer short-term opportunities in neighbouring countries, while medium-term opportunities exist in oil and gas, both locally and in neighbouring countries.

During the year the Structures business unit expanded into sub-Saharan Africa where larger projects are still available. However, prices on these projects are becoming more competitive as more international companies are now looking at construction opportunities in these regions.

Labour strikes had a significant financial impact on the business unit.

Structures’ order book at year-end was R1,8 billion (Feb 2012: R2,3 billion). The potential award of several medium-sized projects in the water treatment, transport and rail industries is expected to support the order book over 6 to 18 months.

Business environment and performanceContract revenue (R’million)

Operating profit (R’million)

2 738

141

2 531

181

2013

2013

2012

2012

Contract revenue by sector (%)

30 Mining infrastructure 32 Transport infrastructure 8 Water, sanitation

and pipelines 21 Power stations

and transmission 9 Industrial plants,

oil and gas

From left to right:

Schalk Ackerman (MD), Koos Saayman (FD), Werner Jerling, Mark Stannard, Matthew Horwill, Shaun Butler, Simon Allen, Brian McDonald, Siphiwe Nzimande, Geoff Thompson, Otto Botha, Wade Leaf, Andy Kaufmann

See group overview page 8

29Stefanutti Stocks Integrated Report 2013 | Operational Review

OPERATIONAL REVIEW STRUCTURES continued

Notable projects

Project Duration Value Location

Kusile – Civil Works (in joint venture – 25%) 70 months R6,680 billion Mpumalanga

Piling to Kusile Power Station (in joint venture – 50%) 48 months R464 million Limpopo

Grootegeluk Bunkers Wet and Dry Plant 38 months R980 million Limpopo

Sishen – Life of Mine Workshops 20 months R569 million Northern Cape

Steyn City Bridges 11 months R56 million Gauteng

Reconstructing Container Terminal at Ben Schoeman Dock (in joint venture – 40%) 60 months R1,375 billion Western Cape

Island View – Berth 2 28 months R66 million KwaZulu-Natal

Navigation Beacons and Fuel Offloading Jetty at Pepel (in joint venture – 50%) 22 months R197 million Sierra Leone

Island View – Berth 5 17 months R116 million KwaZulu-Natal

Mombasa Port Load Jetty 13 months R73 million Kenya

Lateral Support – Steyn City 2 months R8,4 million Gauteng

Piling to Newcastle Centre 4 months R10 million KwaZulu-Natal

Piling to Sulphuric Acid Plant – Mopani Copper Mine 2 months R13 million Zambia

Lateral Support to Hussab Mine 8 months R21 million Namibia

Bayhead Road Upgrade 18 months R196 million KwaZulu-Natal

Improvements to Ballito Interchange 12 months R108 million KwaZulu-Natal

Reconstruction of Maydon Wharf Berth 12 15 months R158 million KwaZulu-Natal

Rehabilitation of the National Route, One Tree Hill Interchange (in joint venture – 50%) 21 months R212 million KwaZulu-Natal

Moma Sands Expansion Project 30 months R214 million Mozambique

New North Eastern Wastewater Treatment Works 20 months R139 million Free State

Bridge Repair in Congo 6 months R42 million Congo

Coal Bunker for Sasol 16 months R149 million Mpumalanga

30 Stefanutti Stocks Integrated Report 2013 | Operational Review

Initiatives and trainingThe business unit’s Environmental Management System has been fully developed, and SHE is currently going through a full review programme as part of the business unit’s policy of continuous improvement.

The business unit has developed good market intelligence in the African civil engineering and marine markets, which has started to produce results. The Marine division has also started to enter the Middle East market. This will allow the divisions in the business unit to expand their footprints in order to compensate for the slowdown in the South African market.

Competency in dealing with the EPC concept has been developed, and the business unit has co-ordinated a number of bids with major strategic international partners on behalf of the group. The business unit has also been responsible for leading the execution of multi-disciplinary internal joint ventures, involving up to four business units within the group.

During the year under review, the first employees graduated from the three-year internally developed Site Leadership Development Programme. For more information on this and other training provided by the company, refer to the Social and Environmental Review commencing on page 57 of this integrated report.

Awards and accreditationsThe Civils division, as partner in the Kusile Civil Works Joint Venture (KCWJV), won the annual construction award for Civil Engineering Contractors awarded by Construction World pertaining to KCWJV/Kusile Power Station Main Civil Works. An achievement of 1 000 000 lost time free man-hours was reached on the Bayhead Expansion Project in July 2012 for Transnet and Aurecon. A safety award on the Pepel site in Sierra Leone as Safest Contractor was received. Transnet Capital Project’s Executive Award (best safety and runner up for contract of the year – Bayhead Road Upgrade) was received. A remarkable 355 days recordable case free days on Sasol projects with a 12-month rolling Reportable Case Rate (RCR) rate of 0,20 was achieved.

Other milestones of 700 disabling injury free days and 2 500 000 disabling injury free hours worked on the Grootegeluk Medupi Expansion Project, Wet and Dry Plant and Run of Mine (ROM) Silo project were achieved. An award for second place in the sector F group for larger employers with a NOSA audit score of 95,81% was received. An overall first place award from the Federated Employers’ Mutual Assurance Company Limited (FEM) for Medium Risk Large Employer (Inland Region) was received. Construction World Best Projects 2012 – awarded a high commendation for geotechnical contracts outside South Africa on the Mbabane Office Park project in Swaziland. T3 Service Provider and Green Compliance grading from Sastech. The T1 Certification with Sasol was maintained.

All the divisions of the business unit were accredited with both ISO 18001 and ISO 14001 certifications. The Civils and Geotechnical divisions have a NOSA five-star grading. Civils KZN is also MBA five-star certified.

This financial year saw a committed focus on obtaining and further developing the skills and business systems to operate in the EPC, Design and Construct, and project financing arenas. Progress was made in achieving new strategic alliances with international partners in general and specialist fields of operation.

The dedicated focus to attract new, professional talent to the business unit’s divisions is ongoing and its ability to retain these highly qualified people has exceeded expectations. Much attention has been paid to their development through the Site Leadership Development Programme and personal mentorship programmes by the respective managing directors and general managers. Senior management has also embarked on a programme to stimulate the exploration of alternate and creative ways on how to manage and grow the business, the results of which will show in the medium to long term.

There has been a noticeable change in the demographics of the yearly intake of young graduates with a considerable number of engineers and quantity surveyors representative of the designated groups among them.

While the tender markets show signs that the slowdown will continue, the business unit has strong capabilities to handle the larger and highly technical tenders. Management will continue to aggressively target selected cross-border work.

Sustainability matters Strategic progress and outlook


The Building business unit delivered unsatisfactory results and ended the 2013 financial year with revenue being flat at R3,6 billion (Feb 2012: R3,6 billion) and an operating loss of R40 million (Feb 2012: operating profit R121 million).

The poor performance was mainly due to loss-making projects caused by overruns in the Inland and Mozambique divisions and a bad debt provision in Mozambique. These projects are now complete and various actions have been instituted to recover some of the costs. Labour unrest has also had an adverse impact on the business unit.

Trading conditions remain difficult within a competitive market. However, the average tender margin on new projects has now improved.

Despite the recent contractual problems in Mozambique, there are still good opportunities for the Building business unit in this region. The business unit has established a presence in Namibia where it has undertaken a number of projects. Further opportunities have been identified.

Although there are signs of an upturn in the Dubai market, the Qatar market is only expected to improve from 2014 onwards. The group will retain its presence in the Middle East and plans to expand its current offering only over the medium to long term.

The order book for Building at year-end was R3,1 billion (Feb 2012: R4,1 billion).



3 580

(40)

3 641

121

2013

2013

2012

2012


34 Office and commercial 7 Shopping and retail 8 Hospitals and medical 5 Education 20 Factories and

warehouses 9 Power stations

and transmission infrastructure

3 Other 14 Residential

From left to right:

Luc Jacobs (MD), Dave van der Merwe (FD), Andrew Owens, Johan Brink, Grahame Carver, Bheki Vilakazi, Howard Schwegmann, Theunis Eloff




Menlyn Corner 17 months R300 million Gauteng

KPMG Phase 2 18 months R165 million Gauteng

Sandton Skye 22 months R225 million Gauteng

Kusile Power Station auxiliary works in joint venture 72 months R1,65 billion Mpumalanga

Macro Cape Gate 10 months R155 million Western Cape

Chevron offices 18 months R157 million Western Cape

MBSA offices and workshops 9 months R165 million Eastern Cape

Cecilia Makiwane Hospital 39 months R530 million Eastern Cape

Edificio 24 20 months R140 million Mozambique

Airport Junction Shopping Centre 24 months R265 million Botswana

Fairscape Precinct 27 months R330 million Botswana

OPERATIONAL REVIEW BUILDING continued

Initiatives and trainingThe SHE awareness and ownership training has yielded positive results. Numerous awards and a DIFR rating of 0,13 are the measurable results of the business unit’s efforts.

The three-year capacity building and leadership development programme has been completed and the business unit will continue with these initiatives to improve individual and team performance. During the year under review, the first employees graduated from the in-house three-year Site Leadership Development Programme. For more information on training provided by the company, refer to the Social and Environmental Review commencing on page 57 of this integrated report.

Awards and accreditationsBuilding scored 4,25 out of 5 in the national PMR competition and was awarded the Golden Award for the best construction company in South Africa. The business unit also won several regional safety awards in various categories and three national first places.

The business unit has retained and achieved ISO 18000, 14000 and 9001 accreditation in most of its divisions, and it is registered with the Green Building Council of South Africa.

The South African divisions within the business unit are benefiting from spend in the industrial and petrochemical sectors. In addition, rural developments, fuelled by social grant spending are creating opportunities and the group’s geographical footprint allows the business unit to participate. The Housing division is partnering with developers in procuring Social Housing Regulatory Authority (SHRA) projects in South Africa and is expecting awards in the near future.

Notable projects



Following the successful restructuring of the RPM business unit with effect from 1 March 2012, this business unit continues to produce a strong performance. Contract revenue for the RPM business unit was up by 67% to R2,3 billion (Feb 2012: R1,4 billion), with the operating profit increasing by 66% to R177 million (Feb 2012: R107 million).

Mining Services is well established to take on larger open-pit contract mining projects, such as the recently awarded R1,5 billion contract from Universal Coal. The start of the R1,2 billion Ikwezi contract was unfortunately delayed but is expected to commence during the second quarter of the 2014 financial year. These types of projects provide the RPM business unit with a strong base of annuity income.

Cycad Pipelines did not perform to expectation mainly as a result of contract cancellations and anticipated workflow not materialising. Nonetheless all projects in this division traded profitably, and the end of year order book increased.

Some projects in the transport and water sectors are expected to be awarded during the new financial year and the R10 billion budget for the National Roads Agency, which was recently approved, will create opportunities for the Roads and Earthworks division. This business unit has been successful in Zambia and is actively pursuing further opportunities in sub-Saharan Africa.

The order book of RPM at the end of February 2013 was R3,1 billion (Feb 2012: R1,8 billion).



2 301

177

1 380

107

2013

2013

2012

2012


51 Mining and infrastructure

28 Transport infrastructure 14 Water, sanitation

and pipelines 7 Power stations

and transmission

From left to right:

Frik Venter (MD), Craig Morris (FD), Russell Crawford, Ian Ferguson, Fred Smith, Derek du Plessis



OPERATIONAL REVIEW ROADS, PIPELINES AND MINING SERVICES continued

Notable projects


ROADS AND EARTHWORKS

RDA Zambia 24 months R200 million Zambia

K46 Interchange 24 months R270 million Gauteng

Fibreco/ZTE 18 months R170 million Eastern Cape

Kusile Power Station 72 months R600 million Mpumalanga

Douglas Road 24 months R250 million Northern Cape

MINING SERVICES

Ferreira Coal Mine 48 months R500 million Mpumalanga

Foskor 36 months R250 million Limpopo

PIPELINES

Nelson Mandela Bay Municipality, Nooitgedaght Pipeline 24 months R168 million Eastern Cape

TCTA Komati Pipeline 27 months R172 million Eastern Cape

SIOC Vaal Gamagara Pipeline 15 months R132 million Northern Cape

SWAZILAND

MTN Head Office 21 months R106 million Mbabane

Liberty Office Block 20 months R250 million Ezulweni

Bio-Tech Park 24 months R87 million Matsapha


Initiatives and trainingDuring the year under review, RPM increased its order book with mine surface infrastructure work. Execution of all projects were enhanced by strict control of the contract reporting and scheduling interface.

The first two-year capacity building programme aimed at improving training and mentoring within the business unit reached its conclusion in April 2013. A major part of its success was due to staff buy-in and engagement, which has left the participants energised and with renewed focus. For more information on training provided by the company, refer to the Social and Environmental Review commencing on page 57 of this integrated report.

Awards and accreditationsRPM received a FEM Award of Excellence, achieving third place in the Category High Risk Large Employer in August 2012, a best contractor award from Letseng Mine and a special commendation (365 days without injury) from Anglo Platinum.

The Mining Services division achieved a zero DIFR during the period, while the Roads and Earthworks division achieved 1 000 000 disabling injury free hours at the Kusile Power Station project and as a division attained 2 000 000 disabling injury free hours.

The Roads and Earthworks division is ISO9001 and OHSAS18001 certified and has achieved a NOSA four-star rating. The Swaziland division has achieved a NOSA four-star rating. The Mining Services division is ISO9001 certified. All divisions will obtain ISO9001, OSHAS18001 and ISO14001 accreditation by the 2014 year-end.

RPM approaches all projects focusing on excellence in execution and growth through innovation. Success is also attributable to the effective application of business systems and the continued implementation of capacity building initiatives.

Looking forward, the market will in all likelihood remain competitive for the foreseeable future. Some medium-size project awards in the transport and energy sectors and a sizeable contract award for an open-pit mining contract are expected during the 2014 financial year. RPM is well positioned to secure work emanating from the much anticipated government’s planned strategic infrastructure projects.



For financial reporting purposes the Mechanical and Electrical (M&E) and Power business units (MEP) are combined. Both the M&E and Power business units share existing support services.

Contract revenue for the full year was R710 million (Feb 2012: R438 million), reporting an operating loss of R51 million (Feb 2012: R37 million). This was as a result of historical non-profitable projects in the Electrical & Instrumentation (E&I) division, the start-up costs for the newly formed Oil and Gas division and holding costs in the Power business unit resulting from an ongoing lack of deal flow from the national energy provider.

MEP’s order book as at 28 February 2013 was R472,9 million (Feb 2012: R402,6 million).

The Mechanical division continued to perform well, while the loss-making projects in E&I have now been completed. The outlook is positive with signs of improving market conditions in the petrochemical and power generation sectors and the oil and gas sector, specifically the planned clean fuels programme, will offer additional opportunities. Initially the newly formed Oil and Gas division was limited in its ability to secure work in this sector due to the need for client accreditation. This accreditation had now been achieved. The second and third quarters of the financial year were used to establish compliant systems and a pipe spool fabrication facility as well as closing out client accreditation audits. The division is now certified with key clients and is able to participate in tenders coming to market. The Oil and Gas division was awarded its first project from Sasol in September 2012 and subsequent awards have been received. Shutdown and maintenance contracts will contribute significantly to the division’s growth.

The mining sector remains a tough environment with capital investment projects having been greatly reduced due to the current status of global markets and local labour unrest. With regard to the power sector, no additional opportunities in the coal-fired power stations came to market during the period.



710

(51)

438

(37)

2013

2013

2012

2012


47 Mining and infrastructure

28 Power stations and transmission

25 Industrial plants, oil and gas

From left to right:

Vince Olley (MD), Craig Trueman (FD), Aubrey Michel, José Faria, Michael Hanna, Mark Finaughty




Exxaro: Grootegeluk Coal Mine Blending and loadout SMPP 24 months R140 million Limpopo

BHP Billiton: M14 Furnace Metal Alloys 14 months R110 million Gauteng

Sasol Water Recovery Growth 8 months R100 million Limpopo

Kumba Life of Mine 16 months R140 million Northern Cape

Sasol EPU 5 18 months R70 million Free State

Sasol Waxes 18 months R70 million Free State

OPERATIONAL REVIEW MECHANICAL AND ELECTRICAL continued

Initiatives and trainingA SHE strategy has been developed and implemented focusing on six identified elements namely visible leadership in safety, sub-contractor management, safety culture maturity, training and competency, environmental management and communication.

The business unit directors underwent competition compliance training during the year under review. For more information on training provided by the company, refer to the Social and Environmental Review commencing on page 57 of this integrated report.

Awards and accreditationsThe Mechanical division receives an award for 720 days LTI free man-hours for the Exxaro: Grootegeluk Coal Mine Blending and loadout SMPP Project. It also received an award for 200 000 LTI free man-hours presented by K’enyuka on the BHP Billiton: M14 Furnace Metal Alloys Project. In addition it was presented with a 200 000 LTI free man-hours by Downing Reynard and Associated (DRA) award for the Kumba Iron Ore, Sishen, 10MM Lump Project. The E&I division was presented with an award for 200 000 LTI free man-hours by DRA on the Kumba Iron Ore, Sishen, 10MM Lump Project.

M&E achieved a NOSA four-star rating and the Mechanical division achieved ISO 9001 accreditation. Oil and Gas implemented OHSAS 18001 and 9001 systems and underwent preliminary audits and achieved certification subsequent to year-end.

M&E has the potential to grow into a leader in the markets that it services, based on the strategic progress made during the year under review. Notable achievements are:

› It has established its Oil and Gas division which has positive medium- to long-term growth prospects;

› It has stabilised the E&I division which now has a significantly strengthened management team that is committed to returning the division to a position of profitability; and

› It has positioned the Mechanical division to grow organically and focus on expanding into Africa.


Notable projects


For financial reporting purposes the Mechanical and Electrical (M&E) and Power business units (MEP) are combined. Both the M&E and Power business units share existing support services. Please refer to page 41.

MEP’s order book as at 28 February 2013 was R472,9 million (Feb 2012: R402,6 million).

Sustainability matters

Initiatives and trainingPower successfully positioned itself to offer “design and build” value solutions to its clients. It also embarked on several enterprise development initiatives with the aim of enhancing the contracting capabilities of these enterprises by transferring industry-related skills.

Training undertaken by Power focused on improving supervisory skills, general safety, operating regulations for high voltage systems, fall arrest system and working at heights as well as rigging and basic concrete technology. For more information on training and transformation provided by the company, refer to the Social and Environmental Review commencing on page 57 of this integrated report.

Awards and accreditationsThe Power business unit is currently putting systems in place and is planning for ISO 9001, ISO 14001 and OSHAS18001 accreditation during the forthcoming year.

Strategic progress and outlook

Although the slow roll-out of projects during the past year affected financial performance, the recommitment of Eskom’s capital expansion plan with specific reference to power transmission and distribution lines will create opportunities for Power. Design and build solutions as a service offering will also allow the business unit to tender in neighbouring countries.

Business environment and performance

From left to right:

Jan Oberholzer (MD), Danie de Villiers (FD), Nick van der Mescht, Roger Venzo, Tersia Oosthuizen, Frank Bennetts, Etienne McDonald,



Tabor/Witkop 96km 400kV overhead line 18 months R140 million Limpopo

Gumeni 18km 132kV overhead line 10 months R18 million Mpumalanga

Gamma/Kappa 186km 765kV overhead line 8 months R45 million Western Cape

Kappa Turn Ins 11km 400kV overhead Line 4,5 months R47 million Western Cape

Ingula/Venus 21km 400kV overhead line 4 months R10 million KwaZulu-Natal

Notable projects


CORPORATE GOVERNANCE REPORT

Stefanutti Stocks together with its directors and management subscribe to the principles of good corporate governance as one of the foundations of a sustainable business. The company is committed to and is responsible for applying these principles to ensure that the group is being managed within acceptable risk parameters.

Corporate governance within Stefanutti Stocks is managed and monitored by the Audit, Governance and Risk Committee while the Social and Ethics Committee oversees the monitoring of and reporting on sustainability within the group. The board appreciates that strategy, risk, performance and sustainability are inseparable.

The group endorses the principles of the South African Code of Corporate Practices and Conduct as recommended in King III as well as the Companies Act. It also supports the ongoing disclosure on corporate governance required by the JSE, including those contained in the JSE Listings Requirements.

The board is of the view that for the current financial year, the group has applied the 27 principles of King III as discussed in this report throughout the majority of the year. Information in respect of the application of all King III principles can be found on the company’s website www.stefstocks.co.za.

Ethical leadership and good corporate governance

Principle Applied Comment

The board should act as the focal point for and custodian of corporate governance.

✓ Refer to the corporate governance report on page 46.

The board should appreciate that strategy, risk, performance and sustainability are inseparable.

✓ These matters are considered by the board at regular intervals.

The board should provide effective leadership on an ethical foundation.


The board should ensure that the company is and is seen to be a responsible citizen.

✓ Refer to corporate governance report page 46.

The board should ensure that the company’s ethics are managed effectively.

✓ Refer to the corporate governance report on page 46 and 54.

The board should ensure that the company has an effective and independent audit committee.

✓ Refer to the Audit, Governance and Risk Committee report on page 96.

The board should be responsible for the governance of risk. ✓ Refer to risk management on page 10.

The board should be responsible for IT governance. ✓ Refer to the corporate governance report on page 54.

The board should ensure that the company complies with applicable laws and considers adherence to non binding rules, codes and standards.


The board should ensure that there is an effective risk-based internal audit.

✓ Refer to corporate governance report on page 53 as well as the Audit, Governance and Risk Committee report on pages 96 and 97.

The board should appreciate that stakeholders’ perceptions affect the company’s reputation.

✓ Refer to stakeholder engagement on pages 14 and 55.

The board should ensure the integrity of the company’s integrated report.

✓ Refer to scope and boundary on page 6.

The board should report on the effectiveness of the company’s system of internal controls.

✓ Refer to corporate governance report on page 53 as well as the Audit, Governance and Risk Committee report on page 96.

Summary of adherence to King III

46 Stefanutti Stocks Integrated Report 2013 | Corporate Governance Report

Principle Applied Comment

The board and its directors should act in the best interests of the company.


The board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financial distressed as defined in the Act.

N/A Refer to the corporate governance report on page 98.

The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfil the role of chairman of the board.

X The chairman is not independent. Refer to the corporate governance report on page 48.

The board should appoint the CEO and establish a framework for the delegation of authority.


The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent.


Directors should be appointed through a formal process. ✓ A formal process is in place via the Remuneration and Nominations Committee. Refer to the corporate governance report on page 48 and the Remuneration Report on page 85.

The induction of and ongoing training and development of directors should be conducted through formal processes.


The board should be assisted by a competent, suitably qualified and experienced company secretary.


The evaluation of the board, its committees and individual directors should be performed every year.

✓ This is done via a self-evaluation process. Refer to the corporate governance report on page 50.

The board should delegate certain functions to well-structured committees but without abdicating its own responsibilities.


A governance framework should be agreed between the group and its subsidiaries boards.

✓ A delegated authority framework is in place. Refer to the corporate governance report on page 51.

