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Strategy

Strategy

Outlook and focus areas

The outlook and focus for the Group in the short term is to drive its strategic initiatives through the work streams in response to the short-term material issues. Simultaneously optimisation and growth initiatives will be implemented on the foundation of the recovery and stabilisation phase.

The future strategic direction of the Group is being formulated on a continuous basis and some of the key focus areas and initiatives going forward have been summarised below.

Business model and corporate office focus areas

Aveng will maintain a more focused, centre-led business model but with clearer accountability and role clarity. The business model will be:

There is a clear understanding of the broad business model, but there has been a lack of clarity on many operating issues which resulted in uncertainty around responsibilities and accountabilities, and the duplication of work.

An optimisation exercise has been embarked upon to achieve a leaner, more efficient organisation, to eliminate duplication of roles and to ensure role clarity across the Group.

The business model is now clear: the corporate office controls capital allocation, portfolio and geographic decisions, financial objectives and acquisitions and disposals.

Operating group focus areas
Project delivery models and execution capabilities

Aveng recognises the need to focus on attaining excellence in its project delivery models and execution capabilities and is developing the following initiatives in support of this:

Geographic and sector reviews
Geographies

Aveng will increase the geographic spread of its portfolio, with a focus on selected regions in Africa (outside South Africa), Australia, Southeast Asia and the Middle East, while retaining its market share in South Africa.

Customer segmentation

Aveng’s customer base is largely a function of its broad geographical footprint as well as diverse business and product portfolio. Although customer selection and focus happens largely at operating group level, the Group’s focus on customers will be to reduce concentration risk, increase non-public construction activities (outside South Africa) and pursue alternatives to vulnerable or exposed areas of the business.

Transformation in South Africa

Aveng recognises that transformation is a business imperative in South Africa. The Board through the social, ethics and transformation committee oversees the transformation strategy and plans at both an Aveng (Africa) Proprietary Limited and operating group level.

The 2013 / 2014 B-BBEE contributor status will be reviewed against the Construction Charter targets under the existing B-BBEE Codes. It is expected that the 2013 / 2014 contributor status will at least remain at a level 3 but it is anticipated that it could improve to a level 2 with the next verification cycle on 30 June 2014, subject to final measurement and verification. However, the Board is cognisant of the impact of the new DTI B-BBEE Codes of Good Practice to be read in conjunction with employment equity targets set by the Department of Labour and the specific requirements of the Mining Charter with regard to work performed in this sector.

With the business imperative objectives of transformation and the relevant codes, charters and targets in mind, a three-year transformation plan with relevant KPIs and targets will be developed with focus on the following three priority elements:

During the 2012 financial year, shareholders approved amendments to the terms of the 2004 BEE transaction which served to extend this structure. The final shares in terms of the amended BEE share transaction were issued on 30 June 2014. This resulted in the issued share capital of the Company increasing by 26 832 834 shares to 416 670 931 shares. Of the 26 832 834 shares issued, 8 586 507 were allocated each to the Community Investment Trust and the Aveng Empowerment Trust, and 9 659 820 to the BEE strategic partner.

Additional information is available in the online transformation report at www.financialresults.co.za/2014/aveng-integrated-report-2014/sustainability.

Africa strategy

The formulation of a clear Africa strategy remains a high priority, with specific underlying plans for the operating groups.

People

The successful implementation of the Group’s strategy is dependent on continuous improvement in the quality of management and staff which is being addressed by ongoing human resource initiatives, including:

Stakeholder relationship management

The relationships Aveng has with its key stakeholders fundamentally affect its capacity to conduct business profitably and sustainably. Initiatives are underway to restore the trust of stakeholders by engaging with them and re-establishing the Group’s positive reputation. There are various ways in which the Group communicates with stakeholders and responds to them. Best practices from across the Group are being adopted to ensure Aveng strengthens stakeholder relationships at all levels.