2 MURRAY & ROBERTS GROUP PERFORMANCE REVIEWS ’14 SOCIAL SAFETY Ensuring the safety of our people is both a moral obligation and a strategic business imperative, and as such is a primary consideration in all our business activities. In FY2014 our lost time injury frequency rate (“LTIFR”) improved to a record-low of 0.80 (2013: 0.82). An increasing number of our businesses are delivering impressive safety results, notably Murray & Roberts Resources & Industrial which has recorded three lost time injury (“LTI”) free years and our Cementation USA mining operations with more than two LTI free years. In our underground mining operations, fall of ground (“FOG”) incidents, which have been the leading cause of fatalities in these operations, have reduced markedly. These achievements were unfortunately marred by the occurrence of four fatalities (2013: 2): two in Infrastructure and Building, one in our Oil & Gas business and one in Underground Mining. We have extended our condolences to the families of the deceased: • Mr. Prida Chumpla (34), an employee of EPC5a Clough Curtain Joint Venture project was struck and pressed against a structure by a pipe during pipe tie-in operations on 9 July 2013. • Mr. Brian Sikate (31), an employee of Murray & Roberts Cementation, was struck by a kibble car in a mine shaft on 13 December 2013. • Mr. Prince Khumalo (36), an employee of Murray & Roberts Buildings was electrocuted while installing electrical trunking on a car park roof on 30 January 2014. • Mr. Zola Chita (28), an employee of Murray & Roberts Infrastructure was struck by a third party vehicle while on duty on the N1 Road Improvement Project on 19 February 2014. Fatal workplace incidents are unacceptable given their far-reaching impacts on families, communities and our Company. The circumstances leading to these fatalities have been assessed, and corrective measures have been implemented to prevent the repeat of such incidents. We remain committed to our short-term priority of preventing all fatal and serious incidents at our operations. We have completed the first phase of our Zero Harm Through Effective Leadership programme launched two years ago, which emphasises the role of leadership in bringing about sustainable improvements in health and safety while driving a high-performance culture. The programme was launched in response to an independent health and safety culture assessment at our operations. Our safety performance in FY2014 The Group’s LTIFR at year-end improved to 0.80 (2013: 0.82). Despite the reduction in the number of total recordable cases reported, our total recordable case rate (“TRCR”), which is a broader indicator of safety performance, deteriorated to 3.9 (2013: 3.4), mainly due to the reduction in exposure hours following the disposal of the construction products businesses. 0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 05 06 07 08 09 10 11 12 13 14 ANNUAL LTIFR (PER 1 MILLION MAN HOURS) Our approach to health and safety We continued to entrench our Health and Safety Framework during the year, which provides guidance to our operations on delivering our health and safety commitment. Group-wide policies and standards set out the requirements and accountability for managing material health and safety risks within our operations. Each operating company has a health and safety improvement plan that prioritises these risks and reports their progress regularly. Our efforts during the year centred on completing the first phase of our Zero Harm Through Effective Leadership programme, the main focus areas of which were leadership development, extending our Visible Felt Leadership (“VFL”) programme to supervisory staff, implementing lead indicators, managing contractor safety, and entrenching our fatal risks control and flagship Stop.Think.Act.24/7 awareness programmes. We are pleased to report substantial progress on these initiatives, detailed in the following sections.
Transcript
2 MURRAY & ROBERTS GROUP PERFORMANCE REVIEWS ’14
social safetyEnsuring the safety of our people is both a moral obligation and a strategic business imperative, and as such is a primary consideration in all our business activities. In FY2014 our lost time injury frequency rate (“LTIFR”) improved to a record-low of 0.80 (2013: 0.82). An increasing number of our businesses are delivering impressive safety results, notably Murray & Roberts Resources & Industrial which has recorded three lost time injury (“LTI”) free years and our Cementation USA mining operations with more than two LTI free years. In our underground mining operations, fall of ground (“FOG”) incidents, which have been the leading cause of fatalities in these operations, have reduced markedly.
These achievements were unfortunately marred by the occurrence of four fatalities (2013: 2): two in Infrastructure and Building, one in our Oil & Gas business and one in Underground Mining. We have extended our condolences to the families of the deceased:
• Mr. Prida Chumpla (34), an employee of EPC5a Clough Curtain Joint Venture project was struck and pressed against a structure by a pipe during pipe tie-in operations on 9 July 2013.
• Mr. Brian Sikate (31), an employee of Murray & Roberts Cementation, was struck by a kibble car in a mine shaft on 13 December 2013.
• Mr. Prince Khumalo (36), an employee of Murray & Roberts Buildings was electrocuted while installing electrical trunking on a car park roof on 30 January 2014.
• Mr. Zola Chita (28), an employee of Murray & Roberts Infrastructure was struck by a third party vehicle while on duty on the N1 Road Improvement Project on 19 February 2014.
Fatal workplace incidents are unacceptable given their far-reaching impacts on families, communities and our Company. The circumstances leading to these fatalities have been assessed, and corrective measures have been implemented to prevent the repeat of such incidents. We remain committed to our short-term priority of preventing all fatal and serious incidents at our operations.
We have completed the first phase of our Zero Harm Through Effective Leadership programme launched two years ago, which emphasises the role of leadership in bringing about sustainable improvements in health and safety while driving a high-performance culture. The programme was launched in response to an independent health and safety culture assessment at our operations.
Our safety performance in FY2014The Group’s LTIFR at year-end improved to 0.80 (2013: 0.82). Despite the reduction in the number of total recordable cases reported, our total recordable case rate (“TRCR”), which is a broader indicator of safety performance, deteriorated to 3.9 (2013: 3.4), mainly due to the reduction in exposure hours following the disposal of the construction products businesses.
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Our approach to health and safetyWe continued to entrench our Health and Safety Framework during the year, which provides guidance to our operations on delivering our health and safety commitment. Group-wide policies and standards set out the requirements and accountability for managing material health and safety risks within our operations. Each operating company has a health and safety improvement plan that prioritises these risks and reports their progress regularly.
Our efforts during the year centred on completing the first phase of our Zero Harm Through Effective Leadership programme, the main focus areas of which were leadership development, extending our Visible Felt Leadership (“VFL”) programme to supervisory staff, implementing lead indicators, managing contractor safety, and entrenching our fatal risks control and flagship Stop.Think.Act.24/7 awareness programmes. We are pleased to report substantial progress on these initiatives, detailed in the following sections.
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LeadershipEffective leadership remains the focal point of our health and safety improvement drive. Most of our projects are short to medium term in nature and require labour to be mobilised from surrounding communities. This makes instilling the desired safety culture on each project challenging and calls for exceptional leadership and planning if we are to achieve our health and safety goals.
Murray & Roberts leaders are responsible for providing a safe and healthy environment and are expected to set the example by visibly demonstrating leadership and engaging with employees on the required safety mindset and behaviours. We have extended our VFL engagement training to supervisory staff to help leaders deliver on this expectation, following the successful rollout to senior and middle management.
We also set clear expectations for each leader across the different levels of the organisation on the level and frequency of their engagement with employees in the workplace. Our executive committee spent a considerable amount of time during the year engaging with employees and site leaders on health and safety. Feedback from employees has been positive, and VFL will remain one of the key pillars of the health and safety programme as we pursue our primary objective of Zero Harm.
Health and Safety Framework
Group Chief exeCutive and senior manaGement on visible felt leadership enGaGement
senior manaGement and employees disCuss safety on site
INSPECTIONS, OBSERVATIONS, AUDITS & AWARENESS
INCIDENT INVESTIGATIONS
INDUCTION & TRAININGPOLICIES & PROCEDURES
1st, 2nd and
3rd party audits
• VALUES
• HEALTH AND SAFETY VISION and prinCiples
• SHEQ POLICY
• BILL OF RIGHTS
• SHEQ STANDARDS
• FATAL RISKS CONTROL PROTOCOLS
• LIFE SAVING RULES
• HSE GOVERNANCE
HEALTH AND SAFETY
TARGETS & OBJECTIVES
RISK MANAGEMENT
STOP.THINK.ACT.24/7
SAFETY AWARENESS & MOTIVATION
MURRAY & ROBERTS OPERATIONS
MURRAY & ROBERTS CORPORATE
EFFECTIVE VISIBLE FELT LEADERSHIP & LINE ACCOUNTABILITY
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We have also developed and rolled out the Effective Safety Leadership Training programme which now forms part of our broader leadership development programme. The Effective Safety Leadership programme provides leaders with an understanding of their role in cultivating an effective organisational culture that supports a Zero Harm mindset and emphasises the importance of integrating health and safety considerations at an operational level.