Companies should remunerate directors and executives fairly and responsibly.

✓ Refer to the remuneration report on page 85.

Companies should disclose the remuneration of each individual director and certain senior executives.

✓ Refer to the remuneration report on page 85 and note 28 on inserted CD.

Shareholders should approve the company’s remuneration policy.

✓ Refer to the remuneration report on page 85 and notice of annual general meeting on page 110.

Summary of adherence to King III continued

47Stefanutti Stocks Integrated Report 2013 | Corporate Governance Report

The board’s responsibilities and terms of reference are detailed in the board charter. This charter has been developed to enable the directors to maintain effective control over strategic, financial and compliance matters of the group. This charter is reviewed and updated annually. The board is accountable to the stakeholders. It directs the group to achieve profitability by exercising good judgement, strong leadership and by acting with integrity.

Review of key focus areas

As mentioned in the group’s previous integrated report, particular areas were identified for ongoing improvement. These focus areas included corporate citizenship and sustainability in terms of economic, social and environmental performance; risk management; IT governance; and integrated reporting. Each focus area has been discussed in separate reports with IT governance being dealt with later in the Corporate Governance report on page 54.

The board of directors

Composition, independence and skills of the boardDuring the year under review, the board comprised five independent non-executive directors, two non-executive directors (excluding alternate directors), three executive directors and was chaired by a Non-executive Chairman.

The non-executive directors exert significant influence at meetings in considering the composition of the board, and competency in respect of the group’s affairs carries as much weight as independence.

The independence of the directors is assessed annually and was confirmed by the Remuneration and Nominations Committee based on the independence requirements of King III.

The responsibilities of the Chairman and Chief Executive Officer, and likewise the responsibility of executive and non-executive directors, are strictly separated to ensure that no director can exercise unrestricted powers of decision-making.

The board composition is reviewed annually and any shortfalls in terms of skills and experience are identified and addressed accordingly. No new appointments were made during the year under review however, Ms Tina Eboka was appointed to the board on 17 May 2013. Each member of the board offers a wide range of relevant knowledge, expertise, commercial and technical experience and business acumen that allows them to exercise independent judgement in board deliberations and decision-making. A brief curriculum vitae for each director is set out on pages 18 and 19 of this integrated report.

The Chairman provides leadership and guidance to the board and encourages proper deliberation on all matters requiring the board’s attention while obtaining input from other directors. While the Chairman of the board is not an independent non-executive director as prescribed by the JSE Listings Requirements and recommended by King III, the board is of the opinion that Gino Stefanutti’s appointment is in the best interest of the group and does not negatively affect the board’s independence. Mitigating factors, which are relevant in this regard are the appointments of a Lead Independent Director and five independent non-executive directors. In addition, the board is satisfied that the benefits of the Chairman’s extensive industry experience (spanning over 40 years and having co-founded the group) and knowledge of the company outweigh the advantages of appointing an independent non-executive chairman at this time. The practice of appointing the Chairman on an annual basis was introduced in accordance with the recommendations of King III.

The Chief Executive Officer and other executive directors are responsible for implementing strategy and operational decisions in respect of operational issues. Non-executive directors contribute their independent and objective knowledge and experience to board deliberations. All non-executive directors are sufficiently qualified to contribute industry skills and expertise. In line with recommendations of King III, ongoing training for directors is being addressed and enhanced.

The directors of the company during the year under review were:

B Stefanutti (Non-executive Chairman)

W Meyburgh (Chief Executive Officer)

DG Quinn (Chief Financial Officer)

SD Pell (Chief Operating Officer) (resigned effective 31 March 2012)

SJ Ackerman (Executive Director)

NJM Canca (Independent Non-executive Director)

KR Eborall (Independent Non-executive Director)

HSP Mashaba (Independent Non-executive Director)

ZJ Matlala (Independent Non-executive Director)

ME Mkwanazi (Lead Independent Director)

LB Sithole (Non-executive Director – alternate JWLM Fizelle)

Non-executive directors have unrestricted access to management at any time and have access to the external auditors when necessary. All directors are entitled, at the group’s expense, to seek independent professional advice on any matters pertaining to the group where they deem this to be necessary.

CORPORATE GOVERNANCE REPORT continued


Appointments subsequent to year-endAs mentioned above, Ms Tina Eboka was appointed to the board as an independent non-executive director. Ms Eboka is a board-level strategy consultant with a 24-year career spanning banking, science/technology research, retail and manufacturing industries in both the public and private sectors.

She previously served as Executive Director: Group Corporate Affairs at Standard Bank, for five years, where she established and led the group corporate affairs function. Prior to this position, Tina was Vice-President at the CSIR from 1997 to 2005, where she was responsible for Organisational Development and Communications.

Ms Eboka holds an MBA in Business Operations and Project Management and a BSc in Textile Engineering from Philadelphia University as well as a BSc in Applied Mathematics, with a Minor in Industrial Engineering from the State University of New York.

Rotation and tenureThe Remuneration and Nominations Committee continues to evaluate the need for new appointments and directors are appointed through a formal process. In terms of the newly adopted Memorandum of Incorporation (MOI), and the retirement roster, which the Remuneration and Nominations Committee and board reviews, one third of the board (other than the executive directors) is subject to retirement and re-election by rotation annually.

The re-election of directors is done at the annual general meeting and the directors being nominated for re-election can be found in the notice to the annual general meeting commencing on page 109 of this integrated report.

Induction and development trainingDuring the year under review, a detailed induction programme was approved by the Remuneration and Nominations Committee and was co-ordinated by the company secretary. In line with recommendations of King III, ongoing development training programmes were made available to all directors with regard to their duties, responsibilities, powers and potential liabilities.

BOARD OF DIRECTORS

CHIEF EXECUTIVE OFFICER

REMUNERATION AND NOMINATIONS COMMITTEE

AUDIT, GOVERNANCE AND RISK COMMITTEE

SOCIAL AND ETHICS COMMITTEE

MERGERS, ACQUISITIONS AND DISPOSALS COMMITTEE

Governance structure


The board charter codifies the board’s composition, appointment, authorities, responsibilities and processes and sets out the fiduciary duties and roles of each director of the company. During its annual review minor amendments were effected to bring the board charter more in line with recommendations as set out in King III and the Companies Act.

In addition to the responsibilities set out in the Companies Act, the board’s responsibilities, outlined in the charter, include:

› monitoring key risk areas, performance indicators and management;

› reviewing the performance of the Chief Executive Officer;

› reviewing the group’s financial results and procedures, policies and codes of conduct;

› implementing the group’s plans and strategies;

› approving financial and non-financial objectives, including economic, social and environmental performance; and

› ensuring ethical behaviour and compliance with laws and regulations.

› assessing the Company Secretary with regards to qualification, competence, experience and independence.

Board processes

Company SecretaryThe Company Secretary is responsible for the company secretarial duties at holding company level and attends all board and committee meetings as secretary.

The board as a whole and individual directors have access to the Company Secretary who provides guidance on how they should discharge their duties and responsibilities in the best interests of the group. The Company Secretary also oversees the induction and ongoing informal training of board members and assisted the board and its committees in formulating annual plans, agendas, minutes, and terms of reference as warranted. In addition, the Company Secretary liaises closely with the group’s sponsor, where necessary, in regard to compliance with the JSE Listings Requirements.

Mr William Somerville, aged 56 holds a ACIS, ACMA and a Diploma in Corporate Law and was appointed in May 2009 as Company Secretary. He is a qualified chartered secretary with extensive experience in the company secretarial and corporate governance arenas. The board has considered and is satisfied with the competence, qualifications, independence and experience of the Company Secretary. The board is satisfied that an arms-length relationship exists between the Company Secretary and the board of directors, as the Company Secretary is not an employee of the company and provides services on an outsourced basis.

Regulatory and legislative complianceThe investigation by the Competition Commission into anti-competitive behaviour by companies within the construction industry is being finalised. On 24 June 2013, the company advised shareholders that it had reached a final settlement for all contracts included in the Fast Track Settlement Process. In addition to this, the company has now also finalised penalties with respect to known contracts falling outside the Fast Track Settlement Process.

With the exception of the matter noted above, there were no major instances of non compliance with regulatory requirements to report on during the year under review. Key legislation affecting the group has been identified and assessed.

Progress on the group’s compliance with the recommendations as set out in King III, the JSE Listings Requirements, the Companies Act and other applicable legislation, was monitored by the Audit, Governance and Risk Committee and is a standing agenda item for all committee meetings. The progress included:

› The adoption of new MOI at the September 2012 annual general meeting;

› Continuous enhancements to corporate governance in general;

› The appointment of the Group Risk Officer; and

› Further focus on IT governance.

Board and committee effectiveness and evaluationThe board periodically conducts an evaluation of its effectiveness, reviewing its mix of skills, the efficiency of the sub-committees and related corporate governance matters.

An effectiveness review of the board is scheduled to take place in 2013 to assess the board’s performance and that of all relevant sub-committees.

The Company Secretary provides ongoing development for board members in the form of site visits and presentations on specific technical topics. There is no formal board mentorship programme in place, as it is not deemed necessary at this stage.

Succession planningThe Remuneration and Nominations Committee annually reviews the formal succession plan for the Chairman, Chief Executive Officer, board of directors and senior management. The committee’s findings and recommendations are reported to the board for its consideration and further action. In addition, the committee regularly reviews the group’s succession strategy and gives guidance to the board.

Board charter



Function of the board committeesThe board holds itself ultimately accountable and responsible for the performance and affairs of the group and realises that the use of delegated authorities to board committees in no way absolves the board and its directors of the obligation to carry out their duties and responsibilities.

While retaining overall accountability, the board has delegated to the Chief Executive Officer the authority to run the day-to-day affairs of the group. The Chief Executive Officer delegates his authority to the Executive Committee (EXCO), which consists of the Chief Executive Officer, Willie Meyburgh, Executive Directors Schalk Ackerman, and Dermot Quinn, as well as senior management: Luc Jacobs, Jan Oberholzer, Frik Venter, Vince Olley and Mark Snow. Former Executive Director, Stephen Pell, resigned shortly after the commencement of the current year on 31 March 2012.

The EXCO meets monthly to assist the Chief Executive Officer in the management of group operations and finances and reports directly to the Chief Executive Officer, who in turn reports to the board.

Board committeesThe board has created various committees to assist it with its duties and responsibilities and to effectively fulfil its decision-making process. These committees supply the board with information that is relevant in a timely fashion. The directors of these committees have access to all company-related information, records and documentation.

The following committees have been formally constituted:

› Audit, Governance and Risk Committee

› Remuneration and Nominations Committee

› Social and Ethics Committee

› Mergers, Acquisitions and Disposals Committee

Each board committee acts within the scope of formalised terms of reference, which have been adopted and approved by the board. These terms of reference are reviewed annually and updated where necessary. They set out the purpose, membership, duties and reporting procedures of the various committees. The committees are subject to evaluation by the board with regard to their performance and effectiveness.

Audit, Governance and Risk Committee

For information pertaining to the Audit, Governance and Risk Committee, refer to the Audit, Governance and Risk Committee report commencing on page 96 of this integrated report.

Remuneration and Nominations Committee

For information pertaining to the responsibilities and functions of the Remuneration and Nominations Committee, refer to the Remuneration report commencing on page 85 of this integrated report.

Social and Ethics Committee

For information pertaining to the responsibilities and functions of Social and Ethics Committee, refer to the Social and Environmental review commencing on page 57 of this integrated report.

Mergers, Acquisitions and Disposals Committee

The committee is chaired by Independent Non-executive Director Kevin Eborall, and further comprises Non-executive Directors Nomhle Canca, Zanele Matlala and Herman Mashaba. The board has mandated the committee to review and approve mergers, acquisitions and disposals, subject to specific limits. Meetings are held on an ad hoc basis.

SubsidiariesGroup policies on corporate governance and ethics are handled through the process of delegated authority, which is in place between the holding and operating companies to ensure adherence to the group’s overall subscription to the principles of ethical leadership and good corporate governance.

Delegation of authority – board committees


Directors Board

Audit, Governance and Risk Committee


Socialand EthicsCommittee

Mergers, Acquisitions and Disposals Committee

Chairman B StefanuttiZJ Matlala@ NJM Canca† ME Mkwanazi NJM Canca KR Eborall

Number of meetings 5 4 4 1 1

B Stefanutti* (Chairman) 5/5 n/a n/a n/a n/a

W Meyburgh (CEO) 5/5 4/4^ 4/4^ 1/1^ 1/1^

DG Quinn (CFO) 5/5 4/4^ 4/4^ 1/1^ 1/1^

SJ Ackerman 5/5 4/4^ n/a n/a 1/1^

SD Pell (resigned 31 March 2012) 1/1 1/1^ n/a n/a n/a

NJM Canca** 5/5 3 /4 n/a 1/1 0/1

KR Eborall** 5/5 4/4 4/4 n/a 1/1

HSP Mashaba** 5/5 n/a 3 /4 n/a 1/1

ZJ Matlala** 5/5 3/3 n/a 1/1 n/a

ME Mkwanazi** 2/5 n/a 1 /4 n/a n/a

LB Sithole* 4/5 n/a n/a n/a n/a

JWLM Fizelle * (alternate to LB Sithole) 1# 3 /4 n/a n/a 1/1^

* Non-executive

** Independent non-executive

^ By invitation

n/a Not applicable

# Attended as an alternate for one meeting in place of LB Sithole

† Resigned as chairman on 31 July 2012

@ Appointed as chairman on 31 July 2012

Attendance at board committee meetings



Board meetingsThe board met five times this year. Additional meetings are convened when required. Directors are provided with all necessary information in advance to enable them to discharge their responsibilities, including, detailed board packs.

Board documentation is provided to directors in a timely manner, with the tabling of documents at board meetings being the exception. Where necessary, decisions are taken between board meetings by way of written resolution as provided for in the company’s Memorandum of Incorporation.

The board agenda and meeting structure focuses on strategy, performance monitoring, governance and related matters. Management ensures that board members are provided with all relevant information and facts to enable them to make objective and informed decisions. The board meets with management annually to agree on the group’s strategy. Non-executive directors meet without the presence of management as and when deemed necessary.

All committees have met their responsibilities during the year under review in compliance with their formal terms of reference. There is a policy of transparency and full disclosure from these committees to the board. Committee chairmen provide the board with verbal reports on committee activities and the minutes of committee meetings are made available to the board. In addition, the chairmen of the committees or a nominated committee member attends the company’s annual general meeting to answer any questions from stakeholders pertaining to the relevant matters handled by their respective committees.

The charters of the board committees are reviewed annually as standard practice.

The directors are responsible for the group’s systems of internal control. While no system can provide absolute guarantees and protection against material loss, the systems are designed to give the directors reasonable assurance that problems will be identified promptly and remedial action taken where appropriate.

The importance of internal control systems and management of risks are openly communicated to all employees so that they have a clear understanding of their roles and obligations in this regard.

Overall, the board remains responsible for the management of the internal control systems with the assistance of the Audit, Governance and Risk Committee. These systems of internal control are designed to provide reasonable but not absolute assurance as to the integrity and reliability of the annual financial statements, to safeguard and maintain accountability of the group’s assets, and to identify and minimise significant fraud, potential liability, loss and material misstatement while complying with applicable statutory laws and regulations.

There are inherent limitations to the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. The system is therefore designed to manage rather than to eliminate risk of failure and opportunity risk.

There were no material amendments to the Internal Audit function nor were there any changes to the role, duties and reporting line of the Group Internal Audit Manager during the year under review.

Regular discussions are held and line management and internal audit provide assurance to executive management, however, Internal Audit reports directly to the Audit, Governance and Risk Committee ensuring the function remains independent.

The internal audit charter remains unchanged. The application of these internal controls are enforced throughout the group by executive management, line management, quality and safety assurance reviews and internal audit. Internal Audit followed a risk-based internal audit plan conducting various process reviews during the period. Findings predominantly related to certain controls not being applied diligently, lack of segregation of duties within an application and absence of evidence of review and approval by management/independent senior officials. The non-conformities were discussed with management and the existing controls were reinforced with the relevant staff. Management implemented new controls and enhancements to existing controls, where applicable.

No issues have come to the attention of the board to indicate that there was any breakdown in the key systems of internal control during the year.

Accountability and internal control



The group maintained its focus on the importance of IT governance and sustainability during the financial year. A General Manager IT Services was appointed during the previous year who manages the day-to-day activities of the IT Department while the former Group Risk Officer headed the IT Steering Committee, which reports into the EXCO. The Steering Committee meets on a monthly basis to discuss IT governance issues and ensures that the business unit IT principles are guided by group IT policies.

During 2012, a complete review of the IT governance and IT internal controls was performed by an independent service provider, and areas of improvement were identified and are in the process of being corrected. A COBIT framework was adopted and policies and procedures are continuously updated in order to comply therewith.

During the year under review, a multi-vendor approach was initiated to minimise IT risk and ensure external service provider efficiency, virtualisation to consolidate IT infrastructure and reduction of total cost of ownership. In order to achieve this, the group engaged an independent hosting provider and embarked on a private cloud strategy, which has resulted in better cost efficiencies within the group’s network and server infrastructure.

The board recognises the importance of aligning the group’s IT management with the group’s performance, risk management and sustainability objectives and an review of this nature will be performed every two years. The Audit, Governance and Risk Committee assists the board in carrying out its IT responsibilities. IT management is guided by the results of the audit and the assessment of risk in its strategy and decision-making process.

IT-related assets are utilised effectively and are disposed of in an environmentally-friendly fashion.

Code of ethicsA formal code of ethics is in place setting out standards of integrity and ethics in dealings with suppliers, customers, business partners, stakeholders, government and society at large. Every employee of Stefanutti Stocks is expected to subscribe to the code, which requires all to act with honesty and integrity in all dealings with stakeholders and to interact with fairness, dignity and respect to create and protect a credible and well-reputed business and working environment free from harassment and discrimination. The code is communicated to newly appointed employees during induction sessions.

Share dealings and disclosure of interestAll directors are required to obtain clearance prior to trading in the company’s securities. Such clearance must be obtained from the Chairman or, in his absence, from a designated director. The Chairman consults the Chief Executive Officer or the designated director prior to his trading in the company’s securities. Directors are required to inform their portfolio/investment managers not to trade in the securities of the company unless they have specific written instructions from that director to do so. Directors may also not trade in their shares during closed periods. Directors are further prohibited from dealing in the company’s shares at any time when they are in possession of unpublished price-sensitive information in relation to those securities, or otherwise where clearance to deal is not given.

Directors are required to notify the company of their interests and this is a standard agenda item at each board meeting.

There have been no material changes to the directors’ interests post 28 February 2013 to date. Information regarding directors’ interests is set out on page 88.

Ethical performanceInformation technology management


Stakeholder communicationsThe company’s Chief Executive Officer, Chief Financial Officer and members of the EXCO conduct timely presentations on the group’s performance and strategy to analysts, institutional investors and the media in South Africa. Presentations, corporate actions and reports on performance, as well as any other information deemed relevant, are published on the company’s website. Shareholders and other stakeholders are advised of such newly published items via SENS, where required in terms of the JSE Listings Requirements. Other information on the company, such as inter alia its management and history is also available on the website at www.stefanuttistocks.com.

The company publishes and reports on details of its corporate actions and performance, including its half- and full-year financial results, in print and electronic media as specified by the JSE Listings Requirements from time to time. The group’s communications function maintains regular contact with the media by disseminating relevant information.

All Non-executive Directors are invited to attend the company’s financial and business-specific presentations.

For further information on stakeholder communications, refer to Stakeholder engagement commencing on page 14 of this integrated report.

Annual general meetingThe annual general meeting will be held on 6 September 2013 at 12h00. Information relating to the annual general meeting is contained in the notice of the annual general meeting commencing on page 109 of this integrated report. The Chairman of the board, chairmen of the board committees and the external auditors will be available to answer questions at the annual general meeting.

Memorandum of IncorporationThe group’s new Memorandum of Incorporation was approved and adopted by shareholders, at the annual general meeting held on 7 September 2012. The salient features were highlighted in an appendix to the notice to the annual general meeting commencing on page 91 of the 2012 integrated report.


The Social and Ethics Committee (the committee) was established during the 2012 financial year in response to the requirements of section 72(4) of the Companies Act, read with regulation 43 of the Companies Regulations, 2011. These regulations require the establishment of a social and ethics committee, to which were added the transformation and sustainability oversight roles (previously the functions of the discontinued B-BBEE Transformation Committee).

CompositionIndependent Non-executive Director, Nomhle Canca, chairs the committee and an additional Independent Non-executive Director, namely Zanele Matlala, serves on the committee. The Group Risk Officer is also a member of the committee. The Chief Executive Officer, Chief Financial Officer and Human Resources Executive attend committee meetings by invitation. The board has satisfied itself that the members are suitably skilled and qualified to fulfil their duties.

MeetingsThe committee held one meeting during the period under review. Attendance at this meeting is shown in the table set out on page 52 of the Corporate Governance report. Three committee meetings are planned for the next year.

Statutory dutiesIn the execution of its duties, the committee:

› Considers and approves the group’s CSI programme and proposed beneficiaries;

› Monitors the group’s compliance with any industry or sector codes;

› Monitors the group’s targets and progress in regard to skills development and training;

› Promotes the principles of transformation on an enterprise-wide basis across all facets of the group’s activities;

› Reviews transformation plans and programmes;

› Regularly reviews policies, plans and processes aimed at facilitating transformation across the group; and

› Reviews integrated reporting to stakeholders on aspects of transformation.

The committee confirms that the group gives its social, ethics, transformation and sustainability responsibilities the necessary attention. Appropriate policies and programmes are in place to contribute to social and economic development, ethical behaviour of staff towards fellow employees and other stakeholders, fair labour practices, environmental responsibility and good customer relations. The committee assists the Audit, Governance and Risk Committee by reviewing all non-financial information contained in this integrated report.

The board and its Social and Ethics Committee present herewith their Social and Environmental Review on inter alia the group’s human capital, safety, health and environment, transformation and corporate social investment (CSI) policies and performance for the year ended 28 February 2013. The board, on the recommendation of the committee, has approved the information provided in this review.

In accordance with the GRI G3.1 Guidelines and in accordance with Stefanutti Stocks’ evolving approach to integrated reporting, this review discloses the group’s material sustainability information for the third consecutive year.

Following this approach allows stakeholders to assess the ability of the group to create and sustain value over the short, medium and long term with information presented within a consistent and comparable framework. The index on page 115 references the GRI disclosures and enables Stefanutti Stocks to self-declare this report compliant with GRI Application Level C. This review covers the group’s South African operations for the year ended 28 February 2013.

Social and environmental strategic objectives

The overall objectives of Stefanutti Stocks’ sustainability strategy are to:

› Create an equitable working environment for the group’s employees to enable them to develop to their full potential;

› Operate profitably, nurture and respect the natural and social environments while recognising the potential impact the group has thereon;

› Be the employer of choice. In achieving this goal, the group strives to provide a healthy place of work with a focus on training and developing its staff; ensuring effective communication and building awareness of the effects of HIV/Aids; and

› Play an active role in South Africa’s transformation process.

