INTEGRATED REPORT 2019

Our transformation journey

As a state-owned enterprise, these objectives are of particular importance for us because they are aligned with South Africa’s National Development Plan and transformation imperatives. We aim to achieve our transformation objectives through strategic procurement in seven sectors in which Airports Company South Africa can leverage its spending power: property, retail, car rental, construction, advertising, ground handling and IT. The Cape Town International Airport Sustainability Journey presents an inclusive transformation story of the Group’s engagement with stakeholders – from local and provincial government planning structures to black-owned service providers and communities whose roles can all be sustainably intertwined to meet development objectives.

B-BBEE in review

Our overall B-BBEE level attained in FY2018/19 was level 2 (125% B-BBEE recognition level), against a target of level 3, and our employment equity for FY2018/19 reflected 93.9% black representation in our workforce, exceeding our KPI target of 92.4% (FY2017/18: 93.3%). We remain a level 2 contributor based on the 2009 Integrated Transport Public sector codes, while we await the new codes which will have more stringent requirements. Transformation and sustainability remain the key component to our overall business and we are developing an overarching transformation strategy to support our 2025 Group vision of being a global transformed business.

The Group has employment equity policies and is implementing a strategy to support workforce transformation across occupational levels per the economically active population. Through targeted recruitment, especially at senior levels with a specific preference to the most under-represented groups (including black women and people with disabilities), the aim is to increase management representation. Talent development strategies have been reviewed and aligned to our employment equity plan. This has been done to address under-represented females at senior management levels. The appointment of new Board members has yielded value in achieving our Board participation points.

Progress to fill vacancies in key positions of CEO and CFO is advanced, which will see the Group attaining targets for management and control in FY2019/20.

Skills development continues to be a significant focus area and the following initiatives contribute to skills development:

  • Internships and learnerships for employed and unemployed black youth
  • Partnerships with institutions such as Northlink College to address the scarce construction skills and early childhood development for unemployed youth More details
  • Firefighters Women Empowerment Programme for black unemployed female youth trained as internationally accredited firefighters More details

Our performance against the B-BBEE scorecard elements is recorded in the following figures:

Transforming our supplier base

In FY2017/18 our supplier base was not adequately diversified, leading to steps taken to increase access and participation for smaller, black-owned suppliers and a significant supplier database cleanup exercise. During FY2018/19, Airports Company South Africa achieved its target of growing black business entrepreneurship as a share of operational and developmental spend by 51% (2017/18: 61%). Black business share of commercial revenue generated now stands at 54% for the year, against a target of 51% (FY2017/18: 59%). While we achieved an increase in spend to black female-owned suppliers, we still see the need to grow participation of black female-owned suppliers in our major infrastructure projects, similarly for black youth and people with disabilities.

We have continually engaged with our suppliers to ensure that they understand where our journey needs to take us, as well as how each type and size of supplier can make a contribution to our business. We have been pleased with the level of cooperation we have engendered. In FY2018/19, we engaged in a lot of advocacy, such as enterprise and supplier development roadshows at each of our airports, where there was an enormous expression of interest and appreciation for our supply chain transformation initiatives.

We believe the sharing of our procurement strategy, major projects pipeline for each airport and our trans-formation agenda has been valuable in addressing potential future pitfalls and in communicating how we see value in especially small- and medium-size suppliers. We believe this has energised our potential supplier base and driven greater participation in tender activity.

We continue to grow our preferential procurement recognition levels.

Another critical area within our operations that has seen some improvement is ground handling. Increasing access to markets has yielded results due to the introduction of new black entrants in the baggage handling system contract in the past year. New black-owned suppliers were given an opportunity to participate as part of the set-aside procurement process when the baggage handling system contracting process was finalised. That value chain was split into three areas: upper level contracting and sorters, conveyors and carousels, and operations.

This is proving to be a success story since baggage handling process initially requires no technical competence, and as service providers become more familiar with our operating system, opportunities for future bids for other functions will present themselves and allow them to fully participate going forward.

However, it also proved to be a difficult year in terms of transformation at Airports Company South Africa because of ongoing litigation directly related to our intention to transform our supplier and contractor base. Important lessons were learned. This litigation has proved instructive in our understanding and interpretation of regulations related to transformation and the need for constant supplier engagement to ensure that all stakeholders’ objectives are aligned. Ongoing litigation continues to affect our ability to advance our transformation objectives within our seven sector strategies: ground handling, car rental, retail, property, construction, IT and advertising sectors of the business, and test the ability to be agile in the generation of revenue growth within the commercial space.

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