MIC Annual Review FY14

annual review 2014

content1 Vision, mission, values and purpose

2 MIC’s group structure

3 Group highlights

4 Foreword

6 Board of directors

8 Governance and sustainability

10 Chairman’s review

12 Chief Executive Officer’s review

16 Management and staff

18 Operations and finances

24 Social impact

TO BE A highly regarded active black-owned value investor in South African companies, ideally with

an African focus, producing above average returns and cash distributions to its shareholder,

the Mineworkers Investment Trust (MIT),

to enable MIT to achieve its goals

vision

mission

To be fully engaged with and achieve significant influence in our investee companies.

To generate sufficient cash to enable MIC to pay substantial dividends to MIT.

To be a premium investment company that seeks stable NAV growth.

To provide an equal opportunity environment that addresses past imbalances.

professionalism

1

integrity

2commitment to transformation

4

5striving for excellence

mutual respect

3ethical conduct

7

social consciousness

6

MIC’s purposeTo identify and invest in long-term cash generative assets, thereby generating

sustainable dividend flows that enable MIC’s sole shareholder, the Mineworkers Investment

Trust (MIT) to meet its social obligations.

MIC adds value as an active equity partner who makes a contribution at a strategic level, whilst

promoting the work of transformation in the companies in which we take a stake.

MIC participates on the boards of all its investee companies.

values

1M I C A N N U A L R E V I E W 2 0 1 3

MIC’s group structure

MINEWORKERS INVESTMENT TRUST (MIT)

Mineworkers Investment Company (MIC)

Financial Holdings

Media and Technology Holdings

Industrial Holdings

FRET (FirstRand Empowerment Trust)Acquired in 2005

Nimble Group Acquired in 2009

PrimediaAcquired in 1996

TrackerAcquired in 2000

Izazi SolutionsAcquired in 2004

General Electric South Africa TechnologiesAcquired in 2008

WestconAcquired in 2010

BPSAAcquired in 2001

Masana Petroleum Solutions Acquired in 2005

MetrofileAcquired in 2004

MSAAcquired in 2006

Set PointAcquired in 2007

PuregasAcquired in 2013

Much AsphaltAcquired in 2013

Peermont GlobalAcquired in 1997

Food and Leisure

Holdings

2 M I C A N N U A L R E V I E W 2 0 1 3

highlightsgroup

Investment portfolio

up 31% to R4.9 billion

(2013: R3.7 billion)

FRET and Westcon

stakes increased

Work of transformation

stepped

up

New investment acquisition made into

puregasand much Asphalt

Group net asset value

up 29.6% to R4.15 billion

(2013: R3.2 billion)

Dividends received

increased by 60%

Debt as a percentage of

NAV downfrom 10.5% to

8.4%


Foreword by Kuben Pillay

‘‘

’’

The focus of any annual review is on the preceding 12 months, but in this instance broader reflection is warranted as 2012 – 14 were watershed years for the Mineworkers Investment Company. Another, more personal reason for a wider perspective is my stepping down as chairman after nearly eight years at the helm and 19 years of active involvement with MIC.

My tenure ends as the organisation begins preparations for its 20th anniversary. The years since inception in 1995 have been momentous. Many people say the only constant is change. I’m not so sure. In my view, change isn’t constant; it’s getting faster.

Technology is transforming lives as well as industries, and doing it at pace. Today’s communication is instant. Social media enable the interchange of ideas and opinions in nanoseconds.

Rapid developments like this make it all the more important that we occasionally hit the ‘pause’ button and assess what has not changed. What principles and values remain in place? What can we trust? What stays on track?

I am proud to say that MIC has displayed remarkable steadfastness of purpose for the best part of two decades. We remain true to our founding principles and our founders’ mandate.

Wealth creation is captured within the MIC portfolio and channelled to our only shareholder, the Mineworkers Investment Trust to fund the work of social upliftment within under-resourced communities, where our beneficiary base largely comes from. That was always the priority and remains the overriding goal to this day.

To deliver on its mandate, MIC has to be a highly efficient wealth generator. And it is. However, wealth does not accrue to individuals. MIC has created no billionaires. MIC executives and directors have no shares in MIC. They share in the mission and vision of the MIT family.

The integrity of this process ensures that social funding is not diluted or diverted.

Our investment returns can be measured in every educational bursary bestowed by JB Marks, every job created by a start-up, the entrepreneurs we nurture, every plot of ground that supports the food security of marginalised, deeply impoverished rural communities supported by the MDA.

These social gains are not accidental. Far-sighted individuals created the MIC wealth engine to a unique set of specifications. Their blueprint ensured independent structures that are each focused on a clear mandate.

Into our structure they embedded certain deeply felt values: continued exploitation of the poor and vulnerable generation after generation is not acceptable. Capital can be used for the broader social good in the country. It has to be put to work to break the cycle of poverty and accelerate a better future for all.

One of those far-sighted individuals recently passed away. I’m referring to one of my predecessors at the helm of the MIC – Crosby Moni. He was a member of MIC’s founder generation; before that, he helped found the National Union of Mineworkers (NUM) and for a time became the union’s deputy president. He was also an ANC MP at the time of his death. In whatever capacity he worked, he was driven by the needs of his constituency, never by self-interest.

When he saw a need, he addressed it personally, in a very hands-on fashion.


stronggrowth

was achieved

portfolio

For my part, I continue my association with MIC as a director. As I look around the boardroom, I note that Clifford Elk and I are all that remain of the founder generation. This is not cause for sadness. This is how it should be.

It is healthy for the board to change and for new energy to be tapped.

The needs of our beneficiaries have not diminished, nor will our efforts. The MIC mandate and mission remain firmly in place. This will ensure growth with a purpose into our 20th year and for many years after that.

Kuben PillayNon-Executive Chairperson

My last memory of the man highlights this characteristic. The school in his home village of Comfimvaba had no computers. Comrade Moni was determined to supply some. He contacted my company (and I’m sure several others) to enquire about our old desktop systems. Rather than write them down or off, could he have those computers for the village school.

He drove his bakkie up from the Eastern Cape. At Primedia, he loaded those old computers onto his bakkie himself. He then drove back to his home village. Mission accomplished. I’m happy to report to my old comrade that the MIC mission is also being fulfilled by people with a very similar hands-on philosophy.

We certainly saw evidence of this during the review period.

Strong portfolio growth was achieved, ensuring that MIC is well placed to provide continued dividends to the MIT for its social upliftment projects.

Sustainability was also the theme of much of the work within the organisation itself.

The end of my tenure was deliberately choreographed to ensure continuity and the continued integrity of the MIC mission. Planning began 18 months before I stepped down as chairperson. Indeed, early preparatory work can be traced back several years.

My successor Phumzile Langeni became lead independent, non-executive director of the MIC board some years ago. In this capacity, she presided at board meetings in my absence. As chairman of the investment committee she also had a key role in strategy formulation.

It is now time for Phumzile Langeni to take the reins. She is superbly equipped for this task. She has the assistance of a knowledgeable, hard-working board and the support of a strong team of accomplished professionals in the executive suite. I wish her well.


Mary Bomela Chief Executive Officer

Phumzile Langeni Incoming Independent Non-Executive Chairman Chairman: Investment Committee

Christopher SeabrookeIndependent Non-Executive Director Chairman: Audit Governance and Risk Committee

Board of directors

Kuben Pillay Outgoing Non-Executive Chairman Chairman: Remuneration and Nominations Committee

Cynthia Mapaure Financial Director


Bharti HarieIndependent Non-Executive Director Chairman of Transformation, Social and Ethics Committee

Lwazi KoyanaIndependent Non-Executive Director

Tshimane MontoediNon-Executive Director

Clifford ElkNon-Executive Director

Simphiwe NaniseNon-Executive Director


The Board and its committees

The Board consists of 10 directors, eight of whom are non-executives and four of whom are independent. The continued independence of directors is assessed annually. The Board is satisfied that the five directors regarded as independent continue to exert this status vigorously.