Our employees

Stefanutti Stocks strives to be regarded as an employer of choice in the engineering and construction sectors. The group is committed to respecting human rights and providing a safe and healthy work environment free of discrimination where employees have the right to freedom of association.

The group has become a leading local construction and engineering group, due to its fundamentally important stakeholder group – its employees, who are committed to innovation, quality and service. Stefanutti Stocks has a diverse workforce and its values form an integral part of its culture of commitment.

The human resources function prioritises the identification and development of capable leaders across the various business units to ensure sustainable organic growth and enables the group to realise growth opportunities both geographically and in the offering of new products and/or services.

Employee distributionThe group ensures that skills are developed in order for Stefanutti Stocks to be regarded as an employer of choice. Individual development, equality and performance-based advancement are the cornerstones of Stefanutti Stocks’ approach to maintaining a balanced and highly skilled workforce.

The Social and Ethics Committee Introduction

57Stefanutti Stocks Integrated Report 2013 | Social and Environmental Review

The diverse and experienced workforce is reflective of the manner in which the group completes work with professionalism. Labour is procured from local communities in areas where work is undertaken to maximise the benefits to and the upliftment of the local communities.

As at 28 February 2013, the group’s total headcount was 13 708 (2012: 12 713), including the United Arabian Emirates operations, of which 11 320 employees (2012: 9 935) worked on projects for the South African operations, reflecting an increase of 8% and 14% respectively.

Total staff turnover for the current financial year was 36,3%, a decrease when compared to the previous financial year of 39,3%. The staff turnover percentages are inflated due to 59,5% of the group’s staff being employed on limited duration contracts, which is an industry norm and is dependent on the contract or client requirements.

Significant progress was made over the last several years to reduce the natural attrition within the group’s employment. Total attrition includes terminations by way of resignations, non-renewal of contracts, retrenchments due to operational requirements, dismissals due to misconduct, retirements, deaths and transfers.

Industry associationsStefanutti Stocks acknowledges the right of employees to freedom of association, and actively participate in various national and industry level bargaining forums.

The group, through its business units, is a member of the following industry associations and forums:

› Gauteng Voluntary Bargaining Council and Builders Union Bargaining Council

› South African Federation of Civil Engineering Contractors (SAFCEC)

› Gauteng Master Builders Association (GMBA)

› Green Building Council South Africa (GBCSA)

› Building Industry Federation of South Africa (BIFSA)

› Metal and Engineering Industries Bargaining Council (MEIBC)

Unions to which its employees are members are as follows:

› National Union of Mineworkers (NUM)

› National Union of Metal Workers, South Africa (NUMSA)

› United Chemical Industries Mining Electrical State Health and Alliance Workers Union (UCIMESHAWU)

› Association of Mineworkers and Construction Union (AMCU)

› Building Construction Allied Workers Union (BCAWU)

The group has open communication channels with all the representative unions which have strengthened relations with union officials. This occurs by way of:

› Ad hoc meetings with bargaining councils;

› Union representatives engagement as part of project labour site meetings;

› Quarterly management and union representative meetings;

› Written and telephonic communication; and

› Face-to-face dialogue.

Induction programmesOngoing induction programmes occur within the group. At business unit level, a comprehensive induction, which covers details of the group policies and procedures, medical aid, pension fund, quality and safety ensures that employees feel engaged from their first day of work with all of the relevant information they may need.

Performance management, staff retention and successionInstilling a high performance culture across the group has gained momentum over the past year with the roll-out of performance contracting and review processes being implemented at top management level.

“Successfactors”, is a Cloud based SAP programme, which creates a common language for performance management, development and succession planning. The programme has been implemented for top management and is based on the balanced scorecard approach. The balanced scorecard plays a critical part in ensuring that key individual performance outputs are aligned to business strategy. This system focuses on group, divisional and individual performance and is aimed at driving business success, and complementing and supporting the talent audit process. The first assessments will be completed in March 2014.

The group also conducted a detailed succession planning review of the top management level. The exercise was well received and highlighted reasons for succession planning as well as key risks surrounding critical future vacancies.

Web recruitmentThe group’s philosophy is to have the right person, in the right place at the right time. One of the issues reported in the culture climate survey, related to employees feeling overlooked when internal opportunities arose due to internal advertisements being inadequate. The group is in the process of implementing a new drive to be more transparent. All positions are being advertised on the website and communications distributed to employees in terms of position availability.

The group has upgraded its web recruitment site and is making use of these processes for all internal job postings, as well as external recruitment. This system provides increased transparency and equal opportunity to employees in terms of applying and being considered for internal positions.

SOCIAL AND ENVIRONMENTAL REVIEW continued

58 Stefanutti Stocks Integrated Report 2013 | Social and Environmental Review

13 708

11 320

12 713

9 935

All operations

RSA operations

2013 2012

Total headcount for all operations vs. RSA operations

Headcount by appointment type

441

561

13

4 174

6 101

393

540

0

3 989

5 008

5

2013

2013

2013

2012

2012

2012

Female Male

Permanent

Project specific

Bursaries

30

Total headcount per business unit

58

495

989

1 817

2 909

5 052

48

305

1 051

1 874

2 182

4 475

Corporate Services

Power

Mechanical and Electrical

Building

RPM

Structures

2013 2012

Headcount by appointment type and gender

2013 % 2012 %

Permanent employees 4 615 40,8 4 382 44,1

Contract employees 6 705 59,2 5 553 55,9

Project specific 6 662 5 548

Bursaries 43 5

Total employees 11 320 100 9 935 100

Male 10 305 91,0 9 002 90,6

Female 1 015 9,0 933 9,4


Headcount key measures (total headcount per region)

Headcount2013

Annualattrition

%Headcount

2012

Annualattrition

%

Eastern Cape 335 24,4 160 24,4

Free State 300 20,0 5 20,0

Gauteng 4 591 38,7 4 675 38,7

KwaZulu-Natal 887 27,4 1 330 27,4

Limpopo 1 335 26,4 1 464 26,4

Mpumalanga 2 348 31,1 1 185 31,1

Northern Cape 690 62,7 397 62,7

Western Cape 409 53,5 310 55,5

Other 425 93,2 409 93,2

11 320 36,3 9 935 39,3

Headcount per employment type (%)

Salaries Wages

77,3

77,1

22,7

22,9

2013

2012

11 267

9 844

8 677

7 375

6 945

2013

2012

2011

2010

2009

Headcount trend – average staff

36

39

49

2013

2012

2011

Total headcount – natural attrition trend (%)

Headcount per employment type

453

562

2 121

8 184

428

505

1 852

7 150

2013

2013

2012

2012

Female Male

Salaries

Wages



Headcount key measures (total headcount per ethnic group)

Headcount2013

Annualattrition

%Headcount

2012

Annualattrition

%

African 9 224 40,6 8 068 41,6

Coloured 317 58,3 277 59,3

Indian 169 17,2 152 17,2

White 1 610 23,2 1 438 24,2

11 320 36,3 9 935 39,3

Employees deemed as HDI

2013 2012

African 9 224 8 068

Coloured 317 277

Indian 169 152

White female 287 265

9 997 8 762

Total employees 11 320 9 935

Employees deemed HDI (%) 88,3 88,2

Headcount by region 2013 Headcount by region 2012

7

0

287

413

28

50

153

5

4 388

917

1 436

1 135

Eastern Cape

Free State

Gauteng

KwaZulu-Natal

Limpopo

Mpumalanga

Female Male

Northern Cape

Western Cape

Other

7

44

390

266

97

312

43

37

525

107

52

68

292

263

4 066

780

1 283

2 280

Eastern Cape

Free State

Gauteng

KwaZulu-Natal

Limpopo

Mpumalanga

Female Male

Northern Cape

Western Cape

Other

72

58

618

351

53

372


Headcount by age group2013 2012

1281 6102 5072 0751 6101 102

869700719

18 – 20 years20 – 25 years25 – 30 years30 – 35 years35 – 40 years40 – 45 years45 – 50 years50 – 55 years

55 + years

441 2362 1491 9041 4111 036801627727

Headcount key measures (total headcount per age group)

Headcount2013

Annualattrition

%Headcount

2012

Annualattrition

%

18 – 20 years 128 73,3 44 73,3

20 – 25 years 1 610 49,5 1 236 49,5

25 – 30 years 2 507 46,8 2 149 46,8

30 – 35 years 2 075 41,5 1 904 41,5

35 – 40 years 1 610 36,3 1 411 37,3

40 – 45 years 1 102 31,2 1 036 31,2

45 – 50 years 869 26,9 801 27,9

50 – 55 years 700 27,2 627 28,2

55 + years 719 26,1 727 26,1

11 320 36,3 9 935 39,3

Headcount key measures (total headcount per occupational level)

Headcount2013

Annualattrition

%Headcount

2012

Annualattrition

%

Top management 93 7,7 91 7,7

Senior management 211 13,2 174 13,2

Middle management 570 22,9 512 22,9

Junior management 3 266 23,0 2 825 23,0

Semi-skilled 3 252 32,6 2 497 32,6

Unskilled 3 928 23,5 3 836 29,5

11 320 36,3 9 935 39,3

Headcount key measures (total headcount per gender)

Headcount2013

Annualattrition

%Headcount

2012

Annualattrition

%

Female 1 015 51,9 933 52,9

Male 10 305 35,9 9 002 37,9

11 320 36,3 9 935 39,3

Headcount key measures (salaried staff only)

Headcount2013

Annualattrition

%Headcount

2012

Annualattrition

%

18 – 20 years – – 3 66,7

20 – 25 years 230 16,3 208 24,5

25 – 30 years 452 19,7 384 17,7

30 – 35 years 400 17,5 391 19,8

35 – 40 years 340 18,4 295 20,0

40 – 45 years 290 18,4 258 8,5

45 – 50 years 245 19,2 231 12,1

50 – 55 years 259 10,4 219 19,2

55 + years 358 30,7 291 29,7

2 574 17,6 2 280 18,6



Skills development and trainingStefanutti Stocks realises that its strength lies with its people and that it will only attain its purpose if the group continues to attract, develop, retain and motivate talented and diverse people. It is for this reason that the group has continuously invested in the development of its people despite the tough economic conditions.

The group realises the importance of corporate training and one of its key strategies is to adopt a modern approach to training and skills development. Training is considered an important retention tool and not merely a cost. The training system has been changed to create and enhance the skills of the workforce and yield the best results.

Our challenges and progress

One of the challenges faced by the group is leadership skills and development. Numerous senior managers are currently on a Leadership Development Programme to assist them in reaching their personal goals, while enhancing their contribution to the group.

The group aims to implement and roll-out selected mentoring programmes as well as Personal Development Plans within all the divisions.

The group will also be establishing talent pipelines, by identifying exceptional employees at various management levels and developing them to ensure the sustainability of the group.

Certain skills shortages have been experienced, which have impacted the effectiveness of project delivery capabilities. Specific focus will therefore be placed on increasing capacity and competence in the following areas:

› Project management

› Programming and planning

› Quality management

› Commercial astuteness

› Engineering

› Quantity surveying

› Safety

› Diesel mechanic apprenticeships

Our strategy

The group’s strategic goals for 2014 are as follows:

› Offering support for the construction scorecard

› Increasing communication with site regarding functions of the training centre and the services offered

› Launching an intranet page

› Moving towards the new occupational learning system

› Developing new programmes that extend training and development opportunities for all employees

› Reviewing and further developing the Site Leadership Development Programme (SLDP)

Training attendees per category

70 Administration 141 Computer 409 Plant 3 764 Safety 4 180 Skill 3 094 Specialised 13 Technicon 14 University 249 Others

Training per gender

111

902

462

11 032

183

559

305

8 018

2013

2013

2012

2012

Female Male

Number of courses

Number of attendees


Solid FoundationsThe Solid Foundations training is a base-skills programme designed to address the core skills of the Competent Construction Worker. It was designed using a selection of methodologies that address potential learning barriers such as literacy and promotes a strong practical application of skills and behaviour. For example, graphic use of “LWAZI” the bilingual character, demonstrates the skills and behaviour being encouraged in the training.

This course is offered by the Stefanutti Stocks Structures accredited training centre over two days. All Q1 and Q2 assessment skills are offered in English, Afrikaans, Zulu, Northern Sotho, Xhosa and Sepedi.

› Q1 Pre-employment selection assessment is a tool used by the training department to determine candidates’ current numeracy and literacy levels. A minimum adult basic education and training (ABET) level 4 is required.

› Q2 Competence assessment investigates prior learning. This assessment is conducted to determine the current skill set based on a Construction-hand Level. The assessment serves as validation and verification of skills and training levels. It assesses employees’ current skills sets, appropriate placement, learning ability and the identification of possible learning barriers as well as training needs.

Training spend

Total training spend for the year under review increased to R12,7 million (2012: R7,1 million). A total of 11 934 employees (2012: 8 577) attended training courses of which 77,2% of the attendees were black (2012: 76,7%).

Training centres

Structures Training Centre

The Structures training centre, which provides services for the group, has injected new energy and focus into training.

A total of 3 711 employees have been trained at this training centre with new registered skills programmes covering:

› Competent Construction Worker – Solid Foundations, a two-day course focusing on SHE, protective equipment and hand tools, which 600 employees attended. It was presented in five official languages with linguistic support provided via images.

› A two-day course run as a form of induction for all hourly-paid employees.

› Construction-hand (Grade III level training).

› Generic training to prepare hourly paid workers:

» Shutter-hand Lower 2 and Upper 1

» Concrete-hand Lower 2 Upper 1

» Reinforcing-hand Lower 2 Upper 1

› Kusile Civils Works Joint Venture Power Station At the Kusile Civils Works Joint Venture Power Station, Stefanutti Stocks has set up a satellite-training centre to accommodate the group’s employees as well as those of joint-venture partners to receive practical training. A total of 2 757 employees have been trained and the training covers similar areas to those mentioned in the Structures training centre above.

RPM Training Centre

This training centre was established and accredited with the Mining Qualifications Authority in 2012. The training centre focuses on operator training and includes the use of simulators as well as apprentice training, and an employee development programme for mining engineers.

The incorporation of simulator training is a new training approach and is aimed at the reduction of future training time, cost and damage to plant. The first simulated and e-learning container classroom is scheduled for delivery by the end of September 2013.

The training centre focuses on the screening of applicants, using the LAB and Dover assessment methods, and it has invested in two mobile simulators, two mobile e-learning classrooms, two pre-simulators and nine yellow plant consoles. Annual machine operator assessments will be performed to establish any bad habits formed and operators will receive additional training to adjust behaviour.

Training Case Study



Training courses and attendees per appointment type

Training courses and attendees per employment type

12,7

7,1

7,3

7,5

5,4

2013

2012

2011

2010

2009

Training cost trend (R’million) Training programmesStefanutti Stocks offers the following development programmes:

› Bursaries and learnerships

› Cadet Foreman Programme

› Graduate Academy

› SLDP

› Leadership Capacity Building and Management Capacity Building

› African Institute of Mentoring (AIM)

In addition to formal training programmes, the group often undertakes informal training in skills such as shuttering and concreting in local communities near its various sites.

Bursaries and learnerships

These schemes provide financial assistance to full-time students, enabling them to qualify for a degree or national diploma at a recognised South African educational institution. This allows students to study on a full-time basis with financial assistance covering expenses related to books, class fees and accommodation.

The group provides experiential training during vacations through a unique pilot intern programme with the Construction Industry Development Board. This allows for the essential practical site experience necessary to qualify. The group takes an active interest in the progress of each candidate, arranging help if required.

Detail

No ofcourses

2013

No ofattendees

2013

No ofcourses

2012

No ofattendees

2012

Permanent 263 6 849 248 5 541

Limited duration contract 310 5 085 240 3 036

573 11 934 488 8 577

Detail

No ofcourses

2013

No ofattendees

2013

No ofcourses

2012

No ofattendees

2012

Salaries 409 4 507 372 3 397

Wages 164 7 427 116 5 180

573 11 934 488 8 577

GENDER EMPLOYMENT TYPE APPOINTMENT TYPE

Total Male Female Salaries Wages PermanentProject

specific

Training expenditure (Rand) 12 694 545 10 966 202 1 728 343 8 654 964 4 039 581 9 142 519 3 552 026

Number of employees trained 11 934 11 032 902 4 507 7 427 6 849 5 085

Number of training days 13 117 12 125 992 5 953 7 164 8 527 4 590

Number of training hours 104 936 97 000 7 936 47 624 57 312 68 216 36 720

Total employees 11 320 10 305 1 015 2 574 8 746 4 645 6 675

Training hours per total employees 9,27 9,41 7,82 18,50 6,55 14,69 5,50

Training hours per employee attended training 8,79 8,79 8,80 10,57 7,72 9,96 7,22

Total number of employees trained

2013 % 2012 %

Employees trained 11 934 97,6 8 577 97,8

Total bursaries 105 0,9 66 0,7

Total learnerships 180 1,5 129 1,5

12 219 100 8 772 100


Candidates are selected on academic merit, with strong emphasis on students from historically disadvantaged backgrounds. Focus is placed on skills that are scarce such as civil engineering and quantity surveying.

While the bursary scheme seems to attract a large number of black women, the challenge appears to be long-term retention of these candidates. The remuneration scheme for graduates, young engineers and quantity surveyors rate among the top in the industry. These young employees are ambitious and need to be developed which is supported with the SLDP.

Stefanutti Stocks is currently running the following learnership programmes:

› NQF 2 – National Certificate Construction

› NQF 2 – Cadet Foreman

› NQF 3 – Health and Safety

› NQF 4 – Further Education and Training Certificate – Material Testing

› NQF 4 – National Certificate Supervision of Construction Processes

› NQF 4 – Business Administration

› NQF 5 – Management of Civil Engineering Construction Processes

The following additional programmes will be implemented:

› National Certificate Rock Breaking and Surface Excavations

› Further Education and Training certificate: Mining Operations

Business unitTotal

bursariesBlack

bursars%

Black

Structures 38 14 37

Building 36 24 67

M&E 3 1 33

RPM 22 9 41

Power 6 3 50

105 51 49

Business unitTotal

learnershipsBlack

learnerships%

Black

Structures 63 23 37

Building 54 50 93

RPM 63 23 37

180 96 53

Gcinile DlaminiGcinile Dlamini matriculated from Queens High school in 2007 and already knew that her career path would start off on a construction site. Gcinile started studying her B-Tech QS at the University of Johannesburg (UJ) in 2008.

She received her first award from UJ after she completed her second year. Gcinile joined the Stefanutti Stocks Building bursary scheme after her second year of study. At the annual students function she received a certificate and cash award for the best overall building sciences student at UJ.

In December 2011, Gcinile received two further awards. The first was for the best B-Tech QS student at UJ, where she received a silver medal, certificate and cash award. The second was for the best student in the department for QS and construction management and received her gold medal, a certificate and a cash award.

She has gained invaluable experience, which started during her second year of studies where she worked for MMQS, a professional quantity surveying (QS) company. While receiving her in-service training, she formed part of the client’s team working on Building’s Lebone contract and assisted in measuring, procurements and aiding MMQS with the bill preparation. Later, in her fourth year Gcinile gained further site experience at KPMG and Simmerpan where she worked during her vacations. She has performed work which involved measuring, monitoring labour, materials and production and contractual issues.

Since her permanent employment in January 2012 as junior QS she has performed all of the QS functions adding significant value to the commercial department. Gcinile says that she has been fortunate to work with quantity surveyors who have been good mentors that have helped with her career progression.

We are very proud of her and wish her well on site and the future with us!

Bursary Case Study



In line with its commitment to investing in the skills of the youth workforce of South Africa, Stefanutti Stocks Civils is dedicated to a unique pilot intern programme with the Construction Industry Development Board.

The pilot programme is aimed at providing further education and training, to students currently completing their National Vocational Certificate in Construction and Civil Engineering, with the essential on-site practical experience and work they require to qualify.

Nine students were selected for the programme and all have been assigned to a foreman as mentor over a six-month period. The foreman provides continuous feedback regarding the intern’s progress on site, after which he will be placed on learnerships as identified by management.

Dressed in customised internship overalls the students are easily identifiable on site.

Cadet Foreman Programme

The Cadet Foreman Programme has been implemented successfully and rolled out to all the business units. It provides specialised education for learners who have passed Grade 12. While addressing the shortage of middle managers in the industry, this course has also empowered learners in other fields. The programme was established due to a shortage in official foreman training.

A total of 50 cadet foremen are enrolled in the programme, of which 94% are black.

Business unit

TotalCadet

Foremen

BlackCadet

Foremen%

Black

Structures 8 8 100

Building 33 32 97

M&E 9 7 78

50 47 94

Graduate Academy

The Structures business unit has recently completed its second annual Graduate Academy. This intensive two-week induction programme has been designed to welcome the graduating bursary students to the group.

After much success it was decided to continue the Academy in January 2013. The Academy is aimed at the group’s bursary students who have completed their qualifications and who are starting their employment within the group.

The group for January 2013 comprised graduate engineers, quantity surveyors, surveyors and the first environmental graduate.

Various activities and training programmes are held, including a surveying course, training at heights certification and scaffold inspection, site visits, scaffolding and steel fixing practicals, plant demonstrations, group presentations and bridge building competitions.

Site Leadership Development Programme

The SLDP was borne out of the need to fast-track development and knowledge of internal systems and processes. The main purpose was to establish a way in which the group’s intellectual capital could be shared across all operations.

This year saw the programme’s first group of 18 delegates graduate. It is a highly customised programme that has proved to be extremely effective. Open, honest and direct participation is encouraged. Directors, project managers and senior employees share the challenges they faced, their personal accomplishments, and the lessons learnt from their many years of practical experience.

Learnership Case Study


It is envisaged that this programme will set a benchmark, creating a culture whereby innovative ideas, problem-solving solutions and new concepts and processes are shared between business units, making them available to all employees.

The highlights for the year under review included the Marine division joining the SLDP and the KZN division launching a selection of modules at their offices. To date, the SLDP has guided and benefited over 330 delegates within the business units with 40% being black beneficiaries.

Leadership Capacity Building (LCBP) and Management Capacity Building (MCBP) programmes

These two programmes have been developed by the Building business unit to enhance its capacity of both senior and middle management respectively. Both programmes are aimed at empowering staff, embedding group values, enabling delivery and driving business excellence.

The LCBP takes an organisational change approach that is strategic and systemic in nature involving a structured learning process. In order for leadership to build a world-class business with a competitive advantage, the LCBP focuses on developing insight and problem-solving abilities, business acumen, external and internal relationship management, self-management and interpersonal skills.

The MCBP is competency based in nature and incorporates the ethos of the LCBP. It is a three-year programme focused on building insight through academic-based education and training. It optimises performance by concentrating on the business and not the individual and builds readiness for progression.

A total of 20 employees in the Building business unit have enrolled on Management Capacity programmes of which 55% are black.

African Institute of Mentoring (AIM)

The Roads, Pipelines and Mining Services business unit has introduced top management to a series of psychometric assessments, identifying developmental needs. The AIM has facilitated this process. The Situational Leadership Development Programme entails the development of a process encompassing coaching and mentoring sessions, strategic alliances sessions and individual and group coaching. Currently 105 employees are enrolled in the programme.