Lead indicators Lead indicators allow us to effectively monitor performance with the aim to act proactively and increase predictability. Lead indicators implemented as part of our performance monitoring programme include:
• The Zero Harm Index, which measures the proportion of work being performed safely;
• VFL engagements;
• Compliance with our Life Saving Rules;
• Compliance with our Critical Safety Standards;
• Quality of pre-shift meetings; and
• Audit Compliance Index.
Looking ahead, effort will now be directed at proactively addressing key risks before they lead to injuries.
Managing health and safety riskWhile we have consistently improved on LTIFR, our commitment to Zero Harm means we strive for zero fatalities and injuries. We have still not delivered on this goal, thus we must redouble our efforts to manage material safety risks. The areas which present the greatest safety risk are fall of ground at our underground mining operations, working at heights, lifting operations, machinery and equipment, falling and rolling objects, hazardous materials, mobile equipment and vehicles used for operations.
The Fatal Risks Control Protocol (“FRCP”) programme remains our primary intervention for addressing safety risks in these areas. Further progress was made during the year to entrench the FRCPs at our operations, and encouragingly there has already been a marked reduction in fall of ground and mobile equipment incidents. Specifically, interventions included implementing the Trigger Action Response (“TARP”) programme to manage fall of ground risk and various other systems to improve communication between operators of mobile equipment and pedestrians at our Murray & Roberts Cementation operations. During the year our operations conducted self-assessments of their compliance with the FRCPs, and progress on addressing gaps identified will be closely monitored during the year ahead.
We have also intensified efforts to manage the risk of alcohol and drug abuse. During the year we implemented an alcohol and drug screening programme at all sites which includes screening at the time of medical surveillance. The higher tested prevalence on drug screening is as a result of more employees being tested and drug screening programmes implemented for the first time at some of
the sites. Our experience has shown that an increase in the number of drug tests conducted often results in a reduced prevalence over time due to the fact that employees change their behaviour knowing that they will be tested. Employees that test positive for drugs are not allowed to enter our sites.
Drug anD alcohol screening programme results
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DRUG TESTING – ANNUAL COMPARISON
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The FRCPs programme forms part of our broader risk management programme which seeks to continually identify and control all health and safety risks. To achieve a systematic approach to risk management we have implemented OHSAS 18001 accredited health and safety management systems at the majority of our operations. To this end 85% (2013: 69%) of our workforce is covered by OHSAS 18001 certification.
social performance continued
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Managing contractor safetySubcontractors play an important role in some of our business activities and are a contributor to our health and safety statistics. Our Group safety processes and programmes are extended to our subcontractors and we continuously reinforce our expectations and monitor their compliance with our requirements.
We have revised our contractor management framework following a benchmarking exercise against our clients and peers. The revised framework incorporates best-practice examples from this process and seeks to bridge the knowledge gap between permanent and contractor employees by ensuring that all role players involved in executing contract work are aware of their health and safety responsibilities.
We are confident that the framework’s emphasis on pre-qualification, performance management and post-contract evaluation will lead to improved subcontractor safety performance. This also provides a basis for us to deepen our relationships with key subcontractors and build more sustainable partnerships.
Learning and sharingOur Stop.Think.Act.24/7 programme, introduced in 2006, remains a useful platform for conveying health and safety messages and motivates employees to take responsibility for their own safety, their colleagues’ safety and the work environment. This programme is supported by the Impilo Yethu print-based comic strip which communicates selected topics on safety lessons and other health, safety and environmental messages.
We strive to uphold our principle of having no repeat incidents by thoroughly investigating all incidents and implementing corrective measures to prevent re-occurrence. Senior management review all high potential and fatal incidents and lessons learnt are widely communicated in the organisation to raise awareness.
We are also able to learn from the good practices implemented by our clients and from within our diverse operations. Management at operations is encouraged to take advantage of these opportunities and use the information to advance our health and safety programme.
Prevention Early identification Early intervention Clinical managementIncapacity
MONITORING AND EVALUATION (ELECTRONIC DATA MANAGEMENT PLATFORM)
24 HOUR MEDICAL AND COUNSELLING CALL CENTRE
Elements of the Integrated Employee Health and Wellness Programme
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We have implemented regular occupational health risk assessments and are formulating occupational health risk exposure profiles (“OREPs”) for all employees which inform the risk-based medical surveillance programme.
MEDICAL SURVEILLANCE (NUMBER OF EXAMINATIONS)
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malariaThree malaria cases were reported at our operations in Ghana. Workplace interventions to combat malaria include providing employees with education and building awareness, as well as providing mosquito nets and undertaking mosquito breeding control. We have implemented a travel health programme that provides medical advice, vaccinations and other relevant services for employees who travel to high risk countries.
Fatigue risk managementDuring FY2014 we initiated a focused Fatigue Risk Assessment programme which forms part of our occupational health risk assessments. The aim of the programme is to understand the extent of fatigue risk in the Group and identify the necessary mitigating actions. The programme will be completed during the first half of FY2015. Qualitative fatigue assessments are also done for all employees at the time of medical surveillance. Employees are encouraged to report fatigue by calling the health and wellness helpline to get advice and affected employees are referred for face-to-face counselling and assistance.
WellnessThe Philisa Employee Health and Wellness programme focuses on prevention, early identification and intervention, clinical management and incapacity management relating to chronic and lifestyle diseases in the workplace. The scope of the programme includes HIV/AIDS, tuberculosis (“TB”), chronic diseases of lifestyle, substance abuse and psychosocial conditions. Within our operations, we are also implementing employee health and wellness standards that guide operations on managing health and wellness issues and providing support to employees.
The programme is supported by a 24-hour medical and counselling call centre which provides information, counselling and support to employees and their families as well as management. Telephonic and face-to-face counselling is provided for medical, psychosocial, financial and legal problems.
We are also working with other companies through industry forums to share lessons learnt and other ideas on improving health and safety. We will continue to look for more ways to identify and share good practices and lessons learnt given its proven effectiveness in improving health and safety at our operations.
Safety going forwardThe Zero Harm Through Effective Leadership programme remains our key initiative to develop a culture of safety in our operations. Over the next year we will focus on further entrenching the initiatives rolled out in the last four years, as we are confident that these programmes can take us to the next level of safety performance. Specific activities will include embedding the Fatal Risks Control programme, lead indicators, leadership development, contractor safety management and Stop.Think.Act.24/7.
Employee health and wellnessDuring the year we implemented an enhanced Philisa Employee Health and Wellness programme at our South African operations, which integrates the various elements of occupational health and wellness management to proactively manage associated risks. Similar programmes are in place at our overseas operations. Encouragingly, we are seeing an increased level of awareness and interest in occupational health and wellness issues among our employees.
Occupational healthAs part of our Occupational Health and Wellness programme we have implemented mandatory Group standards to manage occupational health risks within our operations. Our most prevalent occupational health condition remains Noise Induced Hearing Loss (“NIHL”) which accounts for 68% of all reported conditions. During the year 23 (2013: 29) new NIHL cases were recorded. Other conditions include repetitive strain injuries, dermatitis and heat stroke.
OCCUPATIONAL DISEASE FREQUENCY RATE YEAR-ON-YEAR COMPARISON
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NIHL is most prevalent among our rock drill operators in Underground Mining. Risk mitigation strategies that have been implemented include engineering solutions to eliminate or manage noise risk and educating employees on the risk of noise exposure and the importance of using hearing protection equipment.
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The programme aims to prevent the occurrence of disease through providing all employees with health and wellness education and training, which includes building awareness around HIV/AIDS and TB. HIV/AIDS education covers all topics from transmission and prevention to screening and treatment. An online e-care programme is available to all employees that have internet access.
Early identification focuses on voluntary HIV counselling and testing, TB screening and comprehensive wellness screening for all chronic lifestyle diseases. Early intervention is provided through the chronic disease management programme and the employee assistance programme. Affected employees are supported to ensure access and adherence to treatment and are counselled on behavioural change that is required to manage their conditions.