The Board meets four times a year. Additional meetings are held when non-scheduled matters arise. In addition, the company has an effective Board memoranda process to facilitate consultation with all directors on an ongoing basis. The full responsibilities of the Board are set out in a written charter adopted by the Board.

The roles of Chairman and CEO are separate. The Chairman’s non-executive role encompasses being the mentor and counsel to the CEO, the co-ordination of governance activities, the overseer of Board and committee performance and the guide to the Board in its principal functions as the keeper of strategy, the monitor of risk, the custodian of management excellence and the overseer of company performance.

The directors consider the mix of technical, entrepreneurial, financial and business skills of the directors to be balanced, thus ensuring the effectiveness of the Board. The Board retains full and effective control over the company and its subsidiaries and monitors the performance and decisions of executive manage ment. In addition, the group is represented on the boards of all of its investee companies. The Board fully respects the fiduciary duties of these directors to the respective companies and is cognisant of stock exchange rules and insider trading policies for those companies that are listed.

All directors have access to management and the Company Secretary and to such information as is needed to carry out their duties and responsibilities. All directors are entitled to seek independent professional advice concerning the affairs of MIC at the company’s expense.

The Financial Director is also the Company Secretary. The company is not large enough to warrant the cost nor does the position require sufficient time to justify appointing a separate individual and the Board does not favour outsourcing the function.

Directors are subject to election by shareholders at the first opportunity following their appointment. Directors retire by rotation and stand for re-election by shareholders at least once every three years.

Audit, Governance and Risk Committee The Committee operates within defined terms of reference and authority granted to it by the Board in terms of a written charter. It meets at least three times a year, and the external auditors and Financial Director are invited to attend. The Chief Executive may also attend by invitation from time to time. The external auditors have unrestricted access to the Committee.

The principal functions of the Committee are to review the annual financial statements and accounting policies, monitor the effectiveness of internal controls, assess the risks facing the business, assess the expertise and experience of the Financial Director, discuss the findings and recommendations of the auditors and review corporate governance procedures. The Audit Committee also has the responsibility for recommending the appointment of the external auditors and for ensuring that there is appropriate independence relating to non-audit services provided by the auditors. These non-audit services are presently taxation, technical accounting, risk and human resources. Due to the size of the group, a separate risk committee is not regarded as necessary.

It regards the relationship between the external assurance providers and the company as sound and conducive to optimising the level and quality of assurance and no separate external assurance is necessary on sustainability issues. The Committee does not regard the company as having any current unmitigated risks arising from sustainability considerations.

The Committee has determined that the group is not of a size that requires a full scope internal audit function. As such, the group has

Governance and sustainability


South African Constitution and Bill of Rights and promotes this awareness and compliance in its associates. Compliance with ethical standards is maintained and assessed. The setting of specific measurable metrics is not practicable as the group is an arm’s length investment group without a trading operation as such.

AuthoritiesThe Board reviews its delegation of financial responsibilities to the executive management annually and sets appropriate limits.

Information technology (IT)The Board recognises the need to establish and maintain a secure, integrated information technology environment which supports efficient business processes, good governance and compliance with legal and regulatory requirements, internal control and accurate management reporting and business information systems. The Board assumes the responsibility for IT governance.

The Financial Director takes the role of the Chief Information Officer with overall responsibility of IT management. Appropriate policies and procedures have been established to ensure business continuity in the event of an IT disaster within the network, privacy and IT laws and regulations. Investment in the group’s hardware and local area network systems continues to be made in support of the operations.

Corporate Social Investment (CSI) programmesThe group itself and most of its associates have CSI programmes to facilitate the sustainability of the broader social and economic environment. Details of the CSI initiatives that the group and the broader MIT family are involved in are set out on pages 24 to 32 of this report.

appointed an audit firm to perform a limited scope internal audit function with effect from the financial year ending 28 February 2013.

Investment Committee The Investment Committee operates within defined terms of reference granted to it by the Board and meets four times a year.

The Committee reviews and recommends the group’s investment policy and parameters and investment acquisitions and disposals as proposed by the executive management team. The Committee also reviews the performance of the group’s existing investment portfolio, including an assessment of the risks relevant to each investment.

Remuneration and Nominations Committee The Remuneration and Nominations Committee operates within defined terms of reference granted to it by the Board and meets twice a year.

The Committee determines executive remuneration and incen tives, reviews staff costs and recommends non-executive directors’ fees to the shareholder. It conducts appropriate market reviews periodically relative to these assessments. It also considers the composition and performance of the Board and its committees and makes recommendations on new appointments.

Transformation, Social and Ethics CommitteeThe Committee operates within defined terms of reference and authority granted by the Board. It has a written charter which meets all the requirements of the new Companies Act in the scope of its functions. The Committee meets twice a year.

The Committee monitors the progress made by the group and its investee companies towards achieving Broad-Based Black Economic Empowerment (BBBEE).

Mineworkers Investment Company has subscribed to a written code of ethics. It is committed to the highest standards of integrity and behaviour in dealing with all its stakeholders and those of its associates, and with society as a whole. It maintains a high awareness of the

the directors consider the

mix of technical,entrepreneurial, financial and business skills of thedirectors to be balanced, thus ensuring

the effectiveness of the Board.


My appointment as chairman of the Mineworkers Investment Company comes at an exciting yet challenging time. Clearly, the business has built substantial momentum while the recent process of restructure and renewal gives every indication that is achieving the desired results and is capable of driving sustained growth into the future.

Foundations could hardly be surer as I begin my tenure. I have my predecessors to thank for that. They have built a remarkable company with an impressive record for wealth generation underpinned by a social purpose.

I have a special word of appreciation for my immediate predecessor, Kuben Pillay. He has been with MIC since the outset and has made a unique contribution to its development. I thank Kuben for his efforts and note with some relief that his knowledge and experience will not be lost to us as he will continue to serve on our Board.

Though MIC has an impressive record of past success, my attention is fixed on the future and the years ahead. Our economy is going through challenging times. At MIC, the challenge is to outperform the norm and achieve sustained growth in portfolio values and dividend income.

The future is always changeable, but one thing won’t change in the near or mid term. Our beneficiaries and their communities will continue to face extreme distress, and hence the need is for us to work harder. Unemployment remains stubbornly high; so do food and fuel prices.

Funding streams to our shareholder, the Mineworkers Investment Trust, must be strengthened if we are to tackle the scourge of poverty in severely under-resourced communities and provide educational opportunities for the children of the poor.

In the new period, therefore, MIC will resume the system of annual dividend payments to MIT. In 2008, we made the largest ever contribution to an empowerment beneficiary when we distributed a five-year dividend of R245 million to the trust.

Going forward, all members of the MIT family are committed to do the utmost with every resource at our disposal. The focus therefore falls on optimum efficiency and the growth of MIC.

Efforts in every sphere will be redoubled at MIC … in our work to build investment value, drive corporate transformation, foster enterprise and individual development and make our own direct contribution to community upliftment.

The service ethic is deeply embedded in our company. I have served as a director. Now I serve as Chairman. It is an honour and privilege, and I pledge to serve the organisation and our beneficiaries to the best of my ability. The challenges they face in their daily lives are daunting. They don’t shirk that challenge … nor shall we.