The group strives to provide a safe and healthy work environment for all employees, contractors and stakeholders. Safety, health, environment and quality (SHEQ) form integral pillars of the group’s business model. The group’s safety forum plays a vital part in knowledge sharing and building a repository of the group’s best practices, thus ensuring that all practices across the group are aligned.

It is our belief that all incidents are preventable, and the disabling injury frequency rate (DIFR) remains benchmarked at 0,1. During the year, the group achieved its best ever safety performance, with a DIFR of 0,18 (Feb 2012: 0,23) the lowest rating since the group commenced recording statistics. While the board accepts ultimate responsibility, the greatest ongoing drive remains the entrenchment of an understanding that SHEQ is everyone’s responsibility and not only that of a specific department or individual.

Health and safety

Our approach and policy communication

The Group Occupational Health and Safety Framework Manual articulates the roles, responsibilities and accountability in delivering health and safety commitments. This manual, incorporating the Occupational Health and Safety (OHS) Management System, was completed and distributed to all relevant managers and OHS personnel. Amendments to the group’s formal health and safety policies have been made, expanding on the duty of care from the group and employee’s perspective. The use of incentives, employee recognition and the suggestions of employees to improving the SHE Management System and work processes assists in motivating employees to perform at their best.

Group policies are communicated to divisions via SHEQ Committee meetings. Representatives from each business unit attend and various SHEQ issues and risk mitigation strategies are discussed. Further discussions are planned to review the reduction of risks by the implementation of new strategies.

These policies are communicated on an ongoing basis by way of SHE inductions, personnel induction sessions, formal workshop sessions with safety personnel and one-on-one sessions with site personnel and management. Policies are communicated continuously to all employees, sub-contractors, visitors and stakeholders in general. Communication is channelled through a SHE DVD, group intranet, scheduled audits, toolbox talks, workplace visits and inspections and health and safety meetings, work team sessions, quarterly reviews, notice board, hazard/aspect communication through training and awareness, incident recalls, newsletter, emails, posters, notice boards, banners and alerts.

Communication channels are established and implemented throughout all levels of the business units and projects. Formal and informal communication channels have been established to ensure that all employees have access to management in the event of concerns and suggestions.

A process has been established for directors and senior management to formally report on their observations during a site visit through a Site Observation Book to ensure opportunities for improvement. Positive observations are communicated throughout the business units.

Safety, health and environment



The short-term goal is to eliminate all fatalities and major incidents while creating an environment that fosters the belief and mind-set amongst employees that it is possible to work injury free. Focus will be given to the alignment and formalisation of the Visible Felt Leadership (VFL) behavioural and observation roll-out and to integrate health and safety structures by developing Centres of Excellence. The group continues to promote a near miss reporting culture, where a higher number of incidents are reported. This reflects openness and enables greater learning across the group. The group aims to develop and maintain real-time reporting of leading indicators.

Application of group policies

Policies and objectives are compiled at three levels. Level 1 is approved by EXCO, while operations are able to change business unit and divisional levels to accommodate specific requirements in their operations.

An integrated management system has been implemented and is available on the intranet to specified users. It includes core-operating procedures and is designed to support the objectives as stated within the various group policies. The business units have approved policies to supplement and support the various group policies. Group and business unit policies are placed on notice boards at Head Office and at every project.

Our challenges, progress and achievements

The group’s key challenges are as follows:

› Elimination of fatalities at operations

› Continuous improvement in SHE training for all staff

› Embedding a safety culture within the group

› Achievement of ISO 14001 certification within the group

› Continuous improvement in the competence and level of engagement with employees

› Improvement in transport safety management on public roads

The graph below illustrates the DIFR levels achieved by the group for the year under review.1

23

LEVEL

LEVEL

LEVEL

GROUP

Business Unit

Divisional

Mar

12

Structures RPM M&E Power

Building Group Linear (DIFR target)

0,60

0,50

0,40

0,30

0,20

0,10

0,00

Apr

12

May

12

Jun

12

Jul 1

2

Aug

12

Sep

12

Oct

12

Nov

12

Dec

12

Jan

13

Feb

13

Consolidated group safety statistics

12-month DIFR – Rolling Average: February 2013


Business unitDisabling

injuries12-month

rolling average

Structures 11 0,20

Building 6 0,13

RPM 10 0,23

M&E 2 0,17

Power 2 0,51

Total 31 0,18

SHE strategy can only be applied successfully when employees take ownership of their own safety, and can only be achieved when leading by example. In this regard, training and proper communication and consultation between all role players is of primary importance.

Attention needs to be directed to reporting and proper investigation of all incidents, with the focus on preventive action instead of fault-finding. To ascertain accurate results one has to be able to measure, and therefore regular inspections and audits must be carried out.

The group has increased the number of safety officers assigned to projects at divisional levels, and has given bursaries to students who wish to follow careers as safety officers, studying for National Diplomas in Safety Management.

During the year under review, an approach and a culture was established and implemented which related to the effective management of occupational health and safety risks, as well as environmental impacts. A successful group-wide safety campaign was held during November 2012. It focused on providing a clean and healthy work environment. Occupational Health and Safety Management System requirements (OHSAS 18001:2007) certification was obtained through TUV Rhëinland.

The group rewards employees for excellent safety acts and this year the Power Business Unit received the award for the Safest Team.

Health and safety training

Safety training expenditure across the group for 2013 was R1,8 million (2012: R1,6 million) with 3 764 attendees (2012: 3 670) across 135 courses (2012: 134 courses). The pie chart on the right indicates the attendees by category of safety training. Only accredited trainers are used to facilitate training.

For each of the business units’ operational initiatives, training and SHE achievements, refer to the operational review commencing on page 29 of this integrated report.

Safety audits

In line with the Construction Regulations, the required monthly internal safety audits all on sites are required to be completed. Action plans are drafted where audits have highlighted issues that need to be addressed and responsibility is allocated to appropriate staff. Legally appointed safety supervisors follow up to ensure that the necessary action has been taken.

Injuries and fatalities

The group’s target is “Zero Harm” and as mentioned, the DIFR benchmark is 0,1. The target is always to keep disabling injuries to a minimum and all safety precautions are taken when on site however, the RPM business unit recorded a regrettable fatality. Employees were boarding the employee transport truck when a tipper truck struck it from behind. Vusi Nkonyo, sustained fatal injuries when he got caught between the tipper truck wheel and the concrete barrier.

The following measures were implemented to prevent a recurrence of similar incidents:

› Loading and offloading sites were established away from the main public route;

› The group has embarked on a campaign ensuring all transport vehicles are mounted with a left hand side access ladder, controlled by the driver;

› With the support of the Department of Labour, a safety awareness campaign was rolled out, pamphlets were printed creating awareness among employees working on the roads;

› A public plea not to speed and to respect the stop-and-go rules was made;

› A poster was designed and displayed (employee transport trucks and how to board and disembark); and

› Toolbox talks, planned task observations and incident recalls were held.

73 Advanced 1 052 Basic 24 HIV 393 Induction 718 Intermediate 1 504 Toolbox

Safety training attendees per category



Health and safety training courses attended

Course name Course name Course name Course name

114219 Demonstrate an Understanding and Implement

Examine and Make Safe Mines, Quarries and Dumps

HIV/Aids Awareness National Examination Board for Occupational Health and Safety

120330 Conduct a Continuous Risk Assessment In a Workplace

Fall Arrest Technician Level 1 and 2

How to use Ladders and the Associated Risks

National Occupational Safety and Health Conference

120335 Conduct an Investigation into Workplace Incidents

Fall Prevention and Protection

Incident/Accident Awareness and Investigation Level 1-3

Noise

120344 Demonstrate Knowledge and Understanding of Current OHS Legislation

Fatal Alert Induction in English and Zulu Levels 1-2

Occupational Health and Safety Act and Construction Regulations

13973 Identify and Use PPE Fire Drill and Fighter Hose Running

Legal Liability and Supervisor OHSAS 18001 Implementation and Internal Auditor courses

8975 Read Analyse and Respond To a Variety of Text

Fire Marshall Level 1 Anglo Basic Safety Programme English and Mixed

Planned Task Observation

Advice to Employees and Supervisor

Fire, Fire Prevention and Fire Evacuation

Level 1 BECSA Induction English and Mixed

Quality Awareness and Training Guides

Applying SHE Principles and Procedure

First Aid Basic and Levels 1-3

Level 1 Petrochem Synf Site specific Induction in English

Recognising Unsafe Conditions

Basic and Advanced Rigging and Slinging courses

Flagman Training Level 1 Safety Induction and Foundation

Risk Assessments

Basic Fire Fighting Gas Welding Safety Level 2 Anglo Basic Safety Programme English

Root Cause Analysis Team

Bridging and Introduction courses for Safety Management Training

General Induction Level 3 Overview Legal Liability RSA Permits

Compensation for Occupational Injuries and Diseases

Good Housekeeping Lifting Tackle Inspection Safe Access

Confined Space Hand Tool Accidents Loader Operations Safe Scaffold Handling and Scaffold Erector courses

Construction Regulations Hand, Air and Power Hand Tools Lock-Out Procedures Safe Use of Step Ladder

Ear Protection Hazard Identification and Risk Assessment

Management Responsibilities for HIRA

Safety Health and Environment Awareness

Electrical Safety and Housekeeping

Hazard Identification Risk Assessment and Control

Manual Handling of Materials Safety Health and Environmental Representative

Engineering and Power Hand Tool Hazardous Chemical Handling Manual Lifting Safety Health Environment Management Training

Environmental Awareness Health Y2 Mine Health and Safety Conference

Safety Health Environmental Quality Representative


Course name Course name Course name Course name

Safety Requirements Refresher Site Safety Toolbox Talk Working on Platforms

Safety Y1 and Y5 courses Sling Loads Transporting Dangerous Goods

Scaffold Inspector Ten Commandments of Safety Working at Heights

Health and safety training courses attended (continued)

Business unit Division Detail Date obtained

Structures Civils

Civils KZN

Civils KZN

ISO 9001

ISO 9001

ISO 14001

2012

2012

2013

Building Inland ISO 9001

ISO 14001

OHSAS 18001

2001

2012

2012

RPM – ISO 9001

OHSAS 18001

ISO 14001

2012

2013

July 2013

M&E – ISO 9001

OHSAS 18001

2013

2013

Power – All accreditations are in progress

Accreditation milestones achieved



Health services

The group recognises that the health of its employees is critical to its ongoing sustainability and success. Employees are required to complete pre-employment medical examinations, annual and exit medicals, travel consultations and immunisations as well as general wellness drives. It is also essential that all project employees be in possession of valid medical fitness certificates prior to the commencement of work.

An internal industrial psychologist is available to employees as part of the employee assistance programme. The group also supports policies on dreaded disease, smoking in the workplace and substance abuse.

Health services offered to employees include various programmes with two compulsory wellness days per year, where voluntary checks are carried out for tuberculosis, HIV, blood pressure, cholesterol, cholera, malaria, diabetes and hypertension. A voluntary blood donor event is held on a quarterly basis. Employees who have chronic diseases are referred for further medical assistance.

In the Structures business unit, the services of Skeletal Health have been employed to look after the wellness of all employees, including limited duration contract employees.

Medical surveillances are carried out on individuals working at heights and operators of plant and equipment.

HIV/Aids

The group recognises that HIV/Aids is an epidemic and poses a significant threat to the health, wellness and development of its employees.

The following HIV/Aids awareness programmes were run during the year:

› In the Structures business unit, a campaign was held during November 2012. All employees had the opportunity to test their status, and employees who tested HIV positive are receiving retroviral medication via its wellness partner, Skeletal Health.

› The group held a World Aids Day campaign during December 2012. Voluntary counselling and testing was available for all employees.

› The Building Inland division participated in the Ripple Effect Aids campaign for the fifth consecutive year.

The need to raise HIV/Aids awareness within Stefanutti Stocks remains imperative and the group has participated in and supported client and medical assessment service provider initiatives.

HIV/AidsIn November 2012, the Benefits Department, in conjunction with human resources representation from the business units, arranged and held two HIV/Aids awareness days. This initiative was combined with a wellness day and sponsored by Alexander Forbes, our consultant on medical aids as well as Momentum Health, who is our medical aid provider.

The providers on the relevant days consisted of an audiologist from Impact Hearing, Dis-Chem, who provided the products for the HIV and other wellness testing and Virgin Active.

We were privileged to have Dr Lerato Motshudi from Alexander Forbes talk about HIV/Aids, dispelling some of the myths surrounding the disease.

We had a demonstration of the “Zumba” aerobic exercise dance routine from Virgin Active and those who were patiently waiting in line to be tested, joined in the fun.

Health Case Study


Environment

Our approach and policy

Increased awareness of the environment and recognition of the effect the industry has on the environment, has urged the group to focus on sustainability topics related to the environment. A group policy is in the process of being compiled.

Environmental risks and impacts

Global climate change has been identified as a risk where detrimental weather events and temperature extremes will have a direct effect on construction operations, rendering sites unworkable, in the case of floods, and affecting the health of the group’s workforce. Operations in the Civils, Roads and Buildings divisions are particularly vulnerable to the short- and long-term effects of climate change.

The most significant environmental risks identified are:

› Poor waste management, including the inadequate disposal of hazardous waste and insufficient management of appointed waste contractors.

› Soil and groundwater contamination from potential leaks of underground fuel storage tanks.

› Wastewater discharged to the soil or storm water drains and industrial effluent discharges having exceeded effluent limits.

Priority impacts identified this year include soil pollution with spills and waste generation. Additional impacts identified are:

› Air pollution

› Loss of biodiversity, disturbing the seed bank, introducing alien invasive species to the area

› Causing a disruption to receiving environment

› Erosion and loss of top soil

› Water and ground pollution

› Damage to the integrity of the ecosystem functioning

› Depletion of indigenous flora

Our challenges, progress and achievements

Increased operational control of environmental aspects and impacts has been the focal point for the past year. External service providers were engaged to ensure waste is removed and disposed of in line with legislative requirements. Bulk diesel storage facilities were optimised and bundled on the various sites and where possible, catchment pits were installed at wash bays on projects.

Spill kits were provided at projects at ensure spillages were adequately cleaned up and managed. These operational controls were implemented as part of our strategy to obtain ISO 14001 (Environmental Management System Requirements) certification.

The Power business unit has a zero contravention strategy, which includes communication and monitoring of performance and adherence. A contract has been finalised where all employees have access to a legal register published on the intranet, which is updated weekly.

Environmental training

The need for knowledge and skills for effective environmental management has been identified at operational and project levels. An accredited service provider has been appointed to train safety officers to enhance the competency profile for environmental management implementation.

Various awareness programmes have been drafted and implemented to increase awareness levels of all employees in terms of relevant environmental aspects and impacts. Environmental programmes in terms of reducing waste will be implemented over the next two years. Ongoing informal environmental awareness training is presented as part of the client induction process. Environmental awareness is communicated as a topic at daily toolbox talks.

The following training was presented in the group:

› Hazardous Chemical Storage and Management

› ISO 14001 – Modern Environmental Management

› ISO 14001 – Internal Auditors Course

› Implement Environmental Initiative (Unit Standard 114218)

› Environmental Legislative Framework

› Integrated Waste Management

› Environmental Management for Safety Officers

In the Structures Civils KZN division, environmental training plans and a matrix were developed, to cater for different levels of employees. Training was split into two levels namely, General Awareness and Environmental Management System (EMS).

RPM targets to have 25% of all hourly-paid employees trained within the next financial year. This business unit has pursued the implementation of internally recognised environmental management systems (ISO 14001) to ensure optimised management of resources and prevention of pollution of the environment. Legislative requirements contained in project environmental authorisations are communicated and implemented at project level and compliance thereof is monitored on a monthly basis. Site establishments are rehabilitated and cleaned up after project completion to ensure RPM’s environmental footprint is minimised as far as reasonably practicable.

In the Building Inland division, all employees are inducted on the Environmental Management Plan (EMP) before engaging with any activities on site. Sub-contractors are engaged on the EMP, which is monitored on a monthly basis. Weekly toolbox talks are conducted which includes an environmental topic. Construction method statements pertaining to the environment are continuously communicated with supervisors to ensure compliance. Green building requirements have been included in the EMP as a requirement for all projects.



Environmental audits

Various environmental audits were conducted to monitor environmental performance ensuring that corrective and preventive actions were implemented. These audits included:

› Internal operational compliance audits;

› Client audits related to environmental authorisations;

› Monthly audit inspections conducted by environmental officers on their own projects, which included all sub-contractors on their projects; and

› Frequent visible felt leadership by top and senior management with formal feedback to project and site management.

No contravention notices, fines or penalties have been issued during the reporting period.

Environmental initiatives and resource conservation

‘Reduce, Reuse and Recycle’ is an ongoing campaign with waste separation and recycling on all projects as its focus. Appointed environmental officers drive it with support from project and site managers.

Divisional directors have identified sustainable use of natural resources as a divisional EMS objective. In due course action plans and targets will be drafted and implemented.

Optimised resource usage and conservation of non-renewable resources are monitored, measured and managed on all projects. In line with the energy shortage in South Africa, solar panels have been installed to supply solar energy as a power source at Stop/Start warning points. Drivers are also continuously made aware of “over revving” to ensure diesel is economically consumed. Timers and day-night sensors are installed for outside lights, where possible.

Projects report on the consumption of various energy sources, including diesel, petrol, electricity and water consumption. Inspection programmes are continuously implemented to ensure that wastage or spillage does not occur.

The following measures were introduced to conserve, recycle and re-use resources:

› Notices were installed at the printers indicating the importance of recycling paper.

› Awareness stickers have been installed in the kitchens and bathrooms making employees aware of reporting water leakages.

› Awareness stickers have been installed at all light switches making employees aware of switching off lights when not in use.

› Toolbox talks have been held informing employees to turn off computers before leaving for the day.

Paper recycle bins have been placed at Head Offices and form part of the waste management programme. The group is currently measuring its energy and water consumption.

EnergyTotal

(Gigajoules)

Electricity 61 424 464

Diesel 574 984

Petrol 5 419

Heavy fuel oil 98

Liquefied petroleum gas 127

WaterTotal

(Litres)

Surface water 35 057 292

Ground 4 665 803

Rain 1 538 046

Waste 25 702 372

Municipal 112 781 943

Natural resources 141 720 685

As soon as the water footprint is established, water optimisation and efficiency strategies and management programmes can be implemented. The following objectives will remain on the group’s agenda:

› The carbon footprint – embarking on an evaluation process to measure the group’s carbon footprint.

› Emissions and waste management – monitoring and measuring air emissions in accordance with permit requirements.

The SHE Forum is being utilised to discuss and implement all strategies and innovations, embracing continuous improvements.

Stefanutti Stocks continuously looks for projects where green initiatives and green engineering principles are applied. To date we have been involved in the following green projects – Sappi Mill, Eco Park, rehabilitation at Hillendale mine and the rehabilitation of an asbestos mine. The KPMG and Athol Towers projects are both green buildings and the EMP for both projects have been deemed compliant by the environmental consultants assigned to the project.


In order to keep abreast of environmental system requirements and obtain the benefits of corrective action, Stefanutti Stocks Roads, Pipelines and Mining Services has started the process of ISO 14001 implementation. Pre-gap analysis audits were conducted on three projects (Eikenhof, William Nicol and Kusile) which showed a few shortfalls.

Emphasis is placed on environmental induction and introduction. Due to a skills shortage, environmental representatives will be trained to monitor environmental aspects on sites.

Environmental rehabilitation was completed at East Driefontein, where soil pollution occurred due to emulsion when a driver tried to mend a blocked tap of an emulsion tanker. As a result, 20 000 litres of emulsion was spilled. A successful clean up was conducted immediately and the area will be continuously monitored to ensure total rehabilitation.

Zoil Zip, a bio enhancer-fungal and bacterial remediation agent, was used to break down the components of the emulsion.

Our approach and policyQuality management is implemented at business unit level within the group. Each business unit obtains its own ISO accreditation.

Our processRPM has established a quality management system (QMS) which has been documented and implemented and continues to be maintained to ensure continuous improvement in accordance with the ISO 9001:2008 Standard.

Internal audits of the system will be performed in accordance with the audit schedule to comply with ISO 9001:2008. Communication of information necessary to support the operation and the monitoring of the identified processes has been implemented. Internal surveillance and process reviews with divisions and shared services will be undertaken.

Customer satisfaction surveys were implemented to identify potential areas for improvement. Clients are requested to rate Stefanutti Stocks in accordance with the following criteria:

Clients rate the level of service of the Stefanutti Stocks contract teams in the areas of:

› Responsibility

› Professionalism

› Understanding client needs

Contract teams

› Are well trained, knowledgeable and correctly skilled

› Are well supervised

› Adhere to professional standards and act in the client’s best interests

The contract manager

› Has a good relationship with the client and its team

› Makes a positive contribution to the client’s business

› Responds to client inquiries in a timely manner

Quality on this contract

› Ensures all client requirements are complied with and to its satisfaction

› Is entrenched and effective

› Is driven by all contract team leaders

Safety on this contract

› Is entrenched and effective

› Is driven by all contract team leaders

› Ensures preventive controls address hazards effectively

Environmental Case Study Quality management



Our challenges and progressThe QMS and process for the Structures business unit was reviewed, and the business unit obtained recertification during the August 2012 audit conducted by Detche Quality Systems.

In the RPM business unit, quality management integration has started. In September 2012 the RPM QMS was finalised and during November 2012 the Non-conformance Record Database was established on the group intranet. The effective implementation of continuous improvement and assigning responsibilities throughout all levels of processes remains challenging. Housekeeping and waste management were identified as an existing challenge that could have a high impact on profitability.

Transformation and Corporate Social Investment

Our approach and policyStefanutti Stocks remains dedicated to the principles of transformation. The group drives its strategy through the B-BBEE Forum, which has been incorporated into the Social and Ethics Committee. This strategy is aimed at a more representative profile, promoting group-wide activities, strengthening processes and improving on business practices that positively impact on the broader society.

The B-BBEE Forum has set targets for each business unit, which are aimed at improving scorecard ratings in line with the Construction Charter codes with forward looking preparation on how to ensure continuous advancement. The B-BBEE Forum has further been tasked to build awareness of the importance and implications of broad-based black economic empowerment (B-BBEE) principles across the group.

The group has implemented a number of initiatives relating to employment equity, skills development, preferential procurement, enterprise development and corporate social investment. Group efforts delivered pleasing results during the period under review with an improvement on contributor status moving from a Level 3 to a Level 2 in terms of the Construction Charter B-BBEE rating system with effect from May 2012.

The strategy involves significantly increasing a meaningful number of top black managers/leaders throughout the group, and a workforce that reflects the diversity of the South African demographic profile. The group aims to increase its procurement spend among qualifying small enterprises, exempt micro enterprises and black woman-owned enterprises.

Due to the group’s diversity, individual business units are encouraged to tailor their B-BBEE strategies to their specific needs and the group monitors their performance. Key areas for improvement are management control and employment equity. B-BBEE remains a priority for the group with great efforts being made to ensure the group meets its targets.