Clinical management is undertaken through on-site clinics at large sites which provide primary healthcare and emergency services as well as manage occupational health conditions, injuries and claims. Support is provided for managing HIV/AIDS and TB, and treatment is facilitated through government facilities or medical aid programmes.
Management receives support on issues including managerial counselling, absenteeism management, incapacity management, disability management and claims management. This service enables managers to deal with employee health and wellness issues on a professional and confidential basis.
hiV/aiDsNotwithstanding efforts to increase employee participation in the voluntary counselling and testing programme, which included free HIV testing and wellness screening at the time of medical surveillance at our South African operations, our uptake of HIV tests remains disappointingly low. During the year 2 173 (2013: 2 140) employees volunteered for HIV testing. The HIV prevalence in our tested employee population in the year was 4% (2013: 15%).
The reason for the reduction in the number of tests conducted and subsequent HIV prevalence is mainly due to the disposal of some of our businesses that accounted for a large proportion of HIV tests in the last financial year. The industry HIV prevalence is estimated between 18% – 22%. The tested prevalence often depends on how comfortable HIV positive employees are to come forward and be tested. We remain committed in overcoming these challenges and improve performance going forward.
Employees testing positive for HIV are enrolled on the chronic disease management programme that provides for counselling, support, referral, care and facilitation into treatment. The low uptake in voluntary HIV testing is being addressed through ongoing education and building awareness of the benefits of the programme. We are confident that the uptake will improve going forward.
tBAs part of the enhanced programme, TB screening is now also offered to every employee during medical surveillance. During the year, five (2013: 19) cases of TB were reported.
Focus going forward In FY2015 we will continue to prioritise the health and wellness of our employees by further improving our health and wellness programme, with specific focus on the following key issues:
• Setting of targets and objectives and implementing more indicators to measure the effectiveness of the programme.
• Improving communication on health and wellness issues to all employees and promoting personal responsibility.
• Increasing the uptake of the programme, particularly HIV and wellness screening, through increased awareness building and communication to reduce stigma and suspicion.
• Further training for all stakeholders involved in health and wellness such as line management, health and safety and human resources professionals, union representatives and wellness champions.
our employeesThe capacity and capability of our employees is a cornerstone of Murray & Roberts’ sustainability. The Group aims to be an employer of choice in the engineering and construction sectors within which it operates and its world-class delivery of services is a reflection of the capability of its diverse and experienced workforce. Our employee management approach is supported by policies, processes and frameworks which aim to create a culture which drives high performance while remaining compliant with all laws in the countries in which we operate. These policies, processes and frameworks also take cognisance of international standards for social justice and human and labour rights, and the Group will not tolerate any instances of unfair discrimination, inhumane treatment, forced labour, child labour or intimidation in the workplace.
Performance management in the Group aims to drive company, individual and team performance, while creating a purpose driven culture, where there is alignment to the purpose, vision, values and strategic goals of the company. In particular it is aligned to the five performance dimensions necessary to realise our vision of being “a leading international diversified project engineering, procurement and construction group in selected natural resources and supporting infrastructure sectors by 2015”. We have defined leading across five performance dimensions, which have been incorporated into the performance contracts of Group leadership.
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Murray & Roberts Vision and Performance Dimensions
social performance continued
By 2020 we will be a leading international diversified project engineering procurement and construction group in selected natural resources and supporting infrastructure sectors.
1Financial• Satisfied shareholders through value creation
• Achievement of business objectives
2 Leadership• Murray & Roberts brand respected internationally
• Recognised as a diverse, high performing organisation
• Renowned for leadership development and capacity
3 Relationship• Stakeholder partnerships leveraged for growth
• Internal and external trusting and open relationships
• Recognised as an employer of choice
4 Operational• Global capabilities harnessed to deliver successful project outcomes
• Effective systems and controls to ensure successful project delivery
• Sustainability and governance emulated by industry
5 Risk• Recognised for outstanding HSE results
• Effective risk management
LEAD
ING
Key performance indicators (“KPIs”) for each dimension are cascaded down throughout the Group annually by the Group chief executive, which creates strategic clarity and sets clear targets for expected performance and desired behaviour. Formal evaluations are undertaken biannually to measure progress against and achievement of KPIs. The outcomes of these structured, evidence-based discussions feed into our remuneration practices to recognise and reward high performance, and inform our talent management process to strengthen succession planning by identifying scarce and critical roles.
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Employee profile At end FY2014 Murray & Roberts had approximately 21 217 employees (2013: 33 281), of which 15 881 or 75% are based in South Africa and 5 666 internationally. The sharp decline in number of employees is due to the sale of our Construction Products Africa platform and the restructuring of various operating companies. In addition to our permanent employees, we employ some 7 559 individuals who provide services through contracting and joint venture agreements.
Employee turnover was higher during the year due to the restructuring process; however excluding these numbers, turnover remained well within industry norms at 7%, with only 3,3% of employees leaving due to resignation.
We continue to build our employee value proposition and strive to create an environment in which people want to stay and deliver superior performance. Our South African operations participated in the Deloitte Best Company to Work For survey, where our overall score improved again this year, with 82% of our employees rating us as an employer of choice. Cementation Canada was again rated as one of Canada’s Top 100 Employers.
Developing our people Training and development remains a key focus for the Group to ensure our employees are able to perform their duties effectively and safely, and to help them achieve their individual potential. Each operating company managing director, supported by human resources, is accountable for ensuring that appropriate training is in place for employees. During FY2014, a total cost of R259 million (2013: R156 million) was spent on training and development. This equates to 2,7% of payroll which is above the globally accepted benchmark of 2%.
In South Africa approximately 13 744 employees received training at a cost of R65 million. Of this spend 67% was on black employees and 14% on women. This equates to 1,7% of our South African payroll, which is good given the current economic constraints.
Given the high demand for technical skills within the Group, technical training constitutes one of the largest aspects of our training and development interventions. Crucially, technical training also promotes operational excellence and working safely.
unDergrounD mining
The Murray & Roberts Cementation Training Academy’s Trackless mechanised mining (“TMM”) skills programme qualification was recently registered by the Mining Qualifications Authority (“MQA”). The programme provides technical education, training, development and learner support for TMM operators. Learners who undergo TMM operator training at the academy are assessed on their psychomotor skills to determine their suitability as an operator. To build their competencies, learners are provided with e-learning, visual-based training to stimulate consequential thinking, simulations, mock-up training and workplace coaching. In FY2014, 122 learners successfully completed the programme.
The academy will further expand its trackless mining skills training offering, using simulation as a powerful tool to accelerate an operator’s competency development. Simulation accurately assesses an operator’s proficiency across three areas: health and safety, productivity and machine appreciation, by simulating common workplace and work-related hazards and risks in a virtual environment at a fraction of conventional training-related costs.
Shaft sinking technical skills trainingA recent multi-million rand upgrade to the shaft sinking training facility at Murray & Roberts Cementation’s training academy enables it to provide training and development of the necessary skills for Murray & Roberts Cementation’s new shaft sinking method. The new method, proven in the Canadian mining industry, is substantially different to the method used in South Africa in the past.
murray & roberts Cementation traininG aCademy
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Each of the four existing eight meter diameter training shafts were modified to replicate a specific phase of the new shaft sinking method. This ensures that every team member actually practices the procedures repeatedly to develop end-user proficiency before being deployed to a project site. In support of applied competency, all learners undergo stringent assessment to ensure skills programme exit level outcomes are met across foundational, reflexive and practical competency levels.
The employees set to undertake shaft sinking operations at the Venetia Underground Project completed their training in mid-September 2014.
engineeringMurray & Roberts Power & Energy continues to contribute to the skills base of the local communities surrounding the Eskom power programme projects, implemented in line with the National Skills Development Strategy and the Accelerated and Shared Growth Initiative – South Africa (“ASGISA”) imperatives. Primarily, the focus is on artisans in four trade disciplines (Boilermaker, Fitter, Welder Artisan and Rigger) and two occupations (Pipe Fitters and Steel Erections). All qualified welders are certified A-class welders.
Since the programme’s inception, 572 apprentices have successfully completed their training, which translates into 82% progress in meeting our ASGISA commitment to train 700 apprentices on the Medupi power project.
The Kusile project has trained a total of 182 apprentices; 26% of our ASGISA commitment to train 700 apprentices on this project.
Leadership developmentOur Leadership Development Framework, in addition to building strong individual leaders, articulates the collective leadership required to fulfil our purpose, vision and live our values. We have defined a set of leadership practices which enables us to consistently measure the development of leadership across the Group.