Phumzile LangeniChairman

the serviceethic

is deeply

companyembedded in our

Chairman’s review


at MIC,the challenge is to outperform

the norm and achieve sustained growth in portfolio values and dividend income.


The Mineworkers Investment Company continued to see pleasing growth in its net asset value during a review period that was characterised by several worrying international developments and sluggish domestic growth.

Globally, we saw signs of steady revival by the world economy, underpinned by recovery in developed markets. However, US authorities ‘tapered’ their programme of quantitative easing, resulting in capital flight from emerging markets (including South Africa).

The Rand weakened as a result of South Africa’s relatively challenging fundamentals, which includes the ongoing strike activity in the platinum mining sector. The slowdown in Chinese economic growth has resulted in lower demand and prices for commodities. This has reduced our foreign earnings.

At MIC, the effect of the volatility of the currency had little impact on the performance of most of our investees because they are still largely Rand based.

In South Africa, consumer and business confidence remained low. Rising food inflation, higher fuel prices and an increase in interest rates had a material impact on the already highly indebted consumer, sharpening the need for much higher levels of job creation and small business development.

The good news is that many other countries in Africa continue to experience good economic growth and provide opportunities for our investee companies who are looking to expand beyond our borders.

Significant achievementsOur net asset values in 2013 – 14 rose by more than 29.6% while received dividends were up by more than 60%. These achievements are satisfying in a low-growth environment.

Important to note is the restructuring of the capital structures of Primedia and Peermont Global resorts. The results of the restructurings are cleaner balance sheets and more sustainable debt structures at both companies. This will free up management to concentrate on operations and business growth.

We received dividends from more of our investee companies who performed well in a tough economic environment.

2013 – 14 Was also notable for the continued strengthening and growth of our portfolio. MIC acquired the stake of Kagiso Tiso Holdings in the FirstRand Empowerment Trust (FRET), increasing our shareholding to 10.5%. This marked our first major direct secondary BEE transaction, a demonstration that the BEE landscape is maturing and BEE investors can successfully transact amongst themselves and realise value.

New partnerships were created and we acquired two new investments, Puregas and Much Asphalt.

MIC and RMB formed a joint venture, MIC Capital Partners. This venture will focus on investing in high growth small- to medium-sized businesses that the MIC would not ordinarily invest directly in. This joint venture will further cement the good relationship that MIC has with RMB and the wider FirstRand group.

Philosophical clarityRecent adjustments to our portfolio and restructuring gave us an opportunity to communicate a clear vision of MIC’s values and market positioning.

We are a financial investor with impeccable empowerment credentials and a well-defined, deeply felt social purpose. But in today’s financial and investment marketplace, strong BBBEE credentials

Chief Executive Officer’s review

‘‘

’’

Philosophically, we are long-term investors, rather than traders. However, to meet our commitments to our shareholder we cannot give an undertaking that we will never be opportunistic if attractive investment realisation opportunities arise. Similarly, we cannot give a pledge that we will never exit a relationship.


black participation in the economy is not a gift, but a right secured by sizeable capital commitments.

The presentations were well received and opened lines of communication to potential partners and transaction facilitators.

Initial indications could hardly be more positive.

Secondary BBBEE marketAs a well-capitalised empowerment company, MIC is perfectly placed to draw advantage from recent developments in the empowerment sector.

After several years of investment in transformed or transforming companies, some members of empowerment consortiums are looking to realise value. To retain their empowered status, their partners prefer that any sale be to an investor with solid BBBEE credentials.

This creates a secondary BEE market along with opportunities for a player like MIC to increase a stake-holding or build a position in new industries with new partners. These opportunities came into strong focus in the review period. We expect more such opportunities to present themselves in future, creating potential for strong portfolio growth and a presence in good businesses with solid growth prospects.

Portfolio structure and performanceIn 2012 – 13, a searching review of our portfolio structure and the performance of investee companies was carried out. Generally, we found that the diversified structure had served MIC and its MIT shareholder well, but adjustments and tighter focus would be necessary to ensure continued growth in asset values and strong dividend income.

do not always guarantee discounts and favourable terms when transaction opportunities present themselves. Your probity, your balance sheet and your track record are scrutinised just as closely as your empowerment status.

The aforementioned changes within the BEE mergers and acquisitions (M&A) environment have been made or took place against the backdrop of increased financial sector regulation and transitioning towards stricter capital adequacy requirements for the global banking industry. This has resulted in tighter credit markets and a need for greater equity contributions from investors when considering M&A opportunities.

MIC’s sound financial position puts us in a position to participate in these opportunities more meaningfully as both a financial investor and a strategic investor. This informs our philosophy of only participating in transactions where we are an equal partner of our co-investors.

When dealing with an equal, potential partners cannot expect long-term lock-ins as a matter of course.

Philosophically, we are long-term investors, rather than traders. However, to meet our commitments to our shareholder we cannot give an undertaking that we will never be opportunistic if attractive investment realisation opportunities arise. Similarly, we cannot give a pledge that we will never exit a relationship.

Clearly, the legislative environment makes empowerment status a key issue. Prospective partners may therefore look for a long-term commitment underpinned by a contractual obligation. However, this is a point for negotiation. It is not an absolute right.

The empowerment landscape has changed. We can no longer expect automatic vendor financing. Our transaction partners can no longer expect automatic lock-ins.

In the last two years, we have made numerous presentations to corporates, fund managers and other investors to make clear our vision and mission and our stance as an investor in an era when

we are anempowerment

investor

social purposewith a well-defined, deeply felt


Changes – implemented in the prior period and into 2013 – 14, were designed to create a more streamlined structure better suited to the new empowerment landscape and the emergence of a secondary BEE market.

Changes to the portfolio augment the value of our holdings. The investments pursued and consummated during the review period are more sizeable. Our strategic focus is clearer. We actively seek an optimal mix between cash generation and high growth prospects within our investee companies in order to create a sustainable platform for continued dividend income.

The review period was an opportunity to assess whether realignment of the portfolio was capable of delivering the envisaged benefits.

In general, the shape of our portfolio is little changed. We are still represented in the media, financial services, industrial, technology, gaming and leisure, and rail transportation sectors. However, the 2013 sale of Eastvaal Motors means we no longer have interests in automotive retailing.

The net effect of other transactions is to increase our interest in financial services and industrials. Expansion of our industrial interests brought Puregas and Much Asphalt into the fold.

African opportunities We are excited by the progress being made by many African nations and are confident we will see the continued growth of consumer markets across the continent.

However, our strategy remains unchanged. We will not, at this stage, seek direct exposure to African jurisdictions outside South Africa simply because we do not have physical presence in those countries. We are happy to secure knock-on benefits as investee companies develop their sub-Saharan interests. Indeed, we have increased our stake in some companies with very active African growth strategies. What’s more, when considering acquisition opportunities, a target company’s African growth prospects will often be scrutinised in depth.

However, thousands of social beneficiaries are dependent on sustained funding from MIC. We therefore believe a degree of caution is warranted. Experience suggests great patience is needed in Africa and that the proper identification of strong local partners is critical. For the foreseeable future, therefore, we will remain indirect, rather than direct, investors in the wider continent.

Tribute Everyone at MIC was saddened by the untimely death of our former Director and founding Chairman, Crosby Moni. We extend our condolences to his family, his comrades and his community. We are all poorer for this loss.

Board changesThe end of the review period coincided with the end of the tenure as Chairman of Kuben Pillay. He was at the helm for nearly eight years and not only provided a guiding hand and a sure strategic touch, he also provided ‘institutional memory’ in view of his 19-year association with MIC. No one is closer to our mission and our values.