Our achievementsSecuring its Level 2 B-BBEE certification for the first time in May 2012, has placed the group in a good position to participate in large contracts for major parastatals and state-owned entities. This progress is a direct result of the internal and supply chain transformation that has been achieved.

OwnershipIn February 2012, the group implemented the Stefanutti Stocks Employee Participation Plan (SSEPP). In terms of the SSEPP, an Employee Trust was established whereby the Trust owns 10% of Stefanutti Stocks (Pty) Ltd by means of a special purpose vehicle.

The SSEPP was implemented to enhance the ability of Stefanutti Stocks to attract, retain and reward employees, allowing them to participate in the economic benefits generated by the scheme. This provides employees with an incentive to promote and align the economic interest of Stefanutti Stocks with their own. No dividends were declared during the financial year. Compliance with this element of the code has a rating of 31% (64% uncapped) (2012: 71% uncapped).

The diagram below illustrates the current shareholding composition of Stefanutti Stocks (Pty) Ltd using the flow-through principles of the “B-BBEE Act” of the company.

STEFANUTTI STOCKS (PTY) LTD31,2% (63,7% UNCAPPED) BLACK OWNERSHIP4,5% BLACK WOMEN OWNERSHIP

STEFANUTTI STOCKS HOLDINGS LIMITED

22,2% BLACK OWNERSHIP

90%

STEFANUTTI STOCKS EMPLOYEE PARTICIPATIONTRUST

10%


Management controlThe intent is not only to ensure that the group complies with the spirit of South Africa’s B-BBEE legislation, but also to create truly empowered black individuals who are economically active in the sector in which the group operates.

Stefanutti Stocks’ compliance rating is 61% (2012: 51%) an improvement year-on-year against this element of the scorecard. During the year under review, the Stefanutti Stocks board comprised five independent non-executive directors, two non-executive directors and three executive directors and was chaired by a non-executive chairman. Four of the five independent non-executive directors are black of which two are women.

The Remuneration and Nominations Committee continuously assesses the composition of the board and should it identify any shortfall in this regard, it will make recommendations to the board on how to address them.

Employment equityStefanutti Stocks believes in equal opportunity for all and focuses on the upliftment and recruitment of HDIs. Although the rating decreased to 39% (2012: 42%) with regard to this element of the code, various human resources interventions have been implemented to rigorously address this.

Recruitment agencies, specialising in placing black disabled individuals, were sourced. The group has employed six disabled black staff members during the year. One employee has enrolled in an administration learnership programme and the remaining five staff members will be registered for programmes in general administration and human resources.

Stefanutti Stocks’ approach in dealing with transformation this year was focused on creating a culture of transformation with much more time and effort spent on building awareness and facilitating training.

One of the main challenges was to gather information from employees to gain an insight of their knowledge and understanding of employment equity (EE) and diversity and establishing goals for the next five years based on such information. These information-gathering sessions were held at a divisional level.

Employment Equity Committees were re-established and all committee members were formally appointed and received National Qualifications Framework (NQF) based training. These committees are representative of the demographic distribution and represent all staff, reporting back to the business units. A three-month culture climate survey was conducted in August 2012 of which the results have been communicated to the business units to action. Trainers were identified and trained in terms of assisting in educating the workforce on employment equity and diversity. Roll-out of this education programme will commence in 2013. The Employment Equity Committees are in the process of formulating the new EE plans, which was completed in June 2013.

The group needs to ensure that the momentum already gained regarding the EE training is maintained and kept up to date. The group is committed to implementing the EE policy and plan, with the participation of all employees at a divisional level.

Due to historical factors, there are demographic categories that still experience inequality and disadvantage due to gender, disability and other forms of diversity. Furthermore, the impact of increased transformation pressure has created challenges regarding the retention of experienced black executives, engineers and other building environment professionals.

83,9

86,1

70,4

86,3

71,7

87,5

Total

Female

Male

2013 2012

Employment equity (%)

9 224

8 068

317

169

1 610

277

152

1 438

African

Coloured

Indian

White

2013 2012

Headcount by ethnic group



Top management2013 2012

0011223

8305

African femaleColoured female

Indian femaleWhite femaleAfrican male

Coloured maleIndian maleWhite male

Foreign femaleForeign male

00132118300

Senior management2013 2012

012

13841

15506





0121082113400

Middle management2013 2012

311

34603532

3090

23





2143351282830907

Junior management2013 2012

39111593

1 0848654

3934

31





33129811 0389152351111

Stefanutti Stock’s employment equity profile as at end February 2012 and 2013 is indicated in the pie charts below:


Semi-skilled2013 2012

55172476

1 216121823

219





641524761 11415143513

Unskilled2013 2012

36100

51160103





3610055680100

Permanent employees2013 2012

1333143

2172 881

145108964

687





13530402032 76914596913221

Temporary employees2013 2012

479281

745 628

11314

2873

78





447161594 6948613228037



Transformation initiatives are focused on developing and growing talent internally to fill more senior positions to better reflect the demographics of the regions in which the group operates.

The salary scale ratios, per employee level, for men to women within Stefanutti Stocks are:

Occupational levelRatio2013

Ratio2012

Senior Management 1:0,79 1:0,58

Middle Management 1:0,75 1:0,80

Junior Management 1:0,84 1:0,89

Semi-skilled 1:1,22 1:0,94

Unskilled 1:0,61 1:0,70

Skills developmentFor this element of the scorecard, a rating of 80% was maintained. A monthly analysis of all skills development expenses is performed for each business unit, showing targets set and actuals achieved. New bursaries have been issued to targeted B-BBEE students. Bursaries have mainly been awarded to engineers and quantity surveyors. Specific information on skills development is provided in the “Our employees” section commencing on page 57 of this review.

Preferential procurementGreat emphasis was placed on procuring from B-BBEE-accredited suppliers, with ratings in regard to this element showing positive results of 100% (2012: 95%). For the period under review, 80% of all group vendors provided accredited B-BBEE certificates. Vendors were sourced through a centralised database that was assembled during 2011, and which is updated annually. Preference was given to black female-owned suppliers, which comprised 6% of the group’s procurement expenditure, meeting its target for the year. In line with the new B-BBEE Framework, all business units have implemented processes to ensure vendor certificates are updated. Procurement from black female-owned suppliers remains a challenge.

Enterprise developmentStefanutti Stocks believes growing a vibrant black entrepreneurship base is critical to the transformation of the South African economy. The group understands that in order to redistribute wealth, it needs to continue to develop innovative and sustainable black businesses, which in turn employs skills from the expanding unemployed labour pool.

The group manages a robust enterprise development (ED) programme. Benefits accrue to both parties in the form of:

› strengthened relationships;

› more competitive pricing; and

› commitment to the success of growing both businesses.

Group ED programmes focus on the development and growth of small enterprises, specifically businesses that are black owned or black female owned.

By effectively managing and mentoring small business owners, the group is endeavouring to create a pool of skilled sub-contractors that subscribe to similar values and the same standards as Stefanutti Stocks. These developing businesses understand the need for safety, quality and performance, and are well suited to working on large projects with stringent requirements.

Stefanutti Stocks is committed to creating opportunities for those partners who demonstrate a commitment towards sustainable growth and developing their own organisations while adhering to the core values and standards of Stefanutti Stocks. The group’s participation in these programmes over the period under review has maintained it ratings of 100%.

Support in the sum of R5,1 million for 2013 (2012: R8,2 million) is itemised in the table below:

Enterprise supported Rand value

ABC Supplies 23 958

Small Word Contractors 16 035

Sakhekhaya Contracting 350 782

Simunye Developers 350 782

Aburec Fencing cc 974 020

Bakgothu Plumbing 45 800

Mohlaleng Construction 1 011 300

Tswelopelo Civil Lab 21 438

Lusweti Civils 14 000

Bama Civils 2 475

Bella M Ready Mix Concrete cc 1 014 000

Khulani's Trading Enterprises cc 750

M&R Structural Steen 556 845

Procurehub 5 900

Ikhaya Reinforcing 5 900

Eric & Mary 5 900

Pipeline Erectors KZN 5 400

Molokothwa Construction 123 000

Kaghiso Transport 20 000

La Mosito Transport 307 178

SM Mahlangu 200 000

Simon Munyai 66 529

Ditada – Training 28 750

Total 5 150 742


Bella M Ready Mix Concrete ccBella M Ready Mix Concrete is a division of Bella M, started by Michelle Williams in 2007 and is a 100% black women-owned enterprise. Bella M Ready Mix Concrete was established to address the growing demand for bulk transportation services in general and the ready-mix concrete market in particular.

Bella M currently supplies plant to Stefanutti Stocks on various projects such as Medupi Power Station, Kusile Power Station and Grootegeluk Coal Mine.

Stefanutti Stocks is committed to supporting Bella M and it has been part of the ED programme since 2009.

Over the years Bella M has received mentorship and assistance with VAT registration with SARS, financial aid through a loan, mentoring on plant hire rates and escalation calculations. It has participated in the Site Leadership Development Programme and completed modules in Human Resources and Introduction to Tendering.

Bella M has had tremendous success over the years with the aid of the Stefanutti Stocks ED programme and has established itself as being able to provide any type of plant hire from spinner trucks for ready mix concrete, tipper trucks for aggregate and sand products, Tadano or Kolbeco mobile cranes, 25t and 30t tower cranes to 12kva – 500kva generators, buses and various 1t, 4t, 7t and 8t trucks.

Socio-economic developmentAs a responsible corporate citizen, Stefanutti Stocks recognises its obligation to support underprivileged communities and worthwhile initiatives and projects. The group sees such support as more than a responsible business practice – it is seen as an investment in the future of South Africa. The group aims to make a difference in the lives of the communities in which it operates.

Targets are aligned with the requirements of the Construction Sector Charter. The annual contribution to entries should be equal to 1% of net profit after tax, as a minimum. Each business unit was required to contribute to these targets.

In 2013, over R2,3 million (2012: R1,7 million) was donated to the projects listed in the table below:

InstitutionRand value

2013Rand value

2012

Tuks Jool – 20 000

Field Band Foundation 250 000 250 000

Fun-D-Mental Finance – 28 500

Mamelodi School – 115 000

Kohin 120 000 130 000

JS Mpanza School – 90 200

Phegelo High School – 55 000

Addington School – 163 000

Koringfontein Middelburg – 50 000

Trac South Africa 282 500 –

Kalksteenfontein School 258 152 –

Lehlabile HBC Ophans 82 270 –

Worcester School 130 000 –

Sethabelo Aids Orphanage 36 000 –

Viva Youth College 50 000 –

Makhushane Primary School 75 000 –

Akani Diepsloot Foundation 43 860 –

Education 1 327 782 901 700

Family Life Centre – 100 000

King George Hospital – 583 418

Health – 683 418

Sinky Sport Marketing 127 000 134 847

Ruiterwacht – 22 085

Boorhanol – 500

Bushbuck Ridge House 44 832 –

Gauteng Lifesaving Academy 4 149 –

Jan Louw Kinderhuis 4 320 –

Phola Police Station 851 630 –

Other 1 031 931 157 432

Total 2 359 713 1 742 550

Enterprise Development Case Study



Field Band FoundationThe Field Band Foundation concept is built on the global youth activity known as show bands. This specific discipline was chosen as there has been a long history of brass music in South African communities and the activity allows for large group participation. All 17 projects of the Foundation have a minimum of 125 youths actively involved.

The programme currently has 250 children participating therein of which Stefanutti Stocks Building has donated R1 000 per child per annum. These donations allow the recipients to benefit from all the social and educational activities provided by the Foundation, thus contributing towards social change and upliftment of the community.

Some of the programmes and activities offered are HIV/Aids life skills; children in distress; National Brass Bass Event; bursary opportunities and The Field Band Foundation Academy. Stefanutti Stocks believes that the Foundation is highly beneficial to the children under their care and the community at large.

Lap desksStefanutti Stocks is continuously looking for ways to give back to the local communities in which it operates.

Stefanutti Stocks has designed lap desks, which will be given to selected community schools who do not have proper facilities to provide comfortable learning conditions for their learners. Five hundred students will benefit from the lap desks and they can be used for primary school as well as high school learners. They may also be used as a learning tool, teaching students how to use the alphabet in sign language, learning shapes, basic multiplication, mathematics equations, the periodic table and much more.

TRACThe TRAC Programme was first introduced to South Africa in 1994 and its head office is based in the Department of Civil Engineering at the University of Stellenbosch. TRAC South Africa supports science and technology education in South Africa aimed at secondary schools.

This non-profit organisation seeks to enable and encourage learners to enter into the field of science, engineering and technology. In particular, the programmes focus on providing equipment, syllabus content, vocational guidance information and a variety of other material to developing communities where resources are limited.

This is achieved by offering teacher training programmes and classroom intervention in schools where the resources are limited or nonexistent. Most of TRAC’s target market in South Africa cannot afford the full cost of the services offered. To overcome this, TRAC South Africa relies on industry partnerships where commerce and industry provide funds, usually allocated to specific projects.

Stefanutti Stocks is sponsoring this initiative in the Eastern Cape in the community where the Cecilia Makiwane Hospital is being built. There has been a significant increase in the pass rate of mathematics and science of over 20% in the past three years.

Human rightsThe group endeavours to respect and uphold the human rights enshrined in the Human Rights Charter and contained in the Constitution of South Africa.

Discrimination, in any form, is unacceptable and is not tolerated within the group. Discrimination based on race, gender, religion or age is dealt with in terms of the group disciplinary procedures and codes of conduct.

During the reporting period, one incident of sexual harassment was reported. A senior staff member made unwelcome comments to a junior employee as well as making unwelcome sexual advances. A full investigation was conducted and disciplinary hearing was held whereafter the transgressor was dismissed.

Socio-economic Development Case Study


VALUE ADDED STATEMENT for the year ended 28 February 2013

2013%

2013R’000

2012%

2012R’000

CONTRACT REVENUE 9 329 660 7 990 718

Less: Costs of materials, services and sub-contractors (6 684 622) (5 432 319)

Value added by operations 98,5 2 645 038 98,3 2 558 399

Investment income 1,4 36 892 1,6 41 636

Share of profit from associate companies 0,1 2 797 0,1 1 768

Total value add 100 2 684 727 100 2 601 803

Distributed as follows:

CORPORATE SOCIAL INVESTMENT Donations and other community investments 0,1 2 360 0,1 1 743

EMPLOYEES Short-term and post-employment benefit costs 92,4 2 482 972 73,6 1 916 596

Share-based payment and forfeitable share plan costs 0,9 23 563 0,9 22 697

PROVIDERS OF EQUITY Dividend paid to shareholders 0,8 20 998 2,4 63 675

PROVIDERS OF FINANCE Interest and finance charges 2,3 60 728 1,5 37 919

Operating lease rentals 0,3 8 786 0,3 9 098

GOVERNMENT Taxation 1,9 51 584 3,9 100 257

TOTAL VALUE DISTRIBUTED 98,7 2 650 991 82,7 2 151 985

REINVESTED IN THE GROUP 1,3 33 736 17,3 449 818

Reserves available to ordinary shareholders (6,0) (162 061) 10,2 264 241

Depreciation 7,3 195 797 7,1 185 577

100 2 684 727 100 2 601 803

VALUE ADDED RATIOS Number of employees in South Africa 11 320 9 935

Contract revenue per employee (Rand) 824 804

Value created per employee (Rand) 237 262

The group did not receive any financial assistance from government during the year.

(Loss)/earnings retained as per the statement of changes in equity amounts to R172 million loss (2012: R213 million earnings).

84 Stefanutti Stocks Integrated Report 2013 | Value Added Statement

REMUNERATION REPORT

The Stefanutti Stocks board and its Remuneration and Nominations Committee (the committee) present herewith their remuneration report setting out information applicable to the company’s remuneration policy, executive remuneration – both guaranteed and variable – and directors’ fees. The board on the recommendation of the committee has approved the information provided in this report.

Stefanutti Stocks’ executive remuneration policy continues to be driven by performance and it rewards executives for value add that results in targeted growth and shareholder returns.

The group has taken a balanced approach with regard to remuneration ensuring that employees are incentivised to achieve both the short- and long-term strategic objectives of the Company.

In alignment with the remuneration guidelines of King III, and in compliance with the Companies Act, the key issues that are addressed in this Remuneration report are as follows:

› Remuneration and Nominations Committee.

› Remuneration philosophy and policy.

› Components of remuneration.

» Directors’ remuneration (including share incentive schemes, shareholding and other interests) for executive directors and non-executive directors.

› Prescribed officers’ remuneration.


The committee is responsible for the development and oversight of the group’s remuneration philosophy and policy. The composition, mandate, role and function of the committee are set out in written terms of reference, which have been approved by the board.

CompositionThe committee comprises Lead Independent Non-executive Director Mafika Mkwanazi and Independent Non-executive Directors, Kevin Eborall and Herman Mashaba. In addition, the Chairman, the Chief Executive Officer, Chief Financial Officer and the Human Resources Executive attend meetings by invitation.

The Chief Executive Officer, Chief Financial Officer and the Human Resources Executive are excluded from deliberations in respect of their own remuneration. The Company Secretary attends all meetings as the secretary of the committee.

The committee has access to independent advisors to ensure that it receives expert advice on remuneration, both in general and in industry-specific terms. The Chief Financial Officer and the Human Resources Executive also make recommendations to the committee.

MeetingsThe committee met four times during the year. Attendance at these meetings is shown in the table set out on page 52 of the Corporate Governance report.

Role and responsibilitiesThe written terms of reference are reviewed annually. During the year under review all remuneration polices were reviewed by the committee to ensure that the policies remained appropriate and aligned, as far as practically possible, with the principles of King III and the Companies Act.

The committee’s role and responsibilities with regard to board members include:

› assessing the composition of the board and any deficiencies in this regard;

› identifying and recommending nominees to the board (prior to a nomination, appropriate background checks are performed on a proposed new director);

› recommending to the board the annual total fixed package (TFP), annual bonuses, performance-based incentives, share-based incentives and other benefits paid to the executive directors;

› reviewing directors’ independence annually and those directors standing for re-election at the annual general meeting; and

› determining short- and long-term incentive pay structures for group executives.

Responsibility for senior management appointments and remuneration has been assigned to the Chief Executive Officer. The Chief Executive Officer provides feedback to the committee and the board in this regard.

Remuneration philosophy and policy

The company’s philosophy is to employ capable and competent individuals, who subscribe to the group’s culture, values and philosophy. Stefanutti Stocks strives to provide a working environment that makes it an employer of choice. The group rewards executive management and employees for their contributions by:

› paying market competitive annual packages (base salary and benefits);

› paying variable annual performance rewards; and

› making awards to directors in terms of the Forfeitable Share Plan (FSP), which was approved at the annual general meeting in August 2009.

The committee considers the above within the overall remuneration, which is designed to attract, retain, incentivise and drive the behaviour of the group’s employees over the short, medium and long term.

Introduction

85Stefanutti Stocks Integrated Report 2013 | Remuneration Report

The Stefanutti Stocks Pension Fund includes life cover, spouse life cover, permanent health insurance (disability), dread disease cover for the member only, family protector (including funeral benefit), an education benefit and a health premium waiver if the employee is a member of Momentum Health Medical Aid.

It is also compulsory for all new salaried employees to join the group’s prescribed medical aid unless the employee can prove that he/she is a dependant on another medical aid.

Hourly-paid employees enjoy appropriate benefits in terms of industry and/or collective agreements. Membership of SAFRICAN is also compulsory for limited duration contract (LDC) employees.

The group does not have a defined benefit plan obligation.

Variable remuneration

Short-term incentives

The company implements appropriate incentive schemes applicable to respective categories of employees. These schemes enable employees to earn meaningful incentives for achieving predetermined goals.

The key principles are as follows:

› The schemes should induce behaviour that will achieve results that are congruent with the goals of the organisation, i.e. that will align employee behaviour with company and shareholder expectations.

› The schemes should serve to attract and retain participants.

› The schemes should serve to motivate participants.

› The schemes should reward participants for achieving or improving on pre-established performance criteria.

› The schemes should be fair and equitable, transparent and defensible.

The schemes have elements of group, business unit, division and individual measures, depending on what is deemed appropriate under the circumstances.

Long-term incentives

Long-term incentives are applicable to directors who meet company and shareholder long-term objectives, and should be retained. These schemes are also used to attract competent high-performing individuals allowing meaningful incentivisation to be earned.

Group talent is drawn from the market and retained by payment of competitive remuneration. External advisors are utilised to assist in the benchmarking processes.

The key principles of the remuneration policy are as follows:

› Total rewards comprise a guaranteed and variable component.

› The guaranteed component includes a base salary, retirement fund contributions and other benefits.

› The variable component is designed to achieve group objectives in the short, medium and long term.

› Long-term share incentive participation aligns director performance with shareholder expectations.

› Total compensation is targeted to be within the upper quartile of the relevant benchmarks.

› The committee ensures that appropriate benchmarking is undertaken.

Components of remuneration

Guaranteed remunerationWhen structuring guaranteed packages, the group applies a TFP method. The overall strategy is that it will strive to pay, on average, within the 75th percentile for all positions. However, not all employees will be paid as per the guideline in this manner however, as other factors, such as individual performance and supply and demand, are also taken into account.

The benchmark information used in project or operational appointments comes from the industry in which the company operates, and also the general South African market for service positions.

Benefits such as pension, medical aid and car allowance are included in the TFP method of structuring guaranteed packages. It is obligatory that all permanent salaried employees of Stefanutti Stocks belong to the Stefanutti Stocks Pension Fund. Membership of SAFRICAN (a funeral policy which is not part of the pension scheme) is also mandatory for all South African employees.

REMUNERATION REPORT continued

86 Stefanutti Stocks Integrated Report 2013 | Remuneration Report

Non-executive directors do not have service contracts. Instead, letters of appointment serve to confirm their terms of engagement, and include matters such as fees, term of office, expected time commitment, share dealing and board performance assessment. The Chairman and Lead Independent Director have letters of appointment, which are specific to their roles and functions.

All non-executive directors are appointed for a term of three years and are obliged to retire at the end of that period, but may offer themselves for re-election at the annual general meeting.

The fees paid to non-executive directors, as well as the proposed fees for the next financial year, were approved by the committee, the board of directors and shareholders at the last annual general meeting and are set out in note 28 to the annual financial statements, which is included on the inserted CD.

Non-executive directors are not required to be shareholders and they do not qualify to participate in any incentive scheme that is operated by the group.

At the annual general meeting of shareholders scheduled for 6 September 2013, shareholders will be asked to pass a special resolution to take effect from 6 September 2013 until the next Annual General Meeting, approving the proposed changes in non-executive directors’ fees. Details of these fees are set out in the Notice of Annual General Meeting commencing on page 109.

Directors’ service contractsExecutive directors are employed on permanent contracts of employment within the group. The contracts of executive directors or senior executives do not preclude the company from exercising its normal rights to terminate the contract in the event of misconduct or poor performance. Executive directors retire from their positions within the company as well as from the board at their normal retirement date.