The three primary leadership characteristics we are developing for the Group, which are part of our approach to build a strong leadership brand, are:
• Leadership that lives the values, is visible and engaged
− Characterised by values-driven behaviour, personal mastery and enhancing the personal growth of people.
• Leadership that is committed and performance driven
− Where leadership is held accountable for performance and behaviour in delivering our services safely, on time, to budget and to high quality through collaboration, team work, discipline and professionalism.
• Leadership characterised by sound stakeholder relationships
− Built on mutually beneficial partnerships and trust, ethical conduct and value-add to clients.
Our leadership development programmes aim to entrench these characteristics. In FY2014, 184 individuals attended leadership development interventions at a cost of R4,5 million.
Renewed energy will be placed on supervisory leadership training, which is where leadership can have the biggest impact on people, safety and productivity.
social performance continued
murray & roberts Cementation traininG aCademy
TRAINING ON MURRAY & ROBERTS CEMENTATION'S NEw SHAFT SINKING methodoloGy
apprentiCes in traininG
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Project managementIn addition to required leadership practices, we have also identified the core competencies in which our leaders need to be proficient. The three core competencies are project management, commercial acumen and integrated risk management. Project management is a key focus area, and this year we introduced a two-day project management introduction programme which combines both Murray & Roberts content delivered by our executives and applicable theory delivered by external specialists. Strategic context is provided by the Group chief executive at the outset of each programme. To date, 130 individuals have attended the programme and 91 are registered to attain professional project management certification.
Bright Young minDs
Graduate development programmeThe South African Graduate Development programme is run from the Corporate Office and equips graduates with people and management skills to succeed in their careers. Graduates on the programme get to meet and engage with the Murray & Roberts board members. Technical training is done on-site by the relevant operating company. Each graduate has a mentor who coaches and guides them through the difficulties of transitioning from a being a student to a working professional.
In January 2014 39 new graduates joined the programme, of which 62% are black and 26% are women.
Bursary programme
We offer bursaries for students studying towards qualifications in the fields of engineering, quantity surveying and building/construction management. The Group currently sponsors 56 bursars studying at various tertiary institutions in South Africa. Of these bursars 68% are black and 34% are women. We aim to keep bursars informed and engaged by arranging site visits and host an annual bursar camp.
The results of the Universum Student Survey reveal how students perceive organisations as employers in South Africa. We ranked 6th in the 2014 student survey in the engineering category. Young talent is important for us and we will continue to strive to remain attractive and relevant to the market.
Murray & Roberts sponsors the annual Best Science Fiction Short Story Competition for students in the Faculty of Engineering and the Built Environment at Wits University. This year, Jerisa Padayachee’s story – A ray of hope, won first prize and she is now the proud owner of a kindle.
Group Chief exeCutive at the openinG of the projeCt manaGement proGramme
annual murray & roberts bursar Camp
murray & roberts bursars and Graduates
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The Clough Graduate programme is designed to provide a challenging, interesting and rewarding career start. It is a three year structured programme supporting the development of core competencies and capabilities through relevant experience and training. Professional and technical training complements practical hands on experience to ensure all of Clough's graduates can achieve personal and professional success. Clough also offers an engineering summer internship for Australian penultimate year students. The Clough Summer Internship runs for 12 weeks during the university summer break and involves real work situations, providing hands-on experience.
Employee relationsAt Murray & Roberts we uphold the right to freedom of association and the right to collective bargaining. In South Africa, 59% of our workforce is covered by a bargaining agreement or trade union membership.
With the heightened industrial action climate in South Africa, Murray & Roberts recognised the need to implement a consistent approach to managing employee relations. It is estimated that strike action cost the Group approximately R65 million in FY2014. Even though this is an improvement on the previous year’s cost, it remains a risk for the business. For this reason, Murray & Roberts recognised the need to implement a consistent approach for managing employee relations, beyond the normal grievance and disciplinary procedures which are available and are communicated to all employees. The Group has developed an Employee Relations Framework (“ER Framework”) that stipulates key goals and principles to empower operations to build meaningful relationships with their employees and stakeholders, to reduce the risk of labour disputes and to ensure optimum organisational performance in the interest of all stakeholders. The key goals of the ER Framework are engaged, people, capable leaders and being an equitable employer. The principles include effective organisational communication, high performing union-management engagements, high performing teams, community engagement, and critical skills training. A scorecard has been developed to monitor the implementation and progress made in these areas.
In the Energy & Industrial platform, the ER Framework was piloted at the Kusile power project. Given that supervisors and foremen are at the forefront of employee relations, Kusile project leadership took the opportunity during the national industrial strike to train 166
supervisors and foremen on the ER Framework’s recommended critical skills. Crucially in this context, the ER Framework aims to drive effective two way communication and the quick resolution of problems impacting employees and performance. This interactive learning programme was called Phendula, meaning “to turn” or “to change”. The programme will be closely monitored to ensure that it has the desired impact.
Employment equityThis year it was challenging to drive our transformation agenda in South Africa given the reduction in headcount. We have however succeeded in increasing the representation of black employees at top management level from 5,5% to 14,8%.
An Employment Equity Framework with stretch targets has been adopted and will be rolled out in FY2015. The objective of the Employment Equity Framework is to drive rapid transformation with the aims of recruiting and promoting a significant number of historical disadvantaged South African (“HDSA”) candidates, developing and achieving stretch employment equity plans, accelerated HDSA development and retention and affirming accountability for transformation with all leaders. Targets are cascaded from the Group chief executive through to middle management and form part of performance contracts. Bi-annual reviews will be conducted at Group level to review progress, while operating companies are accountable for implementing holistic measures to transform their workforce.
social performance continued
MURRAY & ROBERTS wITS BRAND AMBASSADOR SIHAAR SHAIKH wITH jerisa padayaChee, winner of the best sCienCe fiCtion short story Competition
KUSILE PROjECT SUPERVISORS AND FOREMEN ATTEND THE INTERACTIVE phendula learninG proGramme
13
Of our South African workforce, 75% of employees are black (2013: 76%) and 10% are women (2013: 12%). Approximately ten percent of our South African based employees are foreign employees from bordering African countries employed in our underground mining operations. Of employees at management level, 60% (2013: 64%) are black and 12% (2013: 9%) are women.
Our operations outside of South Africa continue to strive to meet gender and minority targets to create a workforce profile that reflects the demographics and talent of the communities in which they work. Clough for example is the platinum sponsor of the Women in Engineering Curtin Division (“WieCD”). The group provides networking and support for female engineers, as they navigate their way through a predominantly male degree. Clough provides financial support and female engineering mentors and speakers to assist with the programme.
Broad-Based Black economic empowermentMurray & Roberts is committed to Broad-based Black Economic Empowerment (“BBBEE”) in our South African business. We follow the provisions of the Broad-based Black Economic Empowerment Act No. 53 of 2003, the principles embodied in the Codes of Good Practice on Broad-based Black Economic Empowerment (“BBBEE Codes”) and the Construction Sector Charter. As a leading South African enterprise, Murray & Roberts and its operating companies have adopted a holistic BBBEE strategy, which aims to achieve:
• Appropriate BBBEE ownership at all its operations through a tiered approach from Murray & Roberts Holdings Limited and from within selected operating companies;
• A meaningful number of black senior executives throughout the Group;
• An employee complement that reflects the diversity of South Africa’s demographic profile;
• A core complement of black professionals;
• Comprehensive skills development to enhance individual and organisational capability and capacity;
• Preferential procurement policies that leverage the broad-based principles of BBBEE and support local procurement where appropriate; and
• Enterprise and social development programmes aimed at accelerating the development, empowerment and access to the economy of previously disadvantaged individuals and groups.
The Group improved its consolidated BBBEE rating from Level 3 to Level 2 measured against the Construction Sector Charter, which was independently verified by EmpowerLogic (Pty) Limited, an accredited BBBEE verification agency. Individual operating company BBBEE ratings range from Level 2 to Level 6. Despite more stringent targets under the Construction Sector Charter, there were pleasing improvements in equity ownership, management control, skills development and enterprise development as out lined below, where the percentage compliance to the targets is listed. Of significant concern is the drop in the employment equity score, which is due to the increase in targets.
The table below illustrates the change in the Group’s BBBEE rating during the past year.