I have worked closely with Kuben and know how much he has given to the company. I thank him for his help, his support and his wisdom.

Fortunately, Kuben has not been lost to MIC. He continues to sit on our Board and continues to contribute positively.

Kuben’s place has been taken by Phumzile Langeni, the first female chairperson of the MIC. Phumzile has served as a non-executive director on the Board for many years.

I would like to congratulate Phumzile on her appointment as the chairperson and look forward to working with her in the coming years.

Several other changes have been made at Board level, ensuring we maintain our record for a good balance of executive and non-executive directors and strong female representation.

We bid farewell to three directors, Oupa Komane, Albertina Kekana and Leah Gcabashe. They gave MIC unstinting service and we wish them well in their future endeavours.

Chief Executive Officer’s review continued

We are confident that any business that contributes to national growth has an exciting future.


Furthermore, we believe as more and more South Africans benefit from improved living conditions, this will strengthen the prospects of companies operating within the healthcare, education, FMCG and retail sectors of our economy. Companies operating within these sectors, particularly those with ambitions for sub-Saharan expansion, are of particular interest to us.

Unlisted companies are strongly represented in our portfolio. These entities have shown good growth, with the prospect of more to come. However, our strong exposure to the unlisted space does not mean we have turned our back on the JSE. We are certainly not averse to taking positions in listed companies, especially those with a record for strong dividend distribution. Therefore, we may well beef up our listed exposure in the coming months.

Our goal is to constantly strengthen our portfolio as this is the only way to assure sustained funding for our shareholder and its social beneficiaries. Our sense of mission remains as strong as ever.

The strategic necessity for increased black participation in the economy is not up for debate. It was vital when MIC was formed. It is vital today. MIC has always committed to this goal with energy and conviction.

The five-year period covered by the dividend lump sum paid to the MIT in 2008 has come to an end. MIC will therefore recommence the annual payment of dividends to the MIT. These are important to enable the MIT to continue its social upliftment programmes.

In 2015, we won’t waver from our course of sustained income provision for the trust and its desperately needed social interventions. The achievements of the MIC are to be commended for a company on the eve of its 20th anniversary.

Mary BomelaChief Executive Officer

Three new directors have joined our board. MIC welcomes Bharti Hari, Tshimane Montoedi and Lwazi Koyana. We thank them for their input in recent months and look forward to further contributions in the year ahead.

AppreciationLast year was a time of refocus, renewal and growth. MIC performed creditably in a challenging market, thanks to the strategic guidance of our Board and the professionalism and hard work of MIC’s management team.

Two new appointments were made to the team: those of Nchaupe Khaole as Senior Investment Manager and Zaheer Abdulla, an analyst and researcher, both of whom further strengthen our deal origination and execution capabilities.

We remain a lean, tightly-knit and cohesive team and I thank all contributors for their efforts.

The futureAs a consequence of portfolio realignment, the pursuit of new opportunities and subsequent deal activity, we developed new relationships and partnerships during the review period. At the same time, our financial position – already strong – was further enhanced.

After a period of relatively muted merger and acquisition activity in the private sector, we believe deal volumes will grow significantly in the coming year. This opens the door for further acquisitions (and perhaps disposals) as we look to continually improve the balance of our portfolio.

We have the balance sheet and the appetite for continued, even accelerated growth. MIC will pursue opportunities for expansion in several areas, while retaining focus and adhering to its investment criteria.

MIC is currently unrepresented in the telecommunications industry, though we have an abiding interest in businesses that benefit from robust annuity income streams. Telecoms remain an area of special interest for us.


Management and staff

Lebohang ShembeGroup Financial Manager

Mahlatse Kabi Investment Manager

Oren Fuchs Special Projects/ Investment Manager

Sylvia Ngwenya Accountant

Zaheer AbdullaInvestment Analyst

Nchaupe KhaoleSenior Investment Manager


Linkie Kemlo Administration

Lisa MonticelliOffice Manager

Caroline Sehlako Accountant

Ruth Khumalo Administration

Thomas RamahlalerwaAdministration

Rosy HlagalaAdministration

Jenice JonasAdministration


Realignment, consolidation and refocus were the key themes of the year as we put into action the key learnings from the strategic review carried out in the prior period.

Targeted intervention assisted several investees while enhancing the underlying value of our portfolio. Financial restructuring initiatives were carried out at Primedia and Peermont.

The Primedia capital structure reconfiguration was successfully completed in December 2013. As part of this restructure, the Primedia group significantly reduced the size of its debt and widened its shareholder base. As a result, MIC’s stake in the company decreased from 49% to 21.7%.

The restructure has significantly strengthened the group’s capital structure, allowing Primedia management to seek renewed growth, not only in South Africa but across the African continent.

The restructure of the Peermont capital structure also commenced during the year under review. This entailed a conversion of a significant portion of the group’s debt to equity and the refinancing of senior debt with a local debt package. MIC’s shareholding was diluted from 33% to 15.7%. The BEE ownership is 25.1%.

The overall effect is to strengthen the business and increase the value of MIC’s stake. The implementation of the restructure was completed in April 2014.

Augmented stakesFinancial services is a strategic element within our portfolio and we reacted promptly when an opportunity arose to increase our exposure to the FirstRand group through our holding in the FirstRand Empowerment Trust (FRET).

MIC acquired a 6.91% stake in FRET, increasing our FRET stake from 3.66% to 10.57%. As a result of this acquisition the MIC and its shareholder, the Mineworkers Investment Trust, now own a sizeable stake in FRET of 25.23%.

The transaction was a signal to the market that we have confidence in the financial services sector, the FirstRand group and its record for substantial growth and the delivery of strong dividend streams.

We also augmented our stake in one of our technology holdings, Westcon-Comztek, from 26% to 40% pursuant to the merger of Comztek and Westcon. The merger created an opportunity to diversify and strengthen the company’s position across Africa.

Westcon-Comztek is a leading value-added distributor of technology and converged communications solutions.

A common feature of both the FRET and Westcon transactions is MIC’s increased indirect exposure to sub-Saharan Africa. FirstRand’s African expansion strategy is gaining traction while Westcon’s merger with Comztek creates access to 26 African markets.

Acquisitions and disposalsIn May 2013, MIC Capital Partners, our JV with RMB Ventures, acquired 25% of the equity in Puregas, regional leader in the manufacture of specialised gases and ozone friendly propellants.

Puregas adds further weight to the industrial segment of our portfolio, which has historically provided good investment returns.

We also acquired 25% of the equity in Much Asphalt, Southern Africa’s largest manufacturer of hot and cold asphalt products. To effect the purchase from Murray & Roberts, we collaborated

Operations and finances

financialservices is a

strategicportfolio

element within our


‘‘

In line with long-term MIC policy on financial management, gearing is low and the balance sheet remains extremely strong. MIC is, however, in the process of negotiating a new debt package to enhance its acquisitive ‘firepower’.

Additional headroom will enable the company to pursue the strategic growth of the portfolio by engaging in transactions of significant scale, should such opportunities arise.

Cash reserves decreased by 80%. The decline is directly attributable to the cost of acquisitions during 2014.

Financial strategy at MIC is informed by the need to channel substantial dividend payments to the Mineworkers Investment Trust and its social beneficiaries and MIC remains committed to meeting its obligations to the trust on a sustainable basis.

with Capitalworks, which led a consortium that also included the senior management team at Much Asphalt.

Much Asphalt’s vision of sustainable growth extends beyond South Africa’s borders and entails the strategic positioning of static and mobile mixing plants in all the developing regions of sub-Saharan Africa.