The details of the contracts of employment of the executive directors and the three prescribed officers are not disclosed in this integrated report as the group is of the opinion that due to the sensitive and highly competitive nature of the construction industry, such information would place the group at a disadvantage.

Directors’ shareholdingThe aggregate beneficial holdings at 28 February 2013 and 29 February 2012, held by the directors of the company, in the issued shares of the company are detailed over the page:

The committee approved the implementation of a Key Man Attraction and Retention Scheme in 2012. The primary purpose of this scheme is to enable the company to compete for and retain existing talent on an equal footing with its competitors. This remuneration is outside of the standard TFP, annual bonus and long-term incentives.

This scheme recognises that there are occasions when additional monies may need to be paid, such as:

› in making an employment offer to a third party when he/she will be relinquishing a long-term incentive by joining the company and the company may want to compensate the new employee for such forfeiture; or

› A third party is targeting a current employee, and Stefanutti Stocks wishes to retain the individual within the group. The potential recruitment cost for replacing such individual is considered when calculating part of the retention monies.

Directors

Executive directors’ remunerationThe tables showing the breakdown of the annual remuneration (excluding equity awards) of directors for the years ended 28 February 2013 and 29 February 2012 are set out in note 28 to the annual financial statements, which is included on the inserted CD.

Non-executive directors feesNon-executive director remuneration is compared to the company’s peer group. Recommendations are made by the Chief Financial Officer and Human Resources Executive, to the committee, for onward review by the board and submission to shareholders.

Non-executive directors are compensated based on attendance fees. The fees are based on the size and complexity of the group and also take into account market practices and fee surveys provided to the committee.

No distinction is made between fees payable to independent non-executive directors and other non-executive directors, although the fees of the Chairman and Lead Independent Director take their expanded roles into account.

The total fees paid to non-executive directors are not limited to a maximum annual amount, regardless of the number of meetings attended. Directors qualify for reimbursement of expenses incurred in performing their duties for and on behalf of the company.

The Key Man Attraction and Retention Scheme


Directors’ shareholding

28 FEBRUARY 2013 29 FEBRUARY 2012

Number of fully paid shares held

Directbeneficial

%

Indirectbeneficial

%Total

%

Directbeneficial

%

Indirectbeneficial

%Total

%

B Stefanutti (Chairman) 9,31 – 9,31 9,31 – 9,31

ME Mkwanazi (Lead Independent Director) – 0,02 0,02 – 0,02 0,02

NJM Canca – – – – – –

KR Eborall 0,04 – 0,04 0,04 – 0,04

HSP Mashaba – – – – – –

ZJ Matlala – – – – – –

LB Sithole – 1,16 1,16 – 2,40 2,40

JWLM Fizelle (Alternate) 0,02 0,41 0,43 0,02 0,86 0,88

W Meyburgh (Chief Executive Officer) 0,47 4,40 4,87 0,46 4,40 4,86

DG Quinn (Chief Financial Officer) 0,30 0,08 0,38 0,30 0,08 0,38

SJ Ackerman 0,26 0,19 0,45 0,28 0,40 0,68

SD Pell* (Chief Operating Officer) – – – 0,70 – 0,70

* SD Pell resigned 31 March 2012.

Share optionsThe details of the directors’ share options are set out in note 28 to the annual financial statements, which is included on the inserted CD.

Interest of directors in contractsDirectors are required to notify the company of their interests in contracts and this is a standard agenda item at each board meeting. There have been no material changes post 28 February 2013 to date.

Information regarding related-party transactions is set out in note 28 to the annual financial statements, which is included on the inserted CD.

Directors trading in company securitiesAs standard group policy, directors are required to obtain clearance prior to trading in the company’s securities. Such clearance must be obtained from the Chairman or, in his absence, from a designated director. The Chairman consults the Chief Executive Officer or the designated director prior to his trading in the company’s securities. Directors are required to inform their portfolio/investment managers not to trade in the securities of the company unless they have specific written instructions from that director to do so. Directors may not trade in their shares during closed periods.

Directors are further prohibited from dealing in the company’s shares at any time when they are in possession of unpublished price-sensitive information in relation to those securities, or where clearance to deal is not given.

Post year-end share transactionsThe following transactions took place post year-end:

Nature oftransaction

Numberof shares

Putstrike price

Callstrike price

Firsttranche

Lasttranche

LB Sithole Zero Cost Collar 1 712 200 R9,33 R11,07 30 June 2015 22 March 2016

JWLM Fizelle Zero Cost Collar 614 640 R9,33 R11,07 30 June 2015 22 March 2016

REMUNERATION REPORT continued

88 Stefanutti Stocks Integrated Report 2013 | Remuneration Report

Post year-end share transactionsNo transactions took place post year-end.

Share optionsThe details of the prescribed officers’ share options are set out in note 28 to the annual financial statements, which is included on the inserted CD.

Prescribed officers’ share awards in terms of the FSPPrescribed officers’ participation in the group’s FSP is in terms of the conditions as set out in note 16 to the annual financial statements which is included on the inserted CD and is currently included in the total remuneration for these prescribed officers.

The details of the prescribed officers’ share awards in terms of the FSP are set out in note 28 to the annual financial statements, which is included on the inserted CD.

Interest of prescribed officers in contractsThe prescribed officers have certified that they do not have any material interests in any transaction of material significance and which significantly affected the business of the group, the company or any of its subsidiaries. Accordingly, no conflict of interest with regard to prescribed officers’ interests in contracts exists. There has been no material change in this regard post 28 February 2013 to date.

On behalf of the Remuneration and Nominations Committee

Mafika Mkwanazi Chairman

16 July 2013

Prescribed Officers

Prescribed officers’ remunerationThe prescribed officers within the group consist of operational directors and senior managers who are not executive directors of the group per se. Personal details of the individuals are not disclosed herein as the group has confidentiality agreements with the relevant prescribed officers and it is of the opinion that due to the sensitive and highly competitive nature of the construction industry, such information would place the group at a disadvantage.

The prescribed officers’ remuneration is determined in terms of the remuneration policy, as set out on pages 85 and 86 of this report. Information of the prescribed officers’ remuneration is set out in note 28 to the annual financial statements, which is included on the inserted CD.

Prescribed officers’ shareholdingThe aggregate beneficial holdings at 28 February 2013, held by the prescribed officers of the company, in the issued shares of the company and details of future entitlements under the share option schemes and share incentive arrangements are detailed above.

Prescribed officers trading in company securitiesPrescribed officers are required to obtain clearance prior to trading in the company’s securities. Such clearance must be obtained from the Chief Executive Officer. Prescribed officers must inform their portfolio/investment managers not to trade in the securities of the company unless they have specific written instructions from that prescribed officer to do so.

Prescribed officers may not trade in their shares during closed periods. They are further prohibited from dealing in the company’s shares at any time when they are in possession of unpublished price-sensitive information in relation to those securities, or otherwise where clearance to deal is not given.

Prescribed officers’ shareholding

28 FEBRUARY 2013 29 FEBRUARY 2012

Number of fully paid shares held

Directbeneficial

%

Indirectbeneficial

%Total

%

Directbeneficial

%

Indirectbeneficial

%Total

%

Prescribed officer 1 0,26 – 0,26 0,56 0,99 1,55

Prescribed officer 2 0,04 – 0,04 0,03 – 0,03

Prescribed officer 3 0,70 – 0,70 0,11 – 0,11


SUMMARY OF FINANCIAL STATEMENTS

CHIEF FINANCIAL OFFICER’S REPORT

Although focus on working capital management and cash protection has substantially improved (R311,4 million cash generated from operations), loss-making contracts in certain divisions have had a significant impact on the overall financial results of the group.

Competition Commission

The investigation by the Competition Commission into anti-competitive behaviour by companies within the construction industry is being finalised. On 24 June 2013, the company advised shareholders that it had reached a final settlement for all contracts included in the Fast Track Settlement Process. In addition to this, the company has now also finalised penalties with respect to known contracts falling outside the Fast Track Settlement Process. A penalty of R323 million has been provided for in these financial statements, payable over a period of three years. These penalties are subject to confirmation by the Competition Tribunal. The group has sufficient facilities to fund the payments of the penalties.

Financial performance

Revenue for the year increased by 16,6% to R9,4 billion, with improved contributions from the RPM and Structures business units, however as a result of increased competition and certain loss-making contracts, EBITDA dropped to R439,6 million (2012: R554,8 million) and year-on-year operating margin reduced to 2,5% from 4,5%.

Borrowings increased during the year, largely as a result of the Cycad Pipelines acquisition. Accordingly, net investment income of R3,7 million in the previous financial year converted into net finance costs of R23,8 million for the current year.

As testament to the extremely difficult trading conditions, the group’s normalised headline earnings per share decreased 40,2% to 93,5 cents (2012: 156,5 cents). However, after making provision for the Competition Commission penalty, headline earnings per share contracted to a headline loss per share of 96,4 cents (2012: headline earnings 153,3 cents).

Financial highlightsR9,4 billion Revenue

R10,0 billion Order book

R311,4 million Cash from operations

Overview

92 Stefanutti Stocks Integrated Report 2013 | Chief Financial Officer’s Report

The RPM business unit has become the main business driver of the group, with significant growth in both contract revenue of R2,3 billion (2012 : R1,4 billion) and operating profit of R176,7 million (2012 : R106,7 million).

Despite the Structures business unit seeing an increase in contract revenue to R2,7 billion (2012: R2,5 billion), continued fierce competition in this sector saw a reduction in its operating margin to 5,2% (2012: 7,1%).

A number of contract losses in the Building business unit transformed a R121,0 million operating profit in the previous financial year to a disappointing operating loss of R40,4 million in the current year.

MEP was severely impacted by holding costs as a result of anticipated deal flow in the power and electrical market not materialising, together with some loss-making contracts. As a consequence, MEP suffered an inauspicious operating loss of R51,1 million (2012: R37,5 million).

Despite the difficult trading conditions, the group experienced an improved second half in the above trading results, and maintained a stable order book of R10,0 billion at the end of April 2013, providing an early indication of a better outlook for the start of the new financial year.

Financial position

With effect from 1 March 2012, the group acquired 100% of Cycad Pipelines, using mainly debt funding. This, combined with expenditure on property, plant, equipment and the Competition Commission penalty resulted in interest-bearing borrowings increasing by R549,4 million to R941,7 million at the end of the period. The group’s interest bearing debt to equity ratio has increased to 47% (2012: 19%) after taking the above items into account.

Goodwill arising from the acquisition amounted to R152,4 million while non-current assets acquired, amounting to R86,1 million, was included in the acquisition. After taking cash of R935,5 million into account the net gearing position at year end is R6,2 million inclusive of the Competition Commission penalty.

The group generated cash from operations of R311,4 million (2012: R96,1 million) after R76,0 million (2012: R803,8 million) was consumed by changes in working capital. Net cash for the year increased by R38,3 million to R929,1 million as at 28 February 2013.

Dividend

As a result of the receipt of the penalties from the Competition Commission, together with the constraints on working capital, the board has decided not to declare a dividend for the year.

Memorandum of Incorporation

In terms of the Companies Act and JSE Listings Requirements, the company’s new Memorandum of Incorporation was adopted by shareholders, at the Annual General Meeting held on 7 September 2012.

Appreciation

After another difficult year, I would once again like to express my appreciation to the finance and administrative teams for their continued dedication and hard work under demanding conditions.

Dermot Quinn Chief Financial Officer

16 July 2013

Operational review Cash

93Stefanutti Stocks Integrated Report 2013 | Chief Financial Officer’s Report

PREPARATION OF ANNUAL FINANCIAL STATEMENTS

The annual financial statements, available on the group’s website www.stefanuttistocks.com and the inserted CD, as well as the summary of financial statements contained in this integrated report, have been prepared under the supervision of the Chief Financial Officer, DG Quinn, BScEcon, CA(SA). The summary of financial statements has been audited in compliance with the applicable requirements of the Companies Act.

Dermot Quinn Chief Financial Officer

16 July 2013

CERTIFICATE BY THE COMPANY SECRETARY

In terms of section 88(2)(e) of the Companies Act, I certify that, to the best of my knowledge and belief, Stefanutti Stocks Holdings Limited has, in respect of the financial year ended 28 February 2013, lodged with the Companies and Intellectual Property Commission all returns and notices required of a public company in terms of the Companies Act and that all such returns and notices are true, correct and up to date.

William Somerville Company Secretary

16 July 2013

INDEPENDENT AUDITORS’ REPORT

The independent auditors’ report can be found on page 3 of the annual financial statements on the inserted CD as well as on Stefanutti Stocks’ website www.stefanuttistocks.com.

94 Stefanutti Stocks Integrated Report 2013 | Preparation of Annual Financial Statements; Certificate by the Company Secretary; Independent Auditors’ Report

DIRECTORS’ RESPONSIBILITIES AND APPROVAL

The directors are required by the Companies Act to maintain adequate accounting records and are responsible for the content and integrity of the summaries of company and group financial statements and related information included in this report. It is their responsibility to ensure that the summary of financial statements fairly present the state of affairs of the company and the group as at the end of the financial year and the results of their operations and cash flows for the year then ended, in conformity with International Financial Reporting Standards (IFRS). The annual financial statements have been audited by the independent auditors, Mazars, who were given unrestricted access to all financial records and the related data.

The summaries of company and group financial statements are prepared in accordance with IFRS, and are based on appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates, as well as the Companies Act No 71 of 2008, as amended, the JSE Listings Requirements and the AC 500 accounting standards as issued by the Accounting Practices Board.

The directors acknowledge that they are ultimately responsible for the system of internal financial controls established for the company and the group, and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or loss in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and the group.

The focus of risk management in the company and the group is on identifying, assessing, managing and monitoring all known forms of risk across the company and the group. While operating risk cannot be fully eliminated, the company and the group endeavour to minimise risk by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied upon for the preparation of the summaries of company and group financial statements. However, any system of internal control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the company’s and the subsidiaries’ cash flow forecasts for the year ending 28 February 2014 and, in light of this review and current financial position, are satisfied that the company and group have access to adequate resources to continue in operational existence for the foreseeable future. Therefore, the summaries of company and group financial statements have been prepared on the going-concern basis.

Approval

The summaries of company and group financial statements, which appear on pages 99 to 106, were approved by the board of directors on 16 July 2013 and are signed on their behalf:

Willie Meyburgh Dermot Quinn Chief Executive Officer Chief Financial Officer

16 July 2013 Johannesburg

Statement of responsibility

95Stefanutti Stocks Integrated Report 2013 | Directors’ Responsibilities and Approval

This report is provided by the Audit, Governance and Risk Committee (the committee) appointed in respect of the 2013 financial year of Stefanutti Stocks Holdings Limited. This report incorporates the requirements of section 94(7)f of the Companies Act, the King III principles and other regulatory requirements. The committee’s operation is guided by detailed terms of reference that are informed by the Companies Act and King III and was approved by the board.

The Audit, Governance and Risk Committee

In addition to having specific statutory responsibilities to the shareholders in terms of the Companies Act, the committee assists the board by advising and making submissions on financial reporting, and internal financial controls, external and internal audit functions and statutory and regulatory compliance of the group.

Terms of referenceThe committee’s formal terms of reference are regularly reviewed and updated where necessary. The committee has executed its duties during the past financial year in accordance with these terms of reference.

CompositionThe board in respect of the 2013 financial year nominated the committee and shareholders appointed its members at the annual general meeting held on 7 September 2012. Shareholders will be requested to confirm the appointment of the members of the committee for the 2014 financial year at the annual general meeting scheduled for 6 September 2013.

Independent Non-executive Director, Zanele Matlala, chairs the committee and it further comprises two independent non-executive directors, namely Kevin Eborall and Nomhle Canca. Joseph Fizelle, alternate to Non-executive Director Bridgman Sithole, also serves on the committee. The board has satisfied itself, that the members are suitably skilled, independent and qualified to fulfil their duties.

See Board of Directors page 18

The Chief Executive Officer, Chief Financial Officer, external and internal auditors are invited to all committee meetings.

MeetingsThe committee met four times during the year. Attendance at these meetings is shown in the table set out on page 52 of the Corporate Governance report.

Statutory dutiesIn the execution of its statutory duties, the committee:

› monitors compliance with the code of conduct and the ethical conduct of the company;

› evaluates the independence and effectiveness of the external auditors as well as their performance and recommends their appointment;

› reviews the draft audited financial statements and integrated report, the preliminary announcement and interim statements;

› reviews, together with the external auditors, the conformity of the audited financial statements and related schedules with IFRS and the company’s accounting policies;

› reviews the external audit plan and fees payable to the external auditors;

› reviews the external audit findings and reports;

› approves any non-audit services performed by the external auditors and the policy in this regard;

› reviews internal audit policies, plans, reports and findings;

› monitors compliance with applicable laws and regulations;

› assesses key risk areas facing the group and recommends risk mitigation measures;

› advises and updates the board on issues ranging from accounting standards to published financial information; and

› evaluates the finance function and experience of the Chief Financial Officer

Oversight of risk management

The committee plays an integral role in the group’s risk management process. Both the Group Risk Officer and Internal Audit Manager report directly to the committee, and all risk identification, measurement and management is addressed through these channels. A risk management plan, risk register and risk policy were presented to and considered by the committee during the year.

The committee has satisfied itself that the following areas have been appropriately addressed:

› Financial reporting risks.

› Internal financial controls.

› Fraud risks.

› Information technology risks.

› Reviewed technology risks, in particular how they are managed.

See Risk management page 10

Internal financial controls

During the year under review, the committee:

› reviewed the effectiveness of the group’s system of internal financial controls including receiving assurance from management, internal audit and external audit;

› reviewed significant issues raised by the external auditors in their reports; and

› reviewed policies and procedures for preventing and detecting fraud.

Based on the processes and assurances obtained, the committee believes that the significant internal financial controls are effective.

AUDIT, GOVERNANCE AND RISK COMMITTEE REPORT

96 Stefanutti Stocks Integrated Report 2013 | Audit, Governance and Risk Committee Report

Compliance with laws and regulations is a standing agenda item of the committee.

External audit

The preparation of the annual financial statements is the responsibility of the directors, however, the external auditors are responsible for reporting on whether the annual financial statements are fairly presented in compliance with IFRS.

The committee evaluates the independence and effectiveness of the external auditors and considers whether any non-audit services rendered by such auditors substantively impair their independence. In this regard, a non-audit services policy is in place, which is reviewed annually by the committee. Based on processes followed and assurances received, the committee has no concerns regarding the external auditors’ independence. Based on the group’s satisfaction with the results of the activities outlined above, it has recommended to the board and to the shareholders, the reappointment of Mazars as the independent registered audit firm and Shaun Vorster as the individual registered auditor of the company, respectively.

The external auditors performed certain non-audit services during the year under review, however, their fees were immaterial.

Internal audit

The formal internal audit function, headed by the Internal Audit Manager, establishes appropriate policies and procedures to guide the internal audit and is tasked with evaluating the group’s exposure to risk while also evaluating the adequacy and effectiveness of controls and risk management processes. This is guided by an Internal Audit Charter, which sets out the function’s purpose, independence, ethics, duties, responsibilities and scope.

The Internal Audit Manager reports to the Group Risk Officer on an administrative basis and to the committee on a functional basis. The Internal Audit Manager has unhindered access to the Chief Executive Officer, Chairman of the Audit, Governance and Risk Committee, and the Chairman of the board.

Internal audit also assesses the group’s corporate governance with regard to the various delegation of authority frameworks implemented throughout the group. The various levels of management in the group are delegated the responsibility for the design, implementation and monitoring of the risk management plans and to ensure their sustainability in all areas of the business.

The internal audit plan is overseen by the committee and is based on the key risks identified by executive management.

During the 2012 financial year, comprehensive reviews continued, including feedback from management, external auditors and other stakeholders. Management adequately addressed exceptions that were noted. Where the explanation was deemed insufficient, the exceptions were further investigated and/or corrective action taken.

The committee is entitled to appoint an independent internal review at any time, the results of which are to be reported to the Chief Executive Officer and the committee chairman. In addition, the Institute of Internal Auditors or another suitably qualified independent party, conducts an external review of the internal audit function every four years.

Chief financial officer

The committee has performed its annual evaluation of the finance function and is satisfied that Dermot Quinn has the appropriate expertise and experience to meet the responsibilities of his appointed position as Chief Financial Officer as required in terms of the JSE Listings Requirements. It has further satisfied itself that the resources within the finance function are adequate to provide the necessary support to the Chief Financial Officer. In making these assessments, the committee has also obtained feedback from the external auditors.

Based on the processes and assurances obtained, the committee is satisfied and believes that the accounting practices are effective.

Integrated report

Following the review by the committee of the annual financial statements of Stefanutti Stocks Holdings Limited for the year ended 28 February 2013, the committee is of the view that in all material respects they comply with the relevant provisions of the Companies Act and IFRS and fairly present the consolidated and separate financial position at that date and the results of operations and cash flows for the year then ended.

The committee has also satisfied itself of the integrity of the remainder of the integrated report. Having achieved its objectives, the committee has recommended the integrated report for the year ended 28 February 2013 for approval to the Stefanutti Stocks board. The board has subsequently approved the report, which will be open for discussion at the forthcoming annual general meeting.

On behalf of the Audit, Governance and Risk Committee

Zanele Matlala Chairman

16 July 2013

Legal and regulatory compliance

97Stefanutti Stocks Integrated Report 2013 | Audit, Governance and Risk Committee Report

The directors have pleasure in presenting their report which forms part of the summary of financial statements of the company and of the group for the year ended 28 February 2013.

Nature of business

Stefanutti Stocks Holdings Limited (Registration No 1996/003767/06) is a holding company, and its multi-disciplinary subsidiaries are involved in concrete structures, mine rehabilitation and marine construction, piling and geotechnical services, roads and earthworks, mine residue disposal facilities (mainly tailings dams), open-pit contract mining, building works and mechanical, electrical and power line transmission and distribution construction. These operations are formally structured into the following business units: Structures, Building, Roads, Pipelines and Mining Services, Mechanical and Electrical and Power.

Financial results

The results for the year are set out in the summary of the annual financial statements presented on pages 99 to 106. The comprehensive annual financial statements can also be found on the group’s website www.stefanuttistocks.com.

Year under review

The year under review is comprehensively dealt with in the Chief Executive Officer’s report on pages 24 to 27 and the operational reviews of the business units commencing on page 29 of this integrated report.

Directors, prescribed officers and Company Secretary

The names of the directors who currently hold office are set out on page 18. The prescribed officers of the group are operational directors and senior managers who are not executive directors of the group.

Details of directors’ and prescribed officers’ remuneration, forfeitable share plan (FSP) and options are set out in note 28 to the annual financial statements.

Resolutions

At the 2012 annual general meeting, the shareholders of the company passed the following special resolutions:

› Approval of directors’ fees.

› Approval of financial assistance provided by the company to related or inter-related companies or other entities, including, inter alia, its subsidiaries, for any purpose, as well as present or future directors or prescribed officers of the company or of a related or inter-related company or entity,

and further enabling the directors of the company to pass similar special resolutions for certain of its subsidiaries.

› Adoption of new Memorandum of Incorporation.