2012/13 2014/14 movement*
BBBEE Status Level 3 Level 2
BBBEE Score 78,99% 86,88%
Equity Ownership 84,79% 96,00%
Management Control 65,43% 69,29%
Employment Equity 43,95% 34,09% Skills Development 66,66% 83,59%
Preferential Procurement 100% 100% çè
Enterprise Development 79,06% 100%
Socio-economic Development 100% 100% çè
Note: The majority of Construction Products businesses were excluded for the most part of the reporting period following their disposal in October 2013.
Murray & Roberts as a listed company has a diverse shareholding base with about 7 600 shareholders, with South African and international pension funds and unit trusts holding approximately 70% of the shares. These shareholders are referred to as mandated investments in the BBBEE Codes. The economic interests by black people in the Group’s share ownership is 45,5%, with black women having a 14,4% economic interest. The increase from last year’s 31,7% is due to a change in calculation methodology, where the black ownership of the mandated investments was established by an Independent Competent Persons report. We previously calculated our black ownership in line with the Construction Sector Charter and BBBEE Codes by excluding the mandated investments from the calculation. The calculation of our black ownership percentage is also based on the value of Murray & Roberts’ South African operations, where our South African revenue, EBIT and assets are considered. The higher the international activity, the higher the percentage black ownership.
Murray & Roberts introduced the Letsema BBBEE shareholding scheme in December 2005 to facilitate a broad-based black economic empowerment shareholding transaction consisting of:
• a community trust known as the Letsema Sizwe Broad-based Community Trust formed to benefit previously disadvantaged community groupings;
• a black employees benefits trust known as the Letsema Khanyisa Black Employee Benefits Trust to benefit current and future qualifying black employees and their immediate families;
• a black executives trust known as the Letsema Vulindlela Black Executives Trust to benefit qualifying current and future black executives; and
• a general staff trust known as the Letsema Bokamoso General Staff Trust to assist qualifying employees to acquire shares in Murray & Roberts. In December 2010 the beneficiaries of this Trust were entitled to sell their shares in Murray & Roberts and as a consequence this Trust is no longer a shareholder in Murray & Roberts, however in line with BBBEE Codes, the continued consequence of this shareholding is considered in calculating the Group’s BBBEE shareholding.
Since the Letsema BBBEE shareholding scheme was launched, wealth of approximately R693 million has been created for participants and total dividends of R230 million have been paid to the trusts. Wealth creation is primarily determined by the share price and dividend payments by Murray & Roberts.
14 MURRAY & ROBERTS GROUP PERFORMANCE REVIEWS ’14
We undertake various enterprise development activities through our operating companies. Activities include the procurement of subcontractors from small, medium and micro enterprises (“SMME”), early payment to SMME suppliers, preferential credit terms for buyers and administration support for certain contractors, suppliers and clients. The total value of enterprise development initiatives across the Group was R71,8 million in 2014, representing 0,6% of affected turnover. The quantum is lower than 2013 due to the exclusion of the sale of the Construction Products businesses that made a significant contribution to the Group’s enterprise development activities.
Enterprise Development Case Stusy – Stephina van Rooyen: Woman of steel
Stephina van Rooyen is in a fortunate position, but not one she takes for granted. She is a beneficiary of Murray & Roberts’ Enterprise Development Programme that has helped her build her business into a more stable, sustainable women-owned construction enterprise.
“Being a woman in the construction industry is not easy,” she says. “I would not have been able to get this far without this support. Most of my friends who started in construction have failed, but thanks to the lessons I have learned about their experiences and the advice I receive from my mentors at Murray & Roberts, I have managed to prevail.”
Stephina’s story is compelling especially because she entered the industry with no experience and little more than the passion she felt for it. This started with her completing a brick-laying course in 1997, having previously specialised in selling African art and cosmetics.
She has consistently upgraded her skills through ongoing training and development and is today a Grade 3 member of the Construction Industry Development Board. She is also registered with the South African Federation of Civil Engineering Contractors, as well a member of the National Association of Women in Construction.
As a participant in the Murray & Roberts Enterprise Development Programme Stephina has access to professional advisory skills and mentoring that have helped her build a sustainable business.
“There are many examples of the help they have provided, from assisting with me acquiring a competent-persons certificate for key contracts to the advice they provide for everything from the correct costing of new projects to ongoing mentoring. I’m very happy to be under mentorship because my business would have failed otherwise,” she says.
social performance continued
The revised BBBEE Codes and the consequential alignment of the Construction Sector Charter will result in a significant drop in the Group’s and its competitor’s BBBEE ratings. All operating companies have undertaken an analysis to understand the impact of the new codes and are developing plans to limit the impact and to improve their ratings. The key areas for improvement are management control, employment equity and skills development.
local economic developmentMurray & Roberts is committed to supporting local economic development, with the aim of supporting government and client localisation strategies. We have made a significant investment in our plant and equipment over the past three years with a cumulative capital expenditure of R3,0 billion. R1,8 billion has contributed to the expansion of our productive base. This investment has created more jobs both directly and indirectly and provides a platform for future growth and economic development in the economies in which we operate.
Preferential procurement as a percentage of total procurement spend increased to 79% (2013: 73%) of the South African operations’ procurement expenditure of approximately R8,5 billion. This is well above the Construction Sector Charter target of 70%.
preferential procurement as % of total procurement
62
64
66
68
70
72
74
76
78
80
82
12 13 14
PREFERENTIAL PROCUREMENT AS % OF TOTAL PROCUREMENT(%)
We also increased our percentage procurement from small and micro enterprises and suppliers that are more than 50% black owned. Procurement from black women-owned suppliers improved significantly to 8,4% (2013: 6,0%), which for the first time exceeded the 8% target outlined in the Construction Sector Charter.
PREFERENTIAL PROCUREMENT AS % OF TOTAL PROCUREMENT 2012 2013 2014
Qualifying Small Enterprises & Exempted Micro Enterprises 16,6% 19,6% 25,8%Suppliers that are >50% Black owned 14,0% 10,9% 14,7%Suppliers that are >30% Black Women Owned 2,6% 6,0% 8,4%
stephina van rooyen, a benefiCiary of the murray & roberts enterprise development initiative
15
community developmentMurray & Roberts approaches community development as a business imperative rooted in the needs of our local communities and national development priorities. We currently have four programmes as part of our community development strategy in South Africa, which are aligned to our overall business strategy and focus on education as a means to unlock communities’ potential for sustainable development.
The four programmes are:
CORPORATE SOCIALINVESTMENT (CSI)
LETSEMA KHANYISA EMPLOYEE BENEFITS TRUST
LETSEMA SIZWECOMMUNITY TRUST
MURRAY & ROBERTS CHILD WELFARE FUND
• Aligned to strategic business needs but also supports national agenda
• Core focus on education, specifically mathematics, science and technology education in schools; numeracy and literacy development in ECD and environmental education
• Longer-term funding to larger, reputable and specialist partners
• Annual funding as a percentage of net profit after tax (SA operations)
• Aimed at qualifying employees and their immediate families
• Focus on education and skills development
• Secondary and tertiary education bursaries, in-service training & internships where possible through the Murray & Roberts Bursary Scheme
• Funded through dividend income
• Aligned to social and developmental needs in communities
• Emphasis on social issues and broad-based reach and impact
• Focus areas in the past included: HIV/AIDS awareness and prevention; youth development; life skills and leadership; women’s empowerment and sports development
• Funded through dividend income
• Charitable donations focused on orphans and vulnerable children
• Smaller, once off donations to community based organisations, schools, orphanages
• Funded through voluntary payroll giving and annual golf day
For FY2014, the lion’s share of expenditure (R14 million) occurred within the Corporate Social Investment (“CSI”) programme, followed by our Letsema Khanyisa Bursary commitments.
CHILD WELFARE
FUND
R742million
LETSEMA SIZWE TRUST
R1,5million
LETSEMA KHANYISA BURSARIES
R8,7million
CORPORATE SOCIAL
INVESTMENT
R14million
The technical and professional support and training provided to smaller contractors such as Stephina are vital to the continuing sustainability of these enterprises that would otherwise struggle to meet the required standards, and therefore win profitable contracts.
Stephina partnered with Murray & Roberts in 2000 and has been involved in numerous road and steel construction projects since. The most prestigious of these was as one of the subcontractors on the Sandton Gauteng station – a landmark well known to residents and visitors to Johannesburg.