MIC sold its 31% stake in Eastvaal Motors in March 2013.

Financial perspectiveMIC maintained its reputation for financial prudence and sustained investment gains as the net asset value (NAV) of our portfolio increased by a pleasing 29.6% to R4.15 billion (2013: R3.2 billion). MIC’s long-term target is annualised NAV growth of 15%. Performance therefore is ahead of expectation.

The value of MIC’s investments increased by 31% to R4.9 billion (2013: R3.7 billion). This growth is attributable to the effects of recent acquisitions and underlying growth in the market value of our assets.

Acquisitions were largely funded from our own cash resources.

Major contributions to the growth in the portfolio’s investment value were made by FRET (with value up year on year of 31%), Metrofile (34% growth), GESAT in excess of (100% growth) and Tracker (46% growth).

Pleasing growth in dividend income was also achieved. Dividends received increased by 60% with notable contributions from Metrofile and Tracker while GESAT paid its maiden dividend during the year under review.

The strong cash flow from dividends was gratifying and testimony to the success of MIC’s long-term strategy of focusing on cash-generative investee companies with energetic management teams that consistently deliver operational efficiencies. Administration costs remain low.

Debt levels rose by 2.7% as a result of accrued interest on debt instruments. No new debt obligations were taken on. Our debt remains conservative at 8.4% of NAV (2013: 10.5%).

Financial strategy at MIC is informed by the need to channel substantial dividend payments to the Mineworkers Investment Trust and its social beneficiaries and MIC remains committed to meeting its obligations to the trust on a sustainable basis. ’’

1.72.4

3.24.15

2011 2012 2013 2014

NAV (R4.15 billion)29.6% year on year growth


Empowerment report cardAmended codes of good empowerment practice that were initially scheduled for introduction in October 2014 will now be implemented in April 2015. The new codes sharpen the focus on enterprise development (ED), preferential procurement, employment equity (EE) and the advancement of black people into positions of real executive power and influence. Progress here receives more points than previously. The weighting in other areas has been reduced.

In effect, point-scoring becomes more difficult for companies that have not committed to real transformation. The proposed framework caused concern in some quarters. Even companies that have made significant empowerment gains fear they may lose points on a revised scorecard. This could endanger their current status and impact their businesses.

MIC is aware of these concerns and committed itself in 2013 – 14 to urgent action to help investees set priorities and fast-track the work of transformation.

As a first step, MIC carried out a GAP analysis at almost all investee companies to assess their actual BBBEE performance and the potential for improvements. This gives us a base from which to work in the coming months.

It is important to set out our attitude on these issues. Empowerment is not a compliance issue for us. We focus on empowerment out of conviction. Therefore, our work to assist investees is not characterised by a search for loopholes. We support the introduction of new codes that reward those engaged in sincere transformation.

Operations and finances continued

Investee company financial performanceIn the industrial portfolio, General Electric South African Technologies (GESAT) put in another good performance. A notable development was its Transnet Freight Rail tender success early in the 2014 – 15 financial year. GESAT will supply 233 electric locomotives to the state-owned enterprise over approximately three years. The order is part of a R50 billion tender. GESAT will also transfer skills and create jobs over that period. Metrofile recorded a good performance and identified selected African markets as avenues for further growth. MSA found conditions challenging in the market for mine safety products. Set Point Technology faced a difficult trading environment, given the unsettled conditions in the mining industry.

In financial services, FirstRand continued to perform well and gained traction with expansion efforts in the rest of the African continent and the Indian corridor.

In the media sector, Primedia remained strongly cash generative. Its operations have remained solid notwithstanding challenging market conditions.

In the technology segment of our portfolio, Izazi confronted challenging trading conditions. Tracker put in another pleasing performance and maintained its leadership position in the market for vehicle tracking and telematics services. The merged Westcon-

Comztek business bedded down well, though the domestic market remained challenging for this ICT leader.

In the petroleum industry, BPSA and Masana performed solidly.

In the leisure space, Peermont achieved solid year on year growth notwithstanding the challenges in the general economy and, in particular, the leisure industry.


Setting the bar higher creates a challenge. But if we work at it, we can all make the leap. MIC is committed to assisting its investee companies to comply with the new codes.

Transformation has become a business imperative. We’re encouraged that this is accepted at all our investee companies. This will enable new priorities to be set in the year ahead. We are hopeful that significant progress can be made.

The immediate goal is to ensure that MIC and its investees at least retain their current status. Simultaneously, we hope to create a springboard for future gains. The BBBEE status of all companies at the end of our 2013 – 14 year was:

2014 2013

Mineworkers Investment Company 2 2

Peermont 2 2

Primedia 2 3

Metrofile 3 3

Tracker 3 5

BPSA 3 5

FirstRand 2 3

Set Point 4 4

Masana 2 2

Westcon 4 3

Nimble 3 2

IZAZI 4 4

MSA 3 3

GESAT 2 3

Puregas 4 *

Much Asphalt 3 *

* Investments were not current in 2013.

The emergence of enterprise development as a critical issue going forward creates opportunities for MIC. We add value and help businesses grow. We focus on profits and returns. We can assist in the transformation of our economy by communicating the importance of a sustainable business model to more and more business owners from disadvantaged communities – which explains our efforts to significantly widen our ED commitments in 2013 – 14 and into the future.

Staff development within our own organisation is a point of focus and during the review period two learnerships were established following a partnership with a specialist provider of up-skilling services to deaf individuals.

MIC has undertaken to support two deaf learners (one male, one female) for the duration of the six-month learnership programme. Further development of the programme will then be assessed.

ConclusionThe review period posed considerable challenges in view of the difficult trading conditions that faced investee companies in all sectors of the South African economy. Despite the economic headwinds, our investees – and our portfolio – put in a good overall performance, leaving us well positioned to pursue continued growth.

Cynthia MapaureFinancial Director

additional headroom will enable the company to pursue the

strategic growth of the portfolio by

engaging in transactionsof significant scale



incubating entrepreneurial

talentThe businesses supported by the MIC programme are active in various commercial sectors, including steel fabrication, the supply and maintenance of industrial pumps, pharmaceutical supplies and

healthcare, training services and industrial theatre services to the corporate sector.


MIC’s social impact is two-fold. It contributes substantial funds to the educational, poverty alleviation and training initiatives run by its shareholder, the MIT. Simultaneously, MIC invests in its own programmes as part of its commitment to enterprise development (ED) and the upliftment of communities with historical links to the mining, construction and energy industries.

The MIT programmes use a developmental or corporate social investment (CSI) model, with broad community focus. MIC interventions have a commercial, ED bias and much tighter focus as they target individual operations. However, knock-on effects ultimately bring substantial benefit to the community at large.

Mining is a shrinking industry. As jobs are cut, there is growing pressure to create employment and commercial opportunities in areas that have traditionally supplied labour to extractive industries.

These areas are rural and marginalised. Poverty is entrenched. Work is scarce. Often, the only asset in these communities is the land itself. However, this asset can be used to support a growing number of desperately needed jobs.

These sombre realities shape the strategy behind MIC funding for the MIT’s developmental programmes and its own direct interventions.

Cultivating self-relianceMIC is a results-driven company. It believes in long-term investment rather than ad hoc hand-outs. The company prefers to build self-reliance rather than a state of dependency. It has a bias toward

projects that are self-sustaining and self-replicating as they tend to be cost effective and deliver measurable gains.

This explains MIC’s motivation for assisting start-up commercial farmers as they move from traditional forms of cultivation to for-profit operations.

The labour-intensive nature of work on the land means job creation at scale becomes possible once a group of start-up farmers moves from subsistence to profit.