Details of the principal subsidiary companies are set out in note 5 to the annual financial statements.

Share option schemes

Refer to note 16 for information relating to option schemes and share-based payments.

Non-adjusting events after reporting period

No material reportable events have occurred between the reporting date and the date of this integrated report.

Litigation statement

The investigation by the Competition Commission into anti-competitive behaviour by companies within the construction industry is being finalised. On 24 June 2013, the company advised shareholders that it had reached a final settlement for all contracts included in the Fast Track Settlement Process. In addition to this, the company has now also finalised penalties with respect to known contracts falling outside the Fast Track Settlement Process. These penalties are subject to confirmation by the Competition Tribunal.

Going concern

The directors consider that the group and company have adequate resources to continue operating for the foreseeable future and that it is therefore appropriate to adopt the going-concern basis in preparing the summary of financial statements of the company and of the group. The directors have satisfied themselves that the group and company are in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements.

DIRECTORS’ REPORT

Subsidiary companies

98 Stefanutti Stocks Integrated Report 2013 | Directors’ Report

GROUP COMPANY

Notes2013

R’0002012

R’0002013

R’0002012

R’000

ASSETSNON-CURRENT ASSETS 2 497 379 2 226 970 1 118 126 1 118 125

Property, plant and equipment 3 1 139 012 1 019 910 – –

Investment property 4 60 794 57 673 – –

Investment in subsidiaries 5 – – 1 116 702 1 116 702

Investment in associates 6 14 478 15 996 – –

Goodwill and intangible assets 8 1 273 718 1 124 455 – –

Deferred tax assets 9 9 377 8 936 1 424 1 423

CURRENT ASSETS 3 701 924 3 684 062 392 793 227 500

Intergroup loan accounts 10 – – 388 470 221 061

Inventories 11 80 282 94 036 – –

Contracts in progress 12 525 677 431 445 – –

Trade and other receivables 13 2 148 699 2 229 658 2 030 3 972

Taxation 11 810 5 579 – –

Cash and cash equivalents 14 935 456 923 344 2 293 2 467

TOTAL ASSETS 6 199 303 5 911 032 1 510 919 1 345 625

EQUITY AND LIABILITIESCAPITAL AND RESERVES 1 996 308 2 113 696 1 174 650 1 334 410

Issued capital and reserves attributable to the owners of the parent 1 996 308 2 113 696 1 174 650 1 334 410

NON-CURRENT LIABILITIES 664 059 281 770 241 161 –

Other financial liabilities 17 578 199 220 566 241 161 –

Deferred tax liabilities 9 85 860 61 204 – –

CURRENT LIABILITIES 3 538 936 3 515 566 95 108 11 215

Other financial liabilities 17 363 817 157 212 81 839 –

Intergroup loan accounts 10 – – 1 880 –

Trade and other payables 18 1 678 724 1 777 647 11 363 11 161

Provisions 19 1 442 559 1 501 990 – –

Taxation 47 522 46 199 26 54

Bank overdrafts 14 6 314 32 518 – –

TOTAL EQUITY AND LIABILITIES 6 199 303 5 911 032 1 510 919 1 345 625

as at 28 February 2013

STATEMENTS OF FINANCIAL POSITION

99Stefanutti Stocks Integrated Report 2013 | Statements of Financial Position

GROUP COMPANY

Notes2013

R’0002012

R’0002013

R’0002012

R’000

REVENUE 20 9 405 143 8 068 483 217 872 333 204

Contract revenue 20 9 329 660 7 990 718 – –

Contract costs (8 249 784) (6 954 139) – –

Contract gross profit 1 079 876 1 036 579 – –

Other income 21 67 782 67 179 26 901 25 800

Operating costs (708 073) (548 927) (31 916) (35 123)

EARNINGS/(LOSS) BEFORE INTEREST, TAXATION, DEPRECIATION AND AMORTISATION (EBITDA) 21 439 585 554 831 (5 015) (9 323)

Depreciation 3 (195 797) (185 577) – –

Impairment of assets 3 – (2 652) – –

Impairment of investments 5 – – – (223 153)

Amortisation of intangible assets 8 (10 226) (7 589) – –

OPERATING PROFIT/(LOSS) BEFORE INVESTMENT INCOME AND NON-OPERATIONAL ITEM 233 562 359 013 (5 015) (232 476)

Competition Commission penalty 22 (323 000) – (323 000) –

OPERATING (LOSS)/PROFIT BEFORE INVESTMENT INCOME (89 438) 359 013 (328 015) (232 476)

Investment income 23 36 892 41 636 190 971 307 404

Share of profit from associate companies 6 2 797 1 768 – –

OPERATING (LOSS)/PROFIT BEFORE FINANCE COSTS (49 749) 402 417 (137 044) 74 928

Finance costs 23 (60 728) (37 919) – (509)

(LOSS)/PROFIT BEFORE TAXATION (110 477) 364 498 (137 044) 74 419

Taxation 24 (51 584) (100 257) (146) (7 564)

(LOSS)/PROFIT FOR THE YEAR (162 061) 264 241 (137 190) 66 855

OTHER COMPREHENSIVE INCOME 57 010 50 032 – –

Exchange differences on translating foreign operations 57 010 27 380 – –

Gains on property revaluation 3 – 22 652 – –

TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR (105 051) 314 273 (137 190) 66 855

(LOSS)/PROFIT FOR THE YEAR ATTRIBUTABLE AS FOLLOWS:

Equity holders of the company (162 061) 264 241 – –

TOTAL COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE TO:

Equity holders of the company (105 051) 314 273 – –

Basic (loss)/earnings per share (cents) 27 (93,17) 153,23 – –

Diluted (loss)/earnings per share (cents) 27 (86,17) 140,49 – –

year ended 28 February 2013

STATEMENTS OF COMPREHENSIVE INCOME

100 Stefanutti Stocks Integrated Report 2013 | Statements of Comprehensive Income

Notes

Sharecapital

andpremium

R’000

Sharebased

paymentsreserve

R’000

Foreigncurrency

translationreserve

R’000

Revaluationsurplusreserve

R’000

Retainedearnings

R’000

Ordinaryshare-

holdersinterest

R’000

GROUPBALANCE AT 1 MARCH 2011 1 011 195 56 306 (37 087) 4 997 818 160 1 853 571

Treasury shares disposed 15 8 648 – – – (1 779) 6 869

Employee share options 16 – 2 658 – – – 2 658

Realisation of share-based payments reserve – (14 632) – – 14 632 –

Total comprehensive income – – 27 380 22 652 264 241 314 273

Profit for the year – – – – 264 241 264 241

Exchange differences on translation of foreign operations – – 27 380 – – 27 380

Gains on property revaluation – – – 25 000 – 25 000

Taxation relating to gains on property revaluation – – – (2 348) – (2 348)

Dividends paid 26 – – – – (63 675) (63 675)

BALANCE AT 29 FEBRUARY 2012 1 019 843 44 332 (9 707) 27 649 1 031 579 2 113 696

Treasury shares disposed 15 9 066 – – – (405) 8 661

Realisation of share-based payments reserve – (11 220) – – 11 220 –

Total comprehensive loss – – 57 010 – (162 061) (105 051)

Loss for the year – – – – (162 061) (162 061)

Exchange differences on translation of foreign operations – – 57 010 – – 57 010

Dividends paid 26 – – – – (20 998) (20 998)

BALANCE AT 28 FEBRUARY 2013 1 028 909 33 112 47 303 27 649 859 335 1 996 308

Note 15

Share-based payments reserve comprises the accumulated effect of share-based payments in terms of the employee share scheme.

Foreign currency translation reserve comprises the translation effect of foreign subsidiaries, joint ventures and associates to the reporting currency.

Revaluation surplus reserve comprises the revaluation of land and buildings.


STATEMENTS OF CHANGES IN EQUITY

101Stefanutti Stocks Integrated Report 2013 | Statements of Changes in Equity

Notes

Share capital

and premium

R’000

Share based

payments reserve

R’000

Retained earnings/(loss)

R’000

Ordinary shareholders

interest R’000

COMPANYBALANCE AT 1 MARCH 2011 1 161 538 53 598 119 499 1 334 635

Employee share options 16 – 2 510 – 2 510

Realisation of share-based payments reserve – (11 274) 11 274 –

Total comprehensive income and profit for the year – – 66 855 66 855

Dividends paid 26 – – (69 590) (69 590)

BALANCE AT 29 FEBRUARY 2012 1 161 538 44 834 128 038 1 334 410

Realisation of share-based payments reserve – (10 579) 10 579 –

Total comprehensive loss for the year – – (137 190) (137 190)

Dividends paid 26 – – (22 570) (22 570)

BALANCE AT 28 FEBRUARY 2013 1 161 538 34 255 (21 143) 1 174 650

Note 15


STATEMENTS OFCHANGES IN EQUITY continued

102 Stefanutti Stocks Integrated Report 2013 | Statements of Changes in Equity

GROUP COMPANY

Notes2013

R’0002012

R’0002013

R’0002012

R’000

CASH FLOWS FROM OPERATING ACTIVITIES 202 081 (49 003) (2 953) 262 422

Cash receipts from customers 9 486 102 7 442 455 219 814 331 695

Cash paid to suppliers and employees (9 174 677) (7 346 396) (222 692) (300 465)

Cash generated from operations 25 311 425 96 059 (2 878) 31 230

Interest received 23 36 829 41 486 93 331

Finance costs 23 (60 728) (37 919) – (509)

Dividends paid 25 (20 991) (63 798) (22 563) (69 713)

Dividends received 6 & 23 2 167 950 22 570 307 073

Taxation (paid)/refunded 25 (66 621) (78 821) (175) 970

Secondary tax on companies 25 – (6 960) – (6 960)

CASH FLOWS FROM INVESTING ACTIVITIES (456 064) (277 822) – –

Expenditure to maintain operating capacity

Property, plant and equipment acquired 3 (88 622) (87 623) – –

Proceeds on disposals of property, plant and equipment 17 721 21 570 – –

Repayment/(Advance) of associate loan 2 603 (1 611) – –

Proceeds on disposal of associate 6 474 – – –

Expenditure for expansion

Property, plant and equipment acquired 3 (149 990) (207 907) – –

Development of investment property 4 – (2 251) – –

Net cash for acquisition of subsidiary 25 (238 250) – – –

CASH FLOWS FROM FINANCING ACTIVITIES 240 217 124 696 2 779 (266 544)

Treasury shares disposed 8 661 8 648 – –

Proceeds from long- and short-term financing 410 292 246 630 – –

Repayment of long- and short-term loans (178 736) (130 582) – (3 930)

Proceeds from intergroup loan accounts 10 – – 11 215 26 508

Intergroup loan accounts granted 10 – – (8 436) (289 122)

(DECREASE) IN CASH AND CASH EQUIVALENTS (13 766) (202 129) (174) (4 122)

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 890 826 1 078 159 2 467 6 589

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 52 082 14 796 – –

CASH AND CASH EQUIVALENTS AT END OF THE YEAR 14 929 142 890 826 2 293 2 467


STATEMENTS OF CASH FLOWS

103Stefanutti Stocks Integrated Report 2013 | Statements of Cash Flows

The principal accounting policies adopted in the preparation of the summary of financial statements are detailed in the annual financial statements, which are included in the inserted CD to this integrated report.

Basis of presentation of financial statements

The summary of the group financial statements are a consolidation of the holding company, its subsidiaries, joint ventures and associates.

The summaries of company and group financial statements have been prepared in accordance with the framework concepts and measurement and recognition requirements of IFRS and the Interpretations adopted by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB.

The summary of financial statements has been prepared using a combination of the historical cost and fair value basis of accounting.

The accounting policies adopted have been consistently applied throughout the group to all periods presented.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations and future events, and are believed to be reasonable under the circumstances. Actual results may differ from the estimates made by management from time to time.

Notes to the summary of financial statements

For the comprehensive notes to the summary of financial statements please refer to the inserted CD to this integrated report or www.stefanuttistocks.com. Please note that the references to the notes in the summary of financial statements correspond to the notes in the comprehensive annual financial statements to ensure consistent use thereof.

ACCOUNTING POLICIES

Summary of principal accounting policies for the year ended 28 February 2013 Significant judgements and estimates

104 Stefanutti Stocks Integrated Report 2013 | Accounting Policies

NOTES TO THE ANNUAL FINANCIAL STATEMENTS


25. NOTES TO THE STATEMENTS OF CASH FLOWS

GROUP COMPANY

2013R’000

2012R’000

2013R’000

2012R’000

25.1 Cash generated from operating activities

Net (loss)/profit before taxation (110 477) 364 498 (137 044) 74 419

Adjusted for:

Depreciation (note 3) 195 797 185 577 – –

Impairment of investments – – – 262 764

Amortisation of intangibles (note 8) 10 226 7 589 – –

Impairment of assets (note 3) – 2 652 – –

Competition Commission penalty (note 22) 323 000 – 323 000 –

Share-based payments (note 16) – 2 658 – 2 510

Interest received (note 23) (36 829) (41 486) (93) (331)

Dividend received (note 23) (63) (950) (190 878) (307 073)

Finance costs (note 23) 60 728 37 919 – 509

Movement in provisions (note 19) (61 500) 347 515 – –

Share of profit from associate companies (note 6) (2 797) (1 768) – –

Profit on disposal of associate (296) – – –

Net loss/(profit) on foreign exchange 17 579 (1 693) – –

Other non-cashflow items in profit (431) 229 – –

Profit on disposal of property, plant and equipment (7 545) (2 858) – –

387 392 899 882 (5 015) 32 798

Movements in working capital:

Decrease/(increase) in inventories 19 017 (15 185) – –

(Increase) in contracts in progress (86 364) (256 275) – –

Decrease/(increase) in trade and other receivables 133 303 (626 028) 1 942 (1 509)

(Decrease)/increase in trade and other payables (126 893) 84 485 195 (59)

Effect of exchange rate changes on working capital (15 030) 9 180 – –

311 425 96 059 (2 878) 31 230

25.2 Reconciliation of dividends paid during the year

Charged in statement of changes in equity (note 26) 20 998 63 675 22 570 69 590

Movement in shareholders for dividends (7) 123 (7) 123

Payments made 20 991 63 798 22 563 69 713

25.3 Reconciliation of taxation paid during the year

Charge against profit 51 584 100 257 146 7 564

Adjustment for deferred taxation (6 454) (6 212) 1 (114)

Adjustment for deferred taxation – intangible assets 2 856 2 119 – –

Secondary taxation on companies – (6 960) – (6 960)

Effect of exchange rate changes on taxation 1 183 – – –

Movement in taxation balance 17 452 (10 383) 28 (1 460)

Payments made/(refunded) 66 621 78 821 175 (970)

105Stefanutti Stocks Integrated Report 2013 | Notes to the Annual Financial Statements

NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued


25. NOTES TO THE STATEMENT OF CASH FLOWS continued

GROUP COMPANY

2013R’000

2012R’000

2013R’000

2012R’000

25.4 Reconciliation of secondary taxation on companies paid during the year

Charge against profit – 6 960 – 6 960

Payments made – 6 960 – 6 960

25.5 Net cash required for acquisition of subsidiary

Fair value of assets acquired:

Property, plant and equipment 86 097 – – –

Loans 32 – – –

Inventories 5 263 – – –

Contracts in progress 7 868 – – –

Trade and other receivables 52 312 – – –

Bank balances 22 780 – – –

Non-current – Other financial liabilities (3 553) – – –

Deferred tax liabilities (18 573) – – –

Taxation (12 544) – – –

Current – Other financial liabilities (6 129) – – –

Trade and other payables (27 971) – – –

Provisions (2 069) – – –

Total net assets acquired 103 513 – – –

Cash consideration paid 261 030 – – –

Less: Cash acquired (22 780) – – –

238 250 – – –

25.6 Non-cash transactions

Investment in associate exchanged – 1 454 – –

Development property acquired – (1 454) – –

Net cash effect – – – –

The investment in Walk Aboard Properties (Pty) Ltd, an associate of the group was exchanged for development property. At the date of exchange the fair value of the investment in associate was equal to its carrying value. Development property acquired was recognised at the fair value at the date of exchange and has been included in inventory as the property has been acquired exclusively with a view to subsequent disposal in the near future or for development.

35. NON-ADJUSTING EVENTS AFTER REPORTING PERIOD

No material reportable events have occurred between the reporting date and the date of this integrated report.

106 Stefanutti Stocks Integrated Report 2013 | Notes to the Annual Financial Statements


Shareholder spreadNumber of

shareholdings %Number of

shares %

1 – 1 000 shares 1 097 37,42 524 102 0,28

1 001 – 10 000 shares 1 216 41,47 4 726 557 2,51

10 001 – 100 000 shares 446 15,21 14 892 620 7,92

100 001 – 1 000 000 shares 138 4,71 43 575 143 23,17

1 000 001 and over 35 1,19 124 362 324 66,12

TOTAL 2 932 100,00 188 080 746 100,00

Distribution of shareholdersNumber of


shares %

Banks 17 0,58 1 949 698 1,04

Close corporations 42 1,43 217 761 0,12

Endowment funds 17 0,58 548 394 0,29

Individuals 2 317 79,02 41 835 551 22,24

Insurance companies 21 0,72 12 233 190 6,50

Investment companies 14 0,48 709 404 0,38

Medical schemes 5 0,17 716 454 0,38

Mutual funds 107 3,65 62 201 779 33,07

Nominees and trusts 202 6,89 17 722 823 9,42

Other corporations 22 0,75 183 868 0,10

Own holdings 1 0,03 6 710 537 3,57

Private companies 53 1,81 9 413 804 5,01

Retirement funds 111 3,79 26 707 553 14,20

Share trusts 3 0,10 6 929 930 3,68

TOTAL 2 932 100,00 188 080 746 100,00

Public/non-public shareholdersNumber of


shares %

NON-PUBLIC SHAREHOLDERS 136 4,64 50 703 906 26,96

Directors and associates of the company 17 0,59 31 326 799 16,66

Directors of a subsidiary 115 3,92 5 736 640 3,05

Own holdings 1 0,03 6 710 537 3,57

Share trusts 3 0,10 6 929 930 3,68

PUBLIC SHAREHOLDERS 2 796 95,36 137 376 840 73,04

TOTAL 2 932 100,00 188 080 746 100,00

Beneficial shareholders holding 3% or moreNumber of

shares %

Coronation Fund Managers 24 638 380 13,10

B Stefanutti 17 505 512 9,31

Sanlam 16 527 382 8,79

Government Employees Pension Fund 9 657 768 5,13

W Meyburgh 9 153 473 4,87

Moputso Investments (Pty) Ltd 6 853 233 3,64

Stefanutti Stocks Investment Holding Ltd 6 710 537 3,57

Stefanutti & Bressan Share Incentive Trust 5 996 250 3,19

TOTAL 97 042 535 51,60

SHAREHOLDERS’ ANALYSIS

107Stefanutti Stocks Integrated Report 2013 | Shareholders’ Analysis

SHAREHOLDERS’ DIARY

Financial year-end 28 February 2013

Reporting period 1 March 2012 – 28 February 2013

Reporting period of previous report 1 March 2011 – 29 February 2012

Announcement of annual results 14 May 2013

Integrated report posted 6 August 2013

Annual general meeting 6 September 2013

Announcement of interim results November 2013

Stakeholder feedback

The company welcomes written comments and feedback from its stakeholders on this integrated report and on other general matters and should be addressed to: [email protected]

108 Stefanutti Stocks Integrated Report 2013 | Shareholders’ Diary

Notice is hereby given to the shareholders of the company as at 6 August 2013, being the record date to receive notice of the annual general meeting in terms of section 59(1)(a) of the Companies Act, No 71 of 2008, as amended (Companies Act), that the annual general meeting of Stefanutti Stocks will be held at No 9 Palala Street, Protec Park, corner Zuurfontein Avenue and Oranjerivier Drive, Kempton Park, on Friday, 6 September 2013 at 12:00, to (i) consider and, if deemed fit, to pass, with or without modification, the following ordinary and special resolutions, in the manner required by the Companies Act, as read with the JSE Limited (JSE) Listings Requirements (JSE Listings Requirements); and (ii) deal with such other business as may lawfully be dealt with at the meeting, which meeting is to be participated in and voted at by shareholders registered as such as at 30 August 2013, being the record date to participate in and vote at the annual general meeting in terms of section 62(3)(a), read with section 59(1)(b), of the Companies Act.

NB: Section 63(1) of the Companies Act – Identification of meeting participants

Kindly note that meeting participants (including proxies) are required to provide reasonably satisfactory identification before being entitled to attend or participate in a shareholders’ meeting. Forms of identification include valid identity documents, driver’s licences and passports.

Presentation of annual financial statements

The consolidated annual financial statements of the company and its subsidiaries (as approved by the board of directors of the company), including the directors’ report, the report of the Audit, Governance and Risk Committee and the external auditors’ report for the year ended 28 February 2013, have been distributed as required and will be presented to shareholders.

The comprehensive annual financial statements are set out on pages 6 to 69 to be found on the inserted CD of this integrated report of which this notice forms part.

Ordinary resolutions

Ordinary resolution 1: Adoption of annual financial statements“RESOLVED THAT the annual financial statements of the company for the year ended 28 February 2013, including the directors’ report and the report of the Audit, Governance and Risk Committee, be and are hereby received and adopted.”

Percentage of voting rights required to pass this resolution: 50% plus one vote.

Ordinary resolution 2: Re-election of director“RESOLVED THAT B Stefanutti, who retires by rotation in terms of the Memorandum of Incorporation of the company and who is eligible and available for re-election, be re-elected as a director of the company.”

A brief curriculum vitae in respect of B Stefanutti is included on page 18 of this integrated report of which this notice forms part.

Percentage of voting rights required to pass this resolution:

50% plus one vote.

Ordinary resolution 3: Re-election of director“RESOLVED THAT KR Eborall, who retires by rotation in terms of the Memorandum of Incorporation of the company and who is eligible and available for re-election, be re-elected as a director of the company.”

A brief curriculum vitae in respect of KR Eborall is included on page 19 of this integrated report of which this notice forms part.


Ordinary resolution 4: Re-election of director“RESOLVED THAT ME Mkwanazi, who retires by rotation in terms of the Memorandum of Incorporation of the company and who is eligible and available for re-election, be re-elected as a director of the company.”

A brief curriculum vitae in respect of ME Mkwanazi is included on page 19 of this integrated report of which this notice forms part.


Ordinary resolution 5: Confirmation of appointment of director“RESOLVED THAT the appointment of T Eboka as a director of the company be confirmed and approved.” The board appointed Ms Eboka as a director on 17 May 2013. Directors who are appointed as such retire at the first Annual General Meeting following their appointment, and their appointment is thus subject to the confirmation and approval of shareholders at the Annual General Meeting.

A brief curriculum vitae in respect of T Eboka is included on page 49 of this integrated report of which this notice forms part.


Ordinary resolution 6: Appointment of auditors“RESOLVED THAT Mazars be and are hereby reappointed as auditors of the company for the ensuing financial year with Mr S Vorster as the individual responsible for the audit and the directors be and are hereby authorised to fix the remuneration of the auditors.”