Not satisfied with resting on her laurels and letting her larger partners take on all responsibility of developing the sector, Stephina is actively involved in developing other emerging women in construction.
“We need more women in the industry, but they must have a passion for it and they have to be hands-on. It is a tough industry to be in and women must not be ashamed to participate in it,” she says.
16 MURRAY & ROBERTS GROUP PERFORMANCE REVIEWS ’14
Our community development initiatives have reached almost every province in South Africa, with the exception of the North West and Northern Cape. The footprint and impact of our social investment is more visible in Gauteng, followed by Limpopo province and the Eastern and Western Cape. Smaller programmes are being implemented in the Free State and Mpumalanga provinces. Project implementation in these areas has been established around strategic government projects and in support of our operating companies interests around key commercial projects.
Strategic collaboration with key government departments, specialist education institutions and civil society organisations provides opportunities to hone our understanding of the complex challenges facing the education system; to leverage knowledge, resources and best practice in education reform and to support the collective pursuit of widespread, systemic transformation of the education system.
Quantitative and qualitative reports from our partners in education show that our programmes are having a positive impact. Through purposeful collaboration, strategic partnerships and deliberate strategies, we afford learners much needed educational opportunities, positively influence the life chances of thousands of young people across the country and in the process, change lives through education.
social performance continued
Early Childhood Development
1Project
Social franchising research
• Research into models for scaling up ECD services
Environmental Education
1Project
Fundisa For Change
• Curriculum and Assessment Policy Statement (“CAPS”) aligned materials development and training for tertiary institutions, and educators in the intermediate phase and the FET phase in secondary schools
Education 2University
Chairs
3Science centres
7Maths,
Science and Technology
Interventions
• Chair of Construction Engineering at Stellenbosch
• Chair of Mechanical Engineering at University of the Witwatersrand
Building Africa: Construction Exhibition• Cape Town Science Centre
• KZN Science Centre
• Sci Bono Discovery Centre
• Go for Gold Gauteng Learner Excellence Programme
• Gauteng Department of Education – Grade 9 Satellite Broadcast Programme
• Tomorrow Trust Holiday School
• TRAC South Africa – Fixed and mobile physical science labs
• University of the Free State-Schools Change Project
• Venetia Khula Weekend Schools Project
Corporate Social InvestmentOf our R14 million total CSI spend, R11,7 million (84%) was disbursed to 14 partner organisations engaged in a variety of interventions in education. The remaining R2,3 million (16%) was allocated to strategic membership associations such as the National Business Initiative (“NBI”), the Bedfordview Community Policing Forum, discretionary projects around operating company projects and departmental overheads.
Letsema Khanyisa Employee Benefits TrustThe projected expenditure for the Letsema Khanyisa Bursary Support Scheme was R8.7 million for the 2014 academic year in support of 174 students: 85 secondary students and 89 tertiary students. During the period under review, secondary education bursaries were capped at R35 000 per student and tertiary education costs were limited to R65 000 per student. By 30 June 2014, R4,8 million had been disbursed to current bursars for tuition, textbooks and stationery, uniforms and transport.
7provinces
14partners
170schools
8900learners
17
Letsema Sizwe Community TrustA total of R1,5 million was paid from the Trust during FY2014, in support of sports development, coupled with life skills and leadership training activities was implemented by the Jack Cheetham and Letsema Sports Award partners who incubate future sporting champions for South Africa.
Six new organisations were awarded prizes at the event, which was hosted in November 2013. Bethelsdorp Wrestling Club from the Eastern Cape was nominated as the 2013 Jack Cheetham Award winner, while Mandeville Aquatics Disability Swim School in Gauteng received first prize for the Letsema Award.
Murray & Roberts Child Welfare FundMurray & Roberts consistently promotes employee community engagement among our staff. The Murray & Roberts Child Welfare fund boasts a legacy exceeding 50 years and serves as the platform through which employees can make a positive contribution to community development. Funding to the Child Welfare Fund is derived from voluntary employee payroll giving, thus driving commitment to and ownership of the project. This funding model has assisted in increasing employee awareness around corporate citizenship, drawing attention to the plight of orphans and vulnerable children and building synergies between all aspects of Murray & Roberts’ social responsibility activities.
During FY2014, R742 000 was distributed to 19 organisations. The funding supported a variety of projects ranging from once-off, emergency type projects to providing toys, furniture and equipment in hospitals and children’s homes that will be used for years to come.
The Medupi Leadership Initiative Murray & Roberts actively supports the Medupi Leadership Initiative (“MLI”) which was launched by Eskom in the first quarter of FY2014. The MLI was established as a partnership between Eskom and Medupi contractors to address the challenge of sustainable employment around the Medupi Power Station post the construction phase of the project. During FY2014, Murray & Roberts undertook leadership and financial responsibility for two programmes within the MLI: the Life Skills Training Project and the Drylands Project. The collective expenditure on these two programmes was R4,4 million during the year.
The Life Skills Training aims to empower Medupi employees as well as local community members with skills which are focused on financial literacy skills and managing change. Two programmes have been implemented since the inception of the MLI, Financial Literacy ("FL") and Drive Your Life ("DYL") training. The Life Skills Training project has been underway for the last 12 months. Murray & Roberts disbursed R1.1m in respect of management and implementation, as well as direct training costs for the Life Skills project. By the end of FY 2014, over 10 000 people participated in the Life Skills Training opportunities. Within these numbers 4 000 Medupi employees participated in the FL training, while 600 employees were reached through the DYL training.
Murray & Roberts disbursed R3, 3 million in support of the Medupi Drylands Project. The Drylands Project aims to provide jobs for employees and community members in projects that are focused on improving the natural environment, promote sustainable land management and developing a bio-diverse rich, rural green economy. Job opportunities are classified into three primary work streams, namely Working on Fire ("WoF"), Working for Ecosystems ("WfE") and
Working for Wildlife ("WfW"). Implementation of the Drylands Project gained traction in the third quarter of FY2014 and recruitment for the work streams has been completed. Some training has commenced and job placement and land restoration activities will be in full swing by the end of FY2015.
Community Development in Our International OperationsOur international operations undertake various community development initiatives, with Cementation Canada and its employees sponsoring over 50 charitable and community events in 2014, donating over C$20,000. Organisations supported include Prostate Cancer Canada, Canadian Mental Health Association and Crisis Centre North Bay.
Clough supports a range of local community groups in line with their six pillar Corporate Social Responsibility strategy. In FY2014 Clough invested over A$300,000 across a range of initiatives, which align with their six pillars of children and youth, education, art, healthy communities, empowering women and indigenous people.
Clough strengthened its commitment to support the next generation of talented professionals through investment in partnerships with leading universities. The Clough Scholars initiative, a 45 year partnership with the University of Western Australia, honours the academic achievements of Western Australia’s brightest young engineering students studying in the two-year Engineering Masters programme, where four scholarships are awarded per annum.
In March 2014, Clough established the Clough Foundation, a not-for-profit, charitable trust established as a Public Ancillary Fund. The Foundation aims to:
• Provide philanthropic donations to organisations, communities or causes that make a positive difference to society;
• Provide sustained benefits to local communities in which Clough operates;
• Strengthen stakeholder relationships across a diverse range of community groups in line with Clough’s six pillar CSR strategy;
• Conduct effective fundraising activities that significantly increase the value of funds to be administered;
• Encourage Clough employee involvement in community initiatives through volunteering and workplace giving programs; and
• Reflect the Clough Values of Zero Harm, Performance, Productivity, Integrity, Client Focus and Innovation.
The Clough Foundation has supported the Year 9 School Mental Health Awareness Programme in five high schools in Western Australia and the delivery of the Chance to Dance Education and Access Programme in three schools in low socio-economic area communities.
18 MURRAY & ROBERTS GROUP PERFORMANCE REVIEWS ’14
All executives involved in preparing and authorising specific project tenders across the Group sign a declaration that they have not committed, and are not aware that anyone else affiliated with the bid has committed, whether directly or indirectly, any unethical or unlawful practice in the preparation and submission of the tender or resultant project delivery. As part of the implementation of competition law compliance programme (a copy of which was submitted to the Competition Commission, following the Fast Track Settlement Process reported on in FY2013), written declarations were issued by all executives bi-annually and as part of the completion of each tender (combining anti-bribery & corruption and competition law compliance statements), while compulsory software-based competition law training was completed by all relevant employees. Furthermore, the anti-competitive and collusive conduct consequence matrix, which emphasises rejection of any form of anti-competitive or collusive conduct by employees, has been disseminated throughout the Group.
transparencyThe Group encourages concerned employees and suppliers/subcontractors to report observed unethical behaviour within any of its operations. The “Tip-Offs Anonymous” hotline service, administered by Deloitte, enables anonymous reporting of workplace dishonesty and unethical behaviour, including discrimination, theft, fraud and corruption. The hotline is currently being extended to every region in which the Group conducts business.