Primary focus for rural ED on the MIC pattern is the Mkuhlu area near Hazyview in Mpumalanga.

Since 2010, 10 farmers who previously relied on traditional farming methods have been placed on a commercial footing.

At inception, a drip irrigation system is installed at each farm. Initially, each farmer cultivates two hectares of ground, though potential generally exists to grow the farm into a 10-hectare operation.

Only five hectares were planted in 2010. By the end of the 2013 – 14 reporting period, land under cultivation at Mkuhlu had increased to 42 hectares.

Farmer identification and screening processes are rigorous.

Individual land-owning farmers are targeted as they are accountable, are highly motivated and generally have an entrepreneurial mindset. It is much more difficult to measure the progress and target appropriate assistance in cases where an ill-defined group works on communal ground.

Social impactto roll outits rural

enterprise development

model

possible to as many areas as

MIC’s strategic intention is


2014 Proved to be a watershed year as the Hazyview site reached critical mass. By year end, the 10 farms provided employment for 160 permanent and seasonal workers. Most of the farms were profitable.

Product quality is a key focus area and during the year three of the Hazyview farmers confirmed their status as official ‘growers’ to Freshmark, the fruit and vegetable procurement and distribution arm of the Shoprite retail group.

Integration into the Freshmark supply chain indicates that the accredited farmers can produce the requisite quality at significant volumes. In some instances, volumes are enhanced by aggregating the output of other project participants.

Accreditation in line with good agricultural practice (GAP) is an indication the farmers are entering the formal sector.

To obtain this level of certification, land must be properly prepared, pest and disease controls must be implemented and monitored, staff health and hygiene requirements must be strictly adhered to and formal reporting systems have to be established. Audits are carried out at least once a year to ensure standards are maintained.

In the year under review, the three Hazyview farmers identified as official growers to Freshmark all completed the compliance process and confirmed their status. One achieved a 100% GAP score.

In addition, MIC executives regularly visit each farm to monitor progress.

As the farms become commercially viable, MIC funding is gradually cut back for items such as fuel and equipment maintenance. During 2013, the Hazyview farmers took responsibility for the maintenance budget by contributing to a maintenance pool.

MIC typically provides selected farmers with initial working capital to finance the purchase of equipment such as a tractor, rotavator, ploughs, spray booms and other inputs, including fertiliser, herbicides, pesticides and seedlings. Equipment is shared by project participants.

On occasion, MIC makes use of its commercial networks to source funding from corporate partners. MIC has also partnered with technical advisors funded through the JD Group’s CSI budget.

Commercial viability at pace is the objective and early cash flow is a priority.

MIC’s strategic intention is to roll out its rural ED model to as many areas as possible while ensuring its farmers obtain rapid return on capital.

The objective is to create farmers who are confident, self-sufficient and able to operate without long-term MIC funding, though experience shows that financial support is often necessary for an initial two-year period. After that, the farmer has an established base and a market for his or her produce. Cash support is no longer necessary and it is possible to channel funding to new start-up operations in neighbouring or entirely new areas.

Crops with a relatively short harvest cycle are preferred as this speeds up profit generation. Vegetables (spinach, cabbage, onions, chillies, beans, butternut and tomatoes) that have only a three- to four-month turnaround period are the preferred crop. Crop selection is often finalised in consultation with the farmer’s customers.

Annual vegetable sales at Hazyview were up from R280 000 in 2010 to R3.1 million by late 2013.

To ensure consistent quality and high, uniform yields, all farmers adopt the same form of drip irrigation.

Entrants to the programme are expected to upscale their operations until economic viability is assured. Increased scale ensures increased job creation.

Farmer identification and screening processes are rigorous


Once farm profitability, employment generation and potential for sustained growth can be demonstrated, the company organises site visits by potential donors who are in a position to assist similar start-up projects. The focus usually falls on South African corporates, though international donor organisations are also being targeted.

Donors can provide third-party funding for equipment purchases, thereby removing a material constraint on growth.

The need for donor intervention in the targeted geographic areas is readily apparent during a site visit. All projects are in districts where unemployment is high and poverty deeply entrenched. Historically, these communities have been heavily dependent on remittances from family members employed on the mines. This source of income is rapidly drying up.

However, modern farming methods on a commercial footing can provide a viable, sustainable alternative… with appropriate assistance from MIC, its partners and donors.

Incubating entrepreneurial talentDuring the review period, the ED effort was significantly widened by launching a small business incubation initiative to complement MIC’s programme of focused assistance for start-up commercial farmers.

The incubation project recognises some basic challenges facing the South African economy.

It is clear that big corporates are not big job creators. They were once, but the days of fast growth and labour-intensive operations are over. A big, mature business is more likely to be an efficiency seeker, a cost cutter and a net trimmer of the staff complement.

The real creators of jobs are small and micro enterprises; the type of operation that begins life in a Zozo, a garage or a spare bedroom and grows from there, transforming itself in a few years from a one-person operation to a growth-oriented business employing 10, 20, 50 or more workers.

Social impact continued

Farmers share knowledge as well as maintenance costs. Early entrants to the programme – those with a proven business model – become mentors to later project participants.

As calls on its funding eased in the Mkuhlu area, MIC was able to roll out the concept to a second province by forming a public-private partnership (PPP) with the Department of Rural Development and Land Affairs within the Limpopo district.

The site of the PPP is the Thomo District near Giyani.

The Department provides initial capital for equipment purchases while MIC shares its model and provides support. One female farmer was selected to establish the base. Other Thomo project entrants will be identified in due course.

Early in the new period, work began on another Limpopo project; this time in Limpopo’s Modjadji Valley near Tzaneen.

An initial intake of three project participants was identified, with potential to expand the project to 16 farmers once the scheme has bedded down.

As the Limpopo projects go into operation in the coming year, MIC hopes to demonstrate that its rural ED model is not only self-sustaining, it has built-in capacity for rapid expansion – given appropriate funding.

Here, MIC’s commercial networks have a role to play.

Donors, understandably, look for reassurance that their money will deliver the envisaged gains. Therefore, they increasingly focus on proven winners that produce measurable results.

The MIC model is designed to provide donor peace of mind like this.


Commercial viability at pace is the objective and early cash flow is a priority

around eMalahleni (Witbank), an area with strong ties to the coal mining and energy sectors. The eMalahleni hub for MIC’s first incubation initiative is also close to Mpumalanga, a province that has traditionally supplied cheap labour to these industries.

Selection processes are robust. Candidates present their business ideas and business plans. They are then questioned in depth.

A trained psychologist sits on the selection panel to assess an individual’s suitability for life as an entrepreneur, as a micro-business owner has to commit totally to the development of the business and be prepared to work long hours, often with little prospect of immediate reward.

Entrepreneurs have to possess inner energy and be self-motivated with strong capacity for dealing with disappointment and setbacks.

After lengthy assessment sessions with the 22 candidates on the shortlist, 10 were selected for MIC sponsorship. The initial intake is notable for the high percentage of women among the successful candidates.

A family connection with the mining, energy or construction industries was not a precondition for entry into the programme. However, most participants either have a personal or family link to these sectors.

The entrepreneurs were required to show that they had already set up their own businesses and had survived for at least six months.

The businesses supported by the MIC programme are active in various commercial sectors, including steel fabrication, the supply and maintenance of industrial pumps, pharmaceutical supplies and healthcare, training services and industrial theatre services to the corporate sector.

Put simply; to create jobs, South Africa has to create more entrepreneurs.