NOTICE OF ANNUAL GENERAL MEETINGStefanutti Stocks Holdings Limited

(Incorporated in the Republic of South Africa)

Registration number: 1996/003767/06

Share code: SSK

ISIN: ZAE000123766

(“Stefanutti Stocks” or “the company”)

109Stefanutti Stocks Integrated Report 2013 | Notice of Annual General Meeting

Ordinary resolution 7: Appointment of Audit, Governance and Risk Committee members“RESOLVED THAT the members of the company’s Audit, Governance and Risk Committee set out below be and are hereby appointed with effect from the end of this meeting in terms of section 94(2) of the Companies Act. The membership as proposed by the board of directors is: NJM Canca; KR Eborall; and ZJ Matlala, all of whom are independent non-executive directors.” The chairman of the committee is Ms Zanele Matlala.


Ordinary resolution number 8: Company’s remuneration policy“To approve on a non-binding advisory basis, the company’s remuneration policy (excluding the remuneration of the non-executive directors for the services as directors and members of board committees).”

The company’s remuneration policy and related information appears on page 85 of the integrated report.

Reason for this resolution

The reason for this resolution is to comply with the recommendations of King III regarding the key elements and guiding principles of the company’s remuneration policy, that is to communicate to shareholders, for the purposes of a non-binding advisory vote, how senior executives and directors of the company are remunerated.

Effect of this resolution

The effect of this resolution is that the shareholders will have taken note of the key elements and guiding principles of the company’s remuneration approach and policy and will have given an indication by way of a non-binding advisory resolution whether they have found the aforementioned appropriate.

Percentage of voting rights to pass this resolution: 50% plus one vote.

Special resolutions

Special resolution 1: Directors’ fees“RESOLVED THAT payment to the non-executive directors of the following fees for services as directors with effect from the date of this annual general meeting until the date of the next annual general meeting be authorised:

Fees permeeting

Fees permeeting

2013Rand

2014Rand

Non-executive Director 40 250 42 700

Audit, Governance and Risk Committee chairman 75 000 79 500

Audit, Governance and Risk Committee member 40 250 42 700

Remuneration and Nominations Committee chairman 40 250 42 650

Remuneration and Nominations Committee member 23 000 24 400

Social and Ethics Committee chairman 33 750 35 800

Social and Ethics Committee member 18 000 19 100

Mergers, Acquisitions and Disposals Committee chairman 33 750 35 800

Mergers, Acquisitions and Disposals Committee member 18 000 19 100

Any other committees to be formed:

Committee chairman 30 000 31 800

Committee member 16 000 17 000

The Non-executive Chairman is paid an annual fee of R840 000 (2013: R840 000) and a monthly retainer of R45 000 (2013: R45 000) which is subject to annual review by the Remuneration and Nominations Committee.

The Lead Independent Director’s annual fee amounts to R687 000 (2013: R648 000).

Extraordinary services are paid at a rate of R1 700 per hour.”

Percentage of voting rights required to pass this resolution: 75%.

Reason for and effect of special resolution 1

The reason for special resolution 1 is to comply with the provisions of the Companies Act. The effect of the special resolution is that, if approved by the shareholders at the annual general meeting, the fees payable to non-executive directors until the next annual general meeting will be as set out above. Executive directors are not remunerated for their services as directors but are remunerated as employees of the company.

The above rates have been proposed to ensure that the remuneration of non-executive directors remains competitive in order to enable the company to retain and attract persons of the calibre, appropriate capabilities, skills and experience required in order to make meaningful contributions to the company.

NOTICE OF ANNUALGENERAL MEETING continued

110 Stefanutti Stocks Integrated Report 2013 | Notice of Annual General Meeting

Special resolution 2: Financial assistance“RESOLVED THAT to the extent required by the Companies Act, the board of directors of the company may, subject to compliance with the requirements of the company’s Memorandum of Incorporation, the Companies Act and the JSE Listings Requirements, each as presently constituted and as amended from time to time, authorise the company to provide direct or indirect financial assistance by way of loan, guarantee, the provision of security or otherwise, to:

› any of its present or future subsidiaries and/or any other company or entity that is or becomes related or inter-related to the company or any of its subsidiaries (and/or any member of such subsidiary or related or inter-related company or entity) for any purpose or in connection with any matter, including, but not limited to, the subscription of any option, or any securities, issued or to be issued by the company or a related or inter-related company, or for the purchase of any securities of the company or a related or inter-related company; and

› any of the present or future directors or prescribed officers of the company or of a related or inter-related company or entity (or any person related to any of them or to any company or entity related or inter-related to any of them), or to any other person who is a participant in any of the company’s or group of companies’ share or other employee incentive schemes, for the purpose of, or in connection with, the subscription of any option, or any securities, issued or to be issued by the company or a related or inter-related company, or for the purchase of any securities of the company or a related or inter-related company, where such financial assistance is provided in terms of any such scheme that does not constitute an employee share scheme that satisfies the requirements of section 97 of the Companies Act,

Such authority to endure until the annual general meeting of the company for the year ended February 2014.”

Percentage of voting rights required to pass this resolution: 75%.

Reason for and effect of special resolution 2

Notwithstanding the title of section 45 of the Companies Act, being “Loans or other financial assistance to directors”, on a proper interpretation, the body of the section may also apply to financial assistance provided by a company to related or inter-related companies and other entities, including, inter alia, its subsidiaries, associates, joint ventures, partnerships, collaboration arrangements, etc for any purpose.

Furthermore, section 44 of the Companies Act may also apply to the financial assistance so provided by a company to related or inter-related companies or other entities, in the event that the financial assistance is provided for the purpose of, or in connection with, the subscription of any option, or any securities, issued or to be issued by the company or a related or inter-related company, or for the purchase of any securities of the company or a related or inter-related company.

Both sections 44 and 45 of the Companies Act provide, inter alia, that the particular financial assistance must be provided only pursuant to a special resolution of the shareholders, adopted within the previous 2 (two) years, which approved such assistance either for the specific recipient, or generally for a category of potential recipients, and the specific recipient falls within that category and the board of directors must be satisfied that:

› immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test; and

› the terms under which the financial assistance is proposed to be given are fair and reasonable to the company.

The company would like the ability to provide financial assistance, if necessary, also in other circumstances, in accordance with section 45 of the Companies Act. Furthermore, it may be necessary or desirous for the company to provide financial assistance to related or inter-related companies and entities to acquire or subscribe for options or securities or purchase securities of the company or another company related or inter-related to it. Under the Companies Act, the company will, however, require the special resolution referred to above to be adopted. In the circumstances and in order to, inter alia, ensure that the company’s subsidiaries and other related and inter-related companies and entities have access to financing and/or financial backing from the company (as opposed to banks), it is necessary to obtain the approval of shareholders, as set out in special resolution 2.

Sections 44 and 45 contain exemptions in respect of employee share schemes that satisfy the requirements of section 97 of the Companies Act. To the extent that any of the company’s share or other employee incentive schemes do not satisfy such requirements, financial assistance (as contemplated in sections 44 and 45) to be provided under such schemes will, inter alia, also require approval by special resolution. Accordingly, special resolution 2 authorises financial assistance to any of the present or future directors or prescribed officers of the company or of a related or inter-related company or entity (or any person related to any of them or to any company or entity related or inter-related to them), or to any other person who is a participant in any of the company’s share or other employee incentive schemes, in order to facilitate their participation in any such schemes that do not satisfy the requirements of section 97 of the Companies Act.

Summary of applicable rights established in section 58 of the Companies Act

For purposes of this summary, the term “shareholder” shall have the meaning ascribed thereto in section 57(1) of the Companies Act.

1. At any time, a shareholder of a company is entitled to appoint any individual, including an individual who is not a shareholder of that company, as a proxy to participate in, speak and vote at a shareholders’ meeting on behalf of the shareholder.

2. A proxy appointment must be in writing, dated and signed by the relevant shareholder.

3. Except to the extent that the Memorandum of Incorporation of a company provides otherwise:

111Stefanutti Stocks Integrated Report 2013 | Notice of Annual General Meeting

3.1. a shareholder of the relevant company may appoint two or more persons concurrently as proxies, and may appoint more than one proxy to exercise voting rights attached to different securities held by such shareholder; and

3.2. a copy of the instrument appointing a proxy must be delivered to the relevant company, or to any other person on behalf of the relevant company, before the proxy exercises any rights of the shareholder at a shareholders’ meeting.

4. Irrespective of the form of instrument used to appoint a proxy:

4.1 the appointment of the proxy is suspended at any time and to the extent that the shareholder who appointed that proxy chooses to act directly and in person in the exercise of any rights as a shareholder of the relevant company; and

4.2 should the instrument used to appoint a proxy be revocable, a shareholder may revoke the proxy appointment by cancelling it in writing, or making a later inconsistent appointment of a proxy, and delivering a copy of the revocation instrument to the proxy and the relevant company.

5. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the relevant shareholder as of the later of the date:

5.1 stated in the revocation instrument, if any; or

5.2 upon which the revocation instrument is delivered to the proxy and the relevant company as required in section 58(4)(c)(ii) of the Companies Act.

6. Should the instrument appointing a proxy or proxies have been delivered to the relevant company, as long as that appointment remains in effect, any notice that is required by the Companies Act or the relevant company’s Memorandum of Incorporation to be delivered by such company to the shareholder must be delivered by such company to:

6.1 the shareholder; or

6.2 the proxy or proxies if the shareholder has in writing directed the relevant company to do so and has paid any reasonable fee charged by the company for doing so.

7. A proxy is entitled to exercise, or abstain from exercising, any voting right of the relevant shareholder without direction, except to the extent that the Memorandum of Incorporation of the relevant company or the instrument appointing the proxy provides otherwise.

8. If a company issues an invitation to shareholders to appoint one or more persons named by such company as a proxy, or supplies a form of instrument for appointing a proxy:

8.1 such invitation must be sent to every shareholder who is entitled to receive notice of the meeting at which the proxy is intended to be exercised;

8.2 the company must not require that the proxy appointment be made irrevocable; and

8.3 the proxy appointment remains valid only until the end of the relevant meeting at which it was intended to be used, unless revoked as contemplated in section 58(5) of the Companies Act.

Any matters raised by shareholders, with or without advance notice to the companyTo deal, at the annual general meeting, with any matters raised by shareholders, with or without advance notice to the company.

A shareholder of the company entitled to attend and vote at the annual general meeting is entitled to appoint one or more proxies (who need not be a shareholder of the company) to attend, vote and speak in his/her stead. On a show of hands, every shareholder of the company present in person or represented by proxy shall have one vote only. On a poll, every shareholder of the company present in person or represented by proxy shall have one vote for every share held in the company by such shareholder.

Dematerialised shareholders who have elected own-name registration in the sub-register through a Central Securities Depository Participant (CSDP) and who are unable to attend but wish to vote at the annual general meeting, should complete and return the attached form of proxy and lodge it with the transfer secretaries of the company no later than 12:00 on Thursday, 5 September 2013.

Shareholders who have dematerialised their shares through a CSDP or broker rather than through own-name registration and who wish to attend the annual general meeting must instruct their CSDP or broker to issue them with the necessary authority to attend.

If such shareholders are unable to attend, but wish to vote at the annual general meeting, they should timeously provide their CSDP or broker with their voting instructions in terms of the custody agreement entered into between that shareholder and his/her CSDP or broker.

Forms of proxy may also be obtained on request from the company’s registered office. The completed forms of proxy must be deposited at, posted or faxed to the transfer secretaries at the address below, to be received at least 24 hours prior to the meeting.

Any member who completes and lodges a form of proxy will nevertheless be entitled to attend and vote in person at the annual general meeting should the member subsequently decide to do so.

The practical applications of the aforementioned rights are discussed in the notes to the proxy form attached hereto.

By order of the board

William Somerville Company Secretary

16 July 2013

Registered office No 9 Palala Street Protec Park Corner of Zuurfontein Avenue and Oranjerivier Drive Kempton Park 1619 PO Box 12394, Aston Manor, 1630 Telephone: +27 11 571 4300

Transfer secretaries Computershare Investor Services (Pty) Ltd 70 Marshall Street Johannesburg 2001 PO Box 61051, Marshalltown, 2107 Telephone: +27 11 370 5000 Fax: +27 11 688 5238

Voting and proxies

NOTICE OF ANNUALGENERAL MEETING continued

112 Stefanutti Stocks Integrated Report 2013 | Notice of Annual General Meeting

For use at the annual general meeting of the company to be held at No 9 Palala Street, Protec Park, corner of Zuurfontein Avenue and Oranjerivier Drive, Kempton Park, on Friday, 6 September 2013 at 12:00 and at any adjournment thereof.

For use by the holders of the company’s certificated ordinary shares and/or dematerialised ordinary shares held through a Central Securities Depository Participant (CSDP) or broker who have selected own-name registration (own-name dematerialised shareholders). Additional forms of proxy are available from the transfer secretaries of the company.

Not for the use by holders of the company’s dematerialised ordinary shares who are not own-name dematerialised shareholders. Such shareholders must contact their CSDP or broker timeously if they wish to attend and vote at the annual general meeting and request that they be issued with the necessary letter of representation to do so, or provide the CSDP or broker timeously with their voting instructions should they not wish to attend the annual general meeting in order for the CSDP or broker to vote thereat in accordance with their instructions.

I/We (full name in block letters)

of (address)

being a member(s) of Stefanutti Stocks and holding ordinary shares in the company,

hereby appoint of

failing him/her of

failing him/her the chairman of the annual general meeting, as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering and, if deemed fit, passing, with or without modification, the special and ordinary resolutions to be proposed thereat and at any adjournment thereof; and to vote for and/or against the special and ordinary resolutions and/or abstain from voting in respect of the Stefanutti Stocks ordinary shares registered in my/our name(s), in accordance with the following instructions:

Number of votes

For Against Abstain

ORDINARY RESOLUTIONS

1. To adopt the annual financial statements of the company for the year ended 28 February 2013, including the directors’ report and the report of the Audit, Governance and Risk Committee.

2. To re-elect B Stefanutti as a director of the company

3. To re-elect KR Eborall as a director of the company

4. To re-elect ME Mkwanazi as a director of the company

5. To confirm the appointment of T Eboka as a director of the company

6. To re-appoint the auditors

7. To appoint members of the Audit, Governance and Risk Committee: NJMG Canca; KR Eborall and ZJ Matlala

8. To approve the company’s remuneration policy

SPECIAL RESOLUTIONS

1. To approve the fees of non-executive directors

2. To approve financial assistance

* Please indicate with an “X” in the appropriate spaces above how you wish your votes to be cast. Unless otherwise instructed, my/our proxy may vote as he/she thinks fit.

Signed at (place) on (date) 2013

Member’s signature assisted by (if applicable)

FORM OF PROXYStefanutti Stocks Holdings Limited

(Incorporated in the Republic of South Africa)

Registration number: 1996/003767/06

Share code: SSK

ISIN: ZAE000123766

(“Stefanutti Stocks” or “the company”)

113Stefanutti Stocks Integrated Report 2013 | Form of Proxy

1. This form of proxy is to be completed only by those members who are:

(a) holding shares in a certificated form; or

(b) recorded in the sub-register in electronic form in their own name.

2. Members who have dematerialised their shares, other than own-name dematerialised shareholders, and who wish to attend the annual general meeting must contact their CSDP or broker who will furnish them with the necessary letter of representation to attend the annual general meeting, or they must instruct their CSDP or broker as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the members and their CSDP or broker.

3. Each member is entitled to appoint one or more individuals as a proxy (who need not be a member(s) of the company) to participate in, speak, and, on a poll, vote in place of that member at the annual general meeting.

4. A member wishing to appoint a proxy must do so in writing by inserting the name of said proxy or the name of one alternative proxy of the member’s choice on the form of proxy in the space provided, with or without deleting “the chairman of the annual general meeting”. The person whose name stands first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

5. A member’s instructions to the proxy must be indicated on the form of proxy by the insertion of the relevant number of votes exercisable by that member in the appropriate box(es) provided. Failure to comply with the above will be deemed to authorise the chairman of the annual general meeting, if the chairman is the authorised proxy, to vote in favour of the ordinary and special resolutions at the annual general meeting, or any other proxy to vote or to abstain from voting at the annual general meeting as he/she deems fit, in respect of all the member’s votes exercisable thereat.

6. The proxy shall (unless this sentence is struck out and countersigned) have the authority to vote, as he/she deems fit, on any other resolution which may validly be proposed at the meeting, including in respect of any proposed amendment to the above resolutions. If the aforegoing sentence is struck out, the proxy shall be deemed to be instructed to vote against any such proposed additional resolution and/or proposed amendment to an existing resolution as proposed in the notice to which this form is attached.

7. A member or his/her proxy is not obliged to vote in respect of all the ordinary shares held by such member or represented by such proxy, but the total number of votes for or against the ordinary resolutions and in respect of which any abstention is recorded may not exceed the total number of votes to which the member or his/her proxy is entitled.

8. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy, unless previously recorded by the company’s transfer office or waived by the chairman of the annual general meeting.

9. The chairman of the annual general meeting may reject or accept any form of proxy which is completed and/or received other than in accordance with these instructions, provided that he is satisfied as to the manner in which a member wishes to vote.

10. Any alterations or corrections to this form of proxy must be initialled by the signatory(ies).

11. The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such member wish to do so.

12. A minor must be assisted by his/her parent/guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the company’s transfer secretaries.

13. Where there are joint holders of any shares, only that holder whose name appears first in the register in respect of such shares need sign this form of proxy.

14. Any proxy appointment made in terms of this form of proxy remains valid until the end of the annual general meeting, unless revoked earlier.

15. Forms of proxy must be lodged with the transfer secretaries at the address given below at least 24 hours prior to the annual general meeting:

Computershare Investor Services (Pty) Ltd

Ground Floor, 70 Marshall Street, Johannesburg, 2001

PO Box 61051, Marshalltown, 2107

Telephone: +27 11 370 5000

Fax: +27 11 688 5238

NOTES TO THE FORM OF PROXY

114 Stefanutti Stocks Integrated Report 2013 | Notes to the Form of Proxy

GRI reference Description

Pagenumber

1. STRATEGY

Chairman’s report 24

Chief Executive’s report 24

2. ORGANISATIONAL PROFILE

2.1 Name of the organisation OFC, 2, IBC

2.2 Primary brands, products and/or services 2, 7, 8 – 9, 29 – 45

2.3 Operational structure of the organisation 7 – 9

2.4 Location of organisation’s headquarters IBC

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

2

2.6 Nature of ownership and legal form 2, IBC

2.7 Markets served 2, 8 – 9, 29 – 45

2.8 Scale of the reporting organisation, including:

› number of employees

› number of operations

› net sales or net revenues

› total capitalisation broken down in terms of debt and equity

› quantity of products or services provided

› total assets

› beneficial ownership

2, 57 – 62, 78 – 80

8 – 9, 29 – 45

17, 92 – 93, 100

17, 92 – 93, 99

8 – 9, 29 – 45

17, 99

107

2.9 Significant changes during the reporting period regarding size, structure or ownership 26, 98, 107

2.10 Awards received in the reporting period 31, 34, 39, 42, 45

3. REPORT PARAMETERS

REPORT PROFILE

3.1 Reporting period 6

3.2 Date of most recent previous report 6

3.3 Reporting cycle 6

3.4 Contact point for questions regarding the report of its contents 108

REPORT SCOPE AND BOUNDARY

3.5 Process for defining report content 6

3.6 Boundary of the report 6, 57

3.7 State any specific limitations on the scope or boundary of the report 6

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

6

3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement

6

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

6, 26, 57, 98

3.12 Table identifying the location of the Standard Disclosures in the report 115

3.13 Policy and current practice with regard to seeking external assurance for the report 6

GRI INDEX


115Stefanutti Stocks Integrated Report 2013 | GRI Index

GRI reference Description

Pagenumber

4. GOVERNANCE, COMMITMENTS AND ENGAGEMENT

CORPORATE GOVERNANCE

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

18 – 19, 46 – 55, 57, 85, 96

4.2 Indicate whether the Chair of the highest governance body is also an executive officer 18, 48

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

18 – 19, 46 – 55

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

14, 108, IBC

STAKEHOLDER ENGAGEMENT

4.14 List of stakeholder groups engaged by the organisation 14 – 16

4.15 Basis for identification and selection of stakeholders with whom to engage 14 – 16, 57

5. MANAGEMENT APPROACH AND PERFORMANCE INDICATORS

ECONOMIC PERFORMANCE

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

84

EC3 Coverage of the organisation’s defined benefit plan obligations DISC (employee benefit) 86, note 21

EC4 Significant financial assistance received from government 84

ENVIRONMENTAL PERFORMANCE

EC28 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations

75

LABOUR PRACTICES AND DECENT WORK PERFORMANCE

LA1 Total workforce by employment type, employment contract and region, broken down by gender 57 – 62

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

57 – 62

LA10 Average hours of training per year per employee by gender and by employee category 65

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

18 – 19, 57 – 62, 78 – 80

LA14 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation

81

HUMAN RIGHTS PERFORMANCE

HR4 Total number of incidents of discrimination and corrective actions taken 83

GRI INDEX continued


116 Stefanutti Stocks Integrated Report 2013 | GRI Index

Corporate information

Company information Stefanutti Stocks Holdings Limited Share code: SSK ISIN: ZAE000123766 JSE Sector: Construction Year end: 28 February

Registration number 1996/003767/06

Country of incorporation South Africa

Registered office No 9 Palala Street, Protec Park, Cnr Zuurfontein Avenue and Oranjerivier Drive, Kempton Park, 1619

Postal address PO Box 12394, Aston Manor, 1630

Telephone number +27 11 571 4300

Facsimile +27 11 976 3487

Company Secretary WR Somerville 20 Lurgan Road, Parkview, 2193 Telephone number: +27 11 482 4019

Auditors Mazars 2nd Floor, Mazars House, 5 St Davids Place, Parktown, 2193 PO Box 6697, Johannesburg, 2000 Telephone number: +27 11 547 4000

Attorneys Webber Wentzel 10 Fricker Road, Illovo Boulevard, Johannesburg, 2196 PO Box 61771, Marshalltown, 2107 Telephone number: +27 11 530 5000

Transfer Secretaries Computershare Investor Services (Pty) Ltd Ground Floor, 70 Marshall Street, Johannesburg, 2001 PO Box 61051, Marshalltown, 2107 Telephone number: +27 11 370 5000

Sponsor Bridge Capital Advisors (Pty) Ltd 2nd Floor, 27 Fricker Road, Illovo Boulevard, Illovo, 2196 PO Box 651010, Benmore, 2010 Telephone number: +27 11 268 6231

Bankers Nedbank Limited

The Standard Bank of South Africa Limited

Absa Bank Limited

Bidvest Bank Limited

First National Bank, a division of FirstRand Bank Limited

Nedbank Swaziland

Standard Chartered Bank

Banco Internacional de Mozambique

Standard Bank Mozambique

Middle East Barclays Bank

Emirates NBD

HSBC

Website www.stefanuttistocks.com

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