During the year under review, 44 cases were reported and investigated, some of which remain under investigation. Appropriate action was taken in every instance that unethical behaviour was established.
A professional firm of forensic consultants and investigators appointed by the Group assists with investigations into reported cases.
Human riGHtsMurray & Roberts endorses the employee rights enshrined in the Constitution of the Republic of South Africa, 1996, including the right to collective bargaining, the right to peaceful industrial action and other labour rights, wherever we operate. Murray & Roberts acknowledges the right of individuals to freedom of association and rejects child and forced labour. Approximately 59% of South African employees, particularly those in the mining businesses, are represented by trade unions and by collective bargaining agreements. Murray & Roberts respects the rights of indigenous people and where appropriate, partners with indigenous and local communities.
unfair discrimination and eQualityWe view discrimination of any form in a very serious light and take appropriate disciplinary action against offenders. The Group does not condone unfair discrimination and expects everyone who works for or acts on the Group’s behalf to adhere to the highest ethical standards. The Group expects all employees and service providers to treat those with whom they come in contact with dignity and respect. As a South African domiciled company, the Group believes that it is not unfair discrimination in South Africa to promote affirmative action consistent with the Employment Equity Act or to prefer any person on the basis of an inherent job requirement.
etHical manaGement frameworksThe Group promotes a culture of ethical values, standards and practices in all areas and aspects of its business operations. The Group conducts its business in conformity with all laws, rules, codes and standards, as well as the highest standards of business integrity, ethics and corporate governance, and deviations from these principles are not condoned nor tolerated in any circumstances.
statement of Business principlesThe 3rd amendment to our Statement of Business Principles was approved in August 2013. The Statement of Business Principles is widely distributed and is enforced across the Group. In respect of new employees and graduates, initial orientation training is conducted as part of their induction programme, where the importance of understanding and practicing the principles set out in the Statement of Business Principles is emphasised.
The Group continues to conduct its business within the requirements of the regulatory frameworks applicable to the sectors, jurisdictions and territories in which it operates. In this, Murray & Roberts conducts its business in compliance with both the letter and the spirit of the law, with Group values, and with its Statement of Business Principles.
reGulatory complianceRegulatory Compliance remains a key focus of the Group. A Regulatory Compliance Standard was approved and implemented during the year, and a regulatory compliance manager was appointed to oversee this function with a specific mandate to report on:
• The regulatory environments which apply in the jurisdictions and territories in which the Group operates;
• The organisational controls in those jurisdictions and territories that ensures operations comply with all applicable laws, rules, codes and standards that apply;
• The levels of compliance across the Group based on the execution of a comprehensive monitoring and review plan; and
• The corrective actions, including education and training, and improvements required to deal with any identified control weaknesses or compliance failures.
Monitoring procedures were intensified following the appointment of the regulatory compliance manager, with a continued focus on Group operations both locally and internationally. Audit reviews were conducted throughout the year, including across Australia, Canada and the USA, and no major findings of non-compliance reported.
fraud, corruption, anti-competitive BeHaviour and unfair Business practicesMurray & Roberts subscribes to good corporate governance, good corporate citizenship and ethical business practices. The Group is a member of Business Leadership South Africa and supports its Code of Good Corporate Citizenship.
An Anti-bribery & Corruption Standard was approved and implemented during the year.
19
environmentalWe remain committed in minimising our environmental footprint from all our operations and activities. In FY2014 we continued to make steady progress in improving the monitoring and management of our environmental impact, as part of our broader environmental risk management programme.
Progress against the objectives and targets set for the Group is outlined below.
objective fy2014 targets progress against targets
Improve energy and carbon management practices across the Group.
• Develop and implement a Group energy and carbon management standard.
• A Group energy and carbon management standard has been developed and is being implemented.
Improve understanding and reporting of supply chain greenhouse gas ("GHG") emissions.
• Review and implement new scope 3 GHG Protocol requirements.
• We reported a selection of scope 3 GHG data in our 2014 Carbon Disclosure Response, and will do so again in FY2015.
Improve water management practices across the Group.
• Ensure accurate reporting of water usage across the Group.
• Improving the accuracy of reporting is ongoing. A Group water management standard is planned for FY2015.
Improve waste management practices across the Group.
• Develop and implement a Group waste management standard.
• A Group waste management standard has been developed and is being implemented.
Improve environmental risk and incident reporting across the Group.
• Ensure 100% compliance with ISO 14001 across the Group.
• Conduct environmental legal compliance audits across the Group.
• Report and investigate all level 4 and 5 (high potential and major) environmental incidents across the Group.
• 78% of our operating companies are ISO 14001 certified as measured by workforce covered by ISO 14001 certification.
• Legal compliance audits were conducted at operations as part of ISO 14001 implementation.
• Our reporting system was upgraded to provide for the reporting of level 4 and 5 environmental incidents. There were no level 4 or 5 incidents reported during the year.
Improve the quality of environmental reporting across the Group.
• Confirm effectiveness of environmental reporting processes with an intention to get independent assurance on important environmental parameters e.g. energy, carbon and hazardous waste.
• We commissioned internal consultants to conduct an audit on the effectiveness of data collation and reporting processes in preparation for independent assurance of important environmental data in FY2015.
20 MURRAY & ROBERTS GROUP PERFORMANCE REVIEWS ’14
Group environmental manaGement frameworkDuring the year we developed an Environmental Management Framework which outlines environmental requirements and lines of accountability at both corporate and operational level. This framework, which is aligned to our Health and Safety Framework, communicates our approach to environmental management and seeks to create a mindset of environmental responsibility.
INSPECTIONS & OBSERVATIONS
AWARENESS & TRAININGPROCEDURES
Environmental Management Framework
peer and 3rd party reviews
VALUES1. values
2. environmental vision and prinCiples
3. SHEQ POLICY
4. environmental standards
5. material environmental issues
6. environmental GovernanCe
ENVIRONMENTAL OBJECTIVES &
TARGETSRISK
MANAGEMENT
STOP.THINK.ACT.24/7
ENVIRONMENTAL AWARENESS
MURRAY & ROBERTS OPERATIONS
MURRAY & ROBERTS CORPORATE
EFFECTIVE VISIBLE FELT LEADERSHIP & LINE ACCOUNTABILITY
• SELF- assessments
• 2nd and 3rd party audits
• BEHAVIOURINCIDENT MANAGEMENT
We have identified energy and carbon, waste and water as the most important environmental areas for the Group. The Environmental Management Framework will enable us to consistently monitor and manage these priorities across the Group’s operations, and we are currently implementing various programmes in this regard
2014 performanceOur environmental performance for FY2014 with respect to our energy usage, carbon emissions, water usage and ISO 14001 implementation is shown below.
PERFORMANCE DIMENSION 2014 2013 2012 2011 Movement
ISO 14001 Management System implementation (% coverage) 78 58 44 ± 35
Note: The majority of Construction Products businesses were excluded for the most part of the reporting period following their disposal in October 2014.
* This includes surface, ground and municipal sources of water.
** Note that our energy usage and carbon footprint numbers for FY13 have been restated. This is because Clough had originally reported on fuel usage that was outside of the reporting boundary (i.e. the fuel was being purchased by a joint venture partner and not by Clough).
21
enerGy usaGe Ever increasing demand for energy, and the resultant impact of its production on the environment, are major concerns for broader society and Murray & Roberts. As such, utilising energy more efficiently is a priority for the Group. During FY2014, the Group consumed approximately 703 461 megawatt hours (MWh) of energy from a variety of sources, with bituminous coal and diesel accounting for 85% of the Group’s energy usage. The table below indicates the different energy sources utilised across the Group.