MIC is close to these realities because the industry that provided work for its own founder generation has been in decline for decades. According to a Statistics SA estimate, gold mining alone eliminated another 14 461 jobs in the first nine months of 2013.

MIC therefore feels a special need to address the enterprise development challenge at a fundamental level – the incubation of the start-up business and the empowerment of individual entrepreneurs.

The company has therefore initiated a grassroots incubation programme with the objective of creating new business opportunities for those who for too long have been denied effective access to the economy.

Building in-house entrepreneur incubation capacity from a zero-base is expensive and time consuming, with no guarantee that resources will be employed to the optimum or credible results achieved. MIC therefore formed an incubation partnership with Raizcorp, South Africa’s only for-profit organisation that specialises in the identification and development of entrepreneurial talent.

Raizcorp has a successful track record going back to 2000. Its new business incubation programme has an average success rate of 86%. However, other statistics and estimates from the sector at large confirm that successful development of start-up entrepreneurs remains a daunting challenge.

Two-thirds of micro enterprises operate as survivalists with little prospect of becoming formal businesses that can create livelihoods for anyone other than immediate family members. Only 4% of start-up operations like this survive longer than 10 years.

Business skills training and targeted support are needed to improve the odds.

In collaboration with Raizcorp, MIC identified a shortlist of 22 candidates for its business incubation programme – all located in and


Educational courses cover a wide range of business skills. Initial emphasis is on processes with direct bearing on revenue and profit as solid cash flow must be secured to ensure survival in the early stages of business development.

Entrepreneurs are taught how to properly assess their costs, how to price correctly, how to prepare tenders and accounts and how to achieve the levels of profitability necessary to sustain the business.

Strong debate is a feature of the report-back sessions with their trainers. Most start-up entrepreneurs confess to being shocked that they were under-pricing their products and services and that they had poor appreciation of their real costs.

Their numbers and forecasts are ‘interrogated’ intensely by the professionals and more appropriate business systems are developed month by month.

Over time, the focus shifts to potential for expansion and opportunities for profitable growth through better marketing and the successful pursuit of new business.

At the end of the 2013 – 14 review period, the incubation programme had been in operation less than six months. Experience to date confirms that such an initiative is desperately needed in the eMalahleni area and that project participants are making good progress. Their businesses may not yet qualify as engines of local job creation, but in several cases the potential for growth is already apparent.

ED is not a quick fix. It is a long process; especially when the commitment is made at grassroots level. At MIC, work has begun in earnest where ED is most urgently needed. That work will continue.

JB Marks Education TrustThe year was one of strategic growth and innovation, without losing focus on our core competence – providing bursaries and support to enable a new generation to achieve the educational progress denied their parents and grandparents.


The MIC model puts great emphasis on the ‘jockey’ (the individual) rather than the ‘horse’ (the business concept). Good jockeys may not find the right mount first time around, but they persevere and eventually ride a winner. This thinking explains the commitment to proper selection processes.

The programme structured by MIC in collaboration with Raizcorp provides for hands-on involvement and regular interaction with MIC executives, in line with the company’s active partnership philosophy. This model is distinct from the approach adopted by many corporates that sign off on an ED budget and leave the process entirely in the hands of the outsourced service provider.

MIC has strategic reasons for closer involvement. It has an enduring commitment to employment generation and ED in areas currently dependent on mining and associated industries. This commitment predates empowerment legislation and BEE compliance considerations. MIC has always taken a deep interest in the needs of communities in these areas and how the local economy can be revived through entrepreneurship.

The MIC programme lasts three years. In this period, MIC meets the cost of putting each participant through the Raizcorp process. Each individual attends Raizcorp training sessions at its premises in eMalahleni. They then apply the lessons to their start-up operations and their progress is monitored.

Constant feedback is given to MIC while MIC executives make regular site visits to encourage programme participants and assess progress. Raizcorp presents in-depth quarterly reports on the programme and each participant.

we helpthe children of

the poor

university entry

who battle to qualify for


Another initiative to improve pass rates is the recent creation of a nationwide system of tutorial support. The scheme was launched in partnership with Teach Me 2, a specialist provider of tutorial help. No student is more than 5km from support thanks to the company’s national network of qualified tutors.

In addition, we have taken energetic action to ensure a fundamental type of support – food.

The scourge of student hunger has only recently been highlighted on our campuses. To ensure effective intervention we formed a partnership with Eduloan and distributed Eduloan meal vouchers to 327 learners. For the 10 months to November 2013, they each received R10 000 in food vouchers.

To stretch the allowance as far as possible, Eduloan meal vouchers can also be used to make purchases from various retail chains and on-campus canteens. Experience was positive and meal vouchers were again distributed at the start of the 2014 academic year.

Encouragement and celebration are needed as well as support, and at the fourth annual JB Marks Awards, 45 graduates were saluted while additional accolades were handed to five students in recognition of outstanding performance.

A successful community outreach innovation in 2012 – the JB Marks Career Expo – was repeated in mid-2013. The venue was Sekhukhune Further Education & Training College near Groblersdal in Limpopo. The event was hosted in partnership with SABC Education, the National Youth Skills Development Programme, Sekhukhune FET College, Tubatsi Municipality and the Sekhukhune Circuit District of the Department of Education.

Two goals are paramount: to widen our impact and improve our pass rate.

JB Marks spent R25.5 million on bursaries for the year. There were 233 new bursars in 2013, bringing the total number of JB Marks students at various stages of their studies to 541. Most are studying finance (168) and engineering (148). At year-end, 45 students graduated, taking the total of graduates since inception in 1997 to 750.

Slowly but surely the alumni body is growing. Our graduates create a valuable resource. In recent years, alumni volunteers in the Core Team have been deployed to assist those still studying for degrees. This process was formalised in mid-year at the first alumni annual general meeting.

Formal alumni structures were established and a full-time development officer appointed and deployed to our Johannesburg office. Targets and timelines for alumni interventions were set.

Support efforts will also be assisted by our recent move to new offices. The premises are custom-designed to deliver support to students in all parts of the country via direct video, phone and computer links.

Helping students is our number one priority.

JB Marks does not cherry-pick top academic achievers for its programme. We help the children of the poor who battle to qualify for university entry. Additional coping mechanisms are essential; these include a closer interface with students, formal alumni structures and better reporting procedures.

Help for students is our number one priority


Starting a bursary scheme from scratch can be costly and time-consuming. However, JB Marks has the experience, systems and expertise to roll out and manage a cost-effective bursary scheme for third parties.

Early in the new period, JB Marks was formally appointed the bursary scheme service provider to the legacy project, enabling us to complement funding from donors with fee income from a third party.

The appointment followed a rigorous examination of our capacity and track record.

Further efforts to widen our impact will be explored in the new period.

Even closer collaboration with partner companies is envisaged, with special focus on the potential for educational initiatives that work in tandem with on-the-job training. The objective is not only to educate, but increase the prospect of employment on graduation.

Our programme is fast developing a cadre of young people with financial skills. In future, this may create opportunities to roll out financial literacy programmes to union members.

Synergies such as this will be increasingly explored to ensure the most effective delivery of educational value to our constituency.

Mineworkers Development AgencyThe MDA maintained its focus on poverty alleviation and people and enterprise development in some of Southern Africa’s most impoverished areas. The goal is to create 5 000 sustainable livelihoods by 2014 through targeted assistance that reaches 17 000 beneficiaries. By the end of 2013, the MDA was on track to achieve this goal.