Energy sources utilised across the Group
ENERGY SOURCE mwh % of total major user
Diesel 319 327 45,39 Opencast MiningBituminous coal 277 450 39,44 OconbrickElectricity 43 579 6,19 TolconHeavy fuel oil 39 549 5,62 Much AsphaltPetrol 20 184 2,87 Murray & Roberts CementationNatural gas 2 256 0,32 Much AsphaltLPG 1010 0,14 Genrec EngineeringAcetylene 105 0,02 Murray & Roberts Power & Energy
carBon footprintMurray & Roberts has been participating in the Carbon Disclosure Project ("CDP") since 2008 and we have measured and reported on our carbon emissions since then. The Group completed the CDP 12 (12th edition) questionnaire in May 2014. Details on our performance to date are provided in our public responses to the CDP (www.cdproject.net).
total greenhouse gas emissions (t co2e) For FY2011 – FY2014
FY2011 FY2012 FY2013 FY2014
600 000
500 000
400 000
300 000
200 000
100 000
0
SCOPE 3
SCOPE 2
SCOPE 1
Between FY2013 and FY2014 our absolute carbon emissions (scope 1 and 2) decreased by 38%. The main contributor to this reduction was the disposal of our Construction Products businesses early in FY2014. These businesses were energy-intensive, contributing 72% to our absolute carbon emissions during FY2013 and 47% in FY2014.
We are constantly improving the accuracy of our environmental reporting through engaging with our operations. For example, we conducted an internal audit on a selection of our environmental data and will be focusing on rolling out additional training based on the recommendations stemming from this exercise during the next financial year. Fluctuations in our carbon footprint are also correlated with variations in production and the number of projects that we are involved in. This varies year to year making accurate carbon footprint comparisons, and targeting, difficult.
A number of operations have also introduced energy-efficiency/saving measures which further contributed to the reduction in our carbon footprint. The greatest contributor to our carbon footprint was bituminous coal which is used in the brick making process at Oconbrick. The figure below indicates the percentage contribution to the Group’s carbon footprint by emission source for FY2014:
38%
12%
34%
16%BITUMINOUS COAL ELECTRICITY DIESEL OTHER
PERCENTAGE CONTRIBUTION TO THE GROUP’S CARBON FOOTPRINTBY EMISSION SOURCE
carBon tax implicationsIn South Africa, a carbon tax is to be introduced in January 2016 according to the 2014 Budget Review speech by then Finance Minister Pravin Gordhan. The tax will initially be levied at R120 per tonne of CO2e (limited to scope 1 emissions). Murray & Roberts will qualify for the 60% basic free allowance and hence only 40% of our scope 1 emissions in South Africa will be liable for carbon tax at R120/t CO2e. Based on our FY2014 carbon footprint from South African operations, this would have resulted in a tax liability of R8,8 million. Excluding the disposed Construction Products businesses’ contribution to our carbon footprint reduces the liability to R3,6 million.
Murray & Roberts may also face an increase in the price of electricity as a result of Eskom passing the cost of its carbon tax liability to its consumers. This will likely be in the region of R0,03/kWh which would translate to an increase of R1 million per annum spent on electricity, based on our FY2014 electricity consumption figures for our South African operations. Excluding the disposed Construction Products businesses, this increase falls to approximately R700 000.
Although the above totals represent the likely impact the domestic carbon tax will have on the Group, this is to be confirmed once further details are released by South African Treasury during FY2015. There is currently no federal carbon tax in Australia, the Middle East or Canada.
22 MURRAY & ROBERTS GROUP PERFORMANCE REVIEWS ’14
We have developed an energy and carbon standard to improve the management of energy and carbon within our operating companies. The standard will assist us in building awareness on the importance of energy management and contribute to standardising operating companies’ approach to addressing energy consumption.
water usaGeMurray & Roberts operates in several water constrained environments, including South Africa, Western Australia and the United Arab Emirates. We are continuously driving awareness of responsible water use at all operations and will develop and implement a Group water management standard in FY2015. This standard will assist in improving the accuracy and completeness of our water data, and guide operations in identifying and implementing water saving initiatives.
iso 14001 implementationMurray & Roberts requires that operating companies adopt high environmental standards, whether they are imposed by client environmental management plans, local and national legislation, or the Group itself. Our operations are required to implement and comply with ISO 14001, a standard that addresses environmental management systems. Currently, 78% (2013: 58%) of the Group’s operations are ISO 14001 certified, based on the number of employees covered by ISO 14001 certification.
environmental risk and compliance During FY2014 we commenced reporting against our environmental risks and incidents standard. This has enabled us to identify the following potential environmental risks which are closely monitored at operations and corporate level:
• Undertaking listed activities without authorisation (including environmental impact assessments, waste management licenses, atmospheric emissions licenses and water use licenses);
• Hydrocarbon spills and groundwater and/or soil contamination;
• Dust/other emissions; and
• Risks related to ineffective waste management.
There were no instances of fines related to environmental incidents or environmental litigation during the reporting period. In addition, no Level 3, 4 or 5 environmental incidents were reported. The following are types of minor Level 1 and 2 incidents were reported over the reporting period:
• Hydraulic oil spills from plant equipment (e.g. cranes) resulting in minimal soil contamination.
• Engine oil spillages from light duty vehicles.
• Minor chemical spillages from damaged portable toilets.
• Property damage from, for example, excavating in areas where unknown water pipes had been laid resulting in broken pipes and water losses.
• Property damage from grass fires near an asphalt plant.
waste manaGementWaste generated by our operations includes paper, plastic, steel, concrete and hydrocarbons (oil and fuel). Waste is measured and monitored at an operational level and reporting on waste (including hazardous, non-hazardous and recycled waste) continued during the reporting period. Non-hazardous waste is recycled or reused where possible.
During the year we developed a Group waste management standard which is being implemented at operations. The following volumes of waste were reported during FY2014:
Waste generated by our operations
WASTE CATEGORY volume major generator
Non-hazardous waste (t) 89 696 OconBrickSolid hazardous waste (t) 368 Medupi Power Station Joint VentureLiquid hazardous waste (l) 99 829 Murray & Roberts Cementation
The following amounts of material were recycled during FY2014:
Waste recycled
RECYCLABLE volume major recycler
Building rubble (t) 10 197 Medupi Power Station Joint VentureOil (l) 58 448 Opencast MiningPlastic (t) 213 Murray & Roberts Power & EnergyPaper (t) 230 Murray & Roberts Power & EnergyTimber (t) 2 082 Medupi Power Station Joint VentureSteel (t) 9 880 Genrec Engineering
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We have introduced targeted waste management interventions over the past year to reduce our waste footprint. One example is the introduction of paint wash out systems at our green building sites (Roeland Park, 102 Rivonia Road and Bridge Park). These systems provide an environmentally responsible way of washing out paint tools by separating the water from the paint solid waste. The water is then reused on site for other trade related applications and the paint residue is dried and safely disposed of as non-hazardous solid waste.
environmental reduction tarGetsWe continued with our process to identify environmental reduction targets. The setting of reduction targets for a large diversified group such as Murray & Roberts requires the understanding and support of all the operations involved. Murray & Roberts’ contracts are ever-changing which complicates the ability to set fixed targets. For
example, energy and carbon emissions are dependent on the scope of work and projects that Murray & Roberts secures and a declining order book will mean a reduction in energy use and carbon emissions and vice versa.
Despite the difficulties in setting targets, we have investigated appropriate environment-related targets. During FY2013 and FY2014 we undertook a benchmarking exercise to understand the target landscape and investigated the use of production-related indicators and targets, and thereafter set qualitative targets at a corporate level. Following this, we undertook a process to identify efficiency opportunities at site level to investigate the feasibility of setting targets. This exercise was performed at three sites within our Infrastructure & Building platform and energy, water and waste improvement opportunities were identified at each site. These opportunities, the respective capital costs, estimated savings and payback periods have been considered and a selection of the opportunities is being implemented.
lookinG forwardIn terms of environmental management and reporting across the Group, the following objectives and targets have been developed for the next reporting period.
OBjECTIVE TARGETS
Improve energy and carbon management practices across the Group.
• Achieve 100% compliance with the Group energy and carbon management standard.
Improve understanding and reporting of supply chain greenhouse gas emissions.
Improve water management practices across the Group. • Compile and implement the Group water management standard.Improve waste management practices across the Group. • Achieve 100% compliance with the Group waste management standard.Improve the quality of environmental reporting across the Group. • Assure 100% of all material environmental indicators.