Principal focus falls on the Eastern Cape (Ntlenzi), Free State (Welkom, Virginia and Odendaalsrus), Mpumalanga (Bushbuckridge, Mhala and Secunda) and Lesotho. The work to sustain livelihoods in areas of extremely high employment is supported by ongoing


Partnership formation became a feature for the year. A key factor in our campaign to broaden the partner-base is our SARS registration as a public benefit organisation in addition to our not-for-profit status with the Department of Social Services.

Among our new partners is Sanlam. During the review period, we structured a bursary and mentorship programme for 20 Sanlam learners. They study financial subjects while the financial services company provides opportunities for holiday work. The programme builds on the successes achieved by a similar programme run in conjunction with Ubank.

A significant departure for the bursary scheme was the launch of two initiatives targeted at graduates.

A postgraduate programme was set up and an initial intake of 13 took advantage of this opportunity to study for honours. One has since progressed to a master’s course.

The second development involved the creation of a one-year financial training scheme for unemployed beneficiary graduates.

This innovation addresses the challenge posed by a possible mismatch between the university ‘pipeline’ and job opportunities within the economy. Our scheme will prepare well educated, but jobless, young people for a career in financial services as there is growing need for appropriate financial advice across South Africa’s expanding black middle class.

Late in the review period, our role took on a new dimension when we were identified as an outsourced services provider to the Palabora Copper Mining Employees Bursary Scheme – a key component of the legacy programme being set up at this mine by Rio Tinto.

The three- to four-year programme will assist 80 –100 beneficiaries.


MDA teams train villagers in permaculture so they can grow their own vegetables

to Free State. Since February 2012, R3.2 million has been advance to 3 178 borrowers. A collection rate of 95% has been achieved. It is estimated that more than 3 000 jobs have been created on the back of these loans.

Small-scale agribusiness receives increasing attention. In Lesotho, 348 people were trained in poultry management and at Mhala the agency provided advisory services to prospective poultry farmers.

Other small business support initiatives focus on the Thabakgolo African pot-making workshop at Bushbuckridge, the Lillydale bakery and home-based care initiative and the IBEWA farm project.

Food security is a key intervention. It is believed 11 million South Africans are at risk of hunger because of food insecurity and that 70% of those at risk live in rural areas. MDA teams train villagers in permaculture so they can grow their own vegetables. Between 2011 and 2014 they trained 3 814 people in the Mhala, Ntlenzi and Welkom areas, reaching 14 605 dependants. A further 33 people received horticulture training in Maseru.

To increase the scale of cultivation and create potential for commercial operations, the agency assists in the development of community gardens. During the review period, the agency worked with 16 community gardens, supporting 612 project members. Six moved to partial commercial operation and registered as co-operatives.

Work continued at Mhala on the MDA’s emerging farmer support programme. Three farmers are being assisted. A tractor and other equipment have been purchased.

campaigns to fight TB through early testing and referral (in collaboration with TB Project Vumbulula), build community capacity and ensure respect for human rights, including access to social grants.

MDA targets its assistance where needs are greatest. Once a project gains traction, the organisation looks to exit the initiative in order to channel funds to areas of even greater need.

During the review period, the process was showcased by solid progress at a long-term MDA initiative, the community-owned marula project near Bushbuckridge. The MDA began preparing to exit this community enterprise as support is now being provided by government’s National Development Agency and the National Lottery. Proper legal structures are being put in place to formalise the work of this cooperative and provide legal safeguards for the women growers and kernel gatherers.

Another initiative making strong progress is the Wool Growers Support Programme in the Eastern Cape. By the end of 2013, programme participants kept 2 482 sheep in 19 villages. Numbers are projected to rise as more and more villagers apply to join. During the year, 559 wool growers were trained. They support 2 236 dependants.

The programme has demonstrated the benefits of improved sheep rearing and shearing techniques and the collective selling of the clip. The average income from wool sales for farmers in the programme has risen from R30 a year to R1 500.

Early in the new period, the MDA planned to purchase 10 rams to improve the quality of the programme’s bloodstock. The MDA works closely with the Wool Growers Association of South Africa.

A critical constraint on enterprise development in rural areas is restricted access to credit. To address this challenge, the MDA has helped the Lesotho-based micro-lender, Moliko Finance Trust, expand


of the Western Cape (UWC) and the business school of the University of the North West (UNW).

The UNW link creates access to leadership and financial management tuition at the Potchefstroom campus while the UWC partnership enables women union members to study for the Economic Development Certificate. Early in 2014, the first group of 37 women graduated, 12 cum laude.

The need to encourage greater training participation by women was highlighted by the introduction of more rigorous reporting and data-interrogation systems at EBMTC on completion of its modern, properly resourced facilities in Midrand. Records show that in 2004 – 06, 10 men attended national courses for every woman. By 2013 – 14 the gender mismatch had narrowed and 247 women attended national courses versus 384 men.

Rigorous data interrogation will also enable courses to be accurately targeted at officials and union members to meet individual needs and foster the accelerated development of trainees.

Needs analysis receives growing attention. For example, feedback from the membership has indicated a growing need for occupational adult basic education and training courses. New partnerships are being explored to address this demand.

Widening the reach of regional and national training programmes is another priority and early in the new period, a memorandum of understanding was signed with the Central Johannesburg College, Orbit FET College and Vuselela FET College. Additional MOUs with other recognised FET colleges are also being drafted. The intention is to create a national FET network, bringing trainees closer to quality facilities and a wide range of accredited courses.

Another priority in the year ahead is the development of programmes focused specifically on the needs of officials and workers in the construction and energy sectors.

Training challenges are growing. In response, EBMTC is growing its reach, its effectiveness and its partner-base.


Elijah Barayi Memorial Training CentreThe training of union officials and members is central to the MIT’s educational mission as the workers not only have to improve their capacity to carry out their current work, but are also compelled to widen their skills base in view of the ever-present risk of retrenchment in industries that frequently cut jobs and downscale their operations.

Two themes dominated the review period: adding value through course certification and widening the scope of training via partnerships with SETAs and institutions of tertiary education. The planned accreditation of EBMTC as a further education and training (FET) college will give greater impetus to this strategy.

The strategy puts the focus on qualitative improvements. Quantitative progress is already evident.

Since 2001, 13 989 shop stewards have been trained at EBMTC. In 2013 – 14 there were 9 612 applicants and students in the national and regional training system while the centre handled 1 890 applications for 26 national and 54 regional courses.

The EBMTC labour law course has been nationally accredited since 2012. In the review period, the centre’s trade union practice qualification received level four (Matric level) recognition from the Education, Training & Development Practices (ETDP) SETA.

Accreditation and partnerships with SETAs are part of a formalisation strategy designed to ensure an increasing number of EBMTC courses enjoy Matric equivalence and receive internationally recognised credits endorsed by the South African Qualifications Authority. In this way, EBMTC students will be empowered to qualify for university entrance or achieve other qualifications with the potential to advance their careers.

Partnerships are also proving to be a cost-efficient way of expanding the training effort as expenses and resources can often be shared with new partners.

In addition to the relationship with the ETDP SETA, the centre also formed a partnership with the construction industry SETA, the University


content1 Vision, mission, values and purpose

2 MIC’s group structure

3 Group highlights

4 Foreword

6 Board of directors

8 Governance and sustainability

10 Chairman’s review

12 Chief Executive Officer’s review

16 Management and staff

18 Operations and finances

24 Social impact

the needsof our beneficiaries have not

diminished, nor will our efforts.The MIC mandate and mission remain

firmly in place.

MIC Place 4 Eton Road, Parktown, 2193 • Tel +27 (0) 11 088 1800 • Fax +27 (0) 11 088 1843 • [email protected] • www.mic.co.za

www.mic.co.za

Documents

MIC Annual Review FY14