Operational factors
Teams across the business
faced a similar challenge:
how to achieve targets that
had been set in a decidedly
supportive environment when
the trend throughout the
year was toward a gradual
deterioration in trading
conditions.
In the absence of significant
acquisitions and major capital
expansion projects, the focus
fell on continuing efficiency
improvements, enhancements
of our footprint and rationalisation
of under-performing operations.
Afcom GE Hudson and Seating
responded to competitive
pressures in their respective
markets by increasing their
level of imports, resulting
in some job losses in their
manufacturing operations.
Certain KwaZulu-Natal branches
and specialised divisions
of Voltex were consolidated
at a single site in Briardene
industrial park, Durban.
This has led to improved
operational efficiency while
adding to customer convenience.
At Voltex Lighting, we continued
to benefit from the call
for expert help in the implementation
of demand-side management
solutions. We have become
a leading partner of industry
and commerce in the quest
for energy savings. This
role will continue to grow
in importance in view of
impending increases in the
cost of electricity.
Waltons continued its ongoing
programme of upgrades and
relocations to keep it close
to customers while matching
the character of individual
stores to specific commercial
and retail opportunities.
New branch openings and relocations
support Waltons’ long-term
strategy of reclaiming its
leadership of the key Gauteng
region. Another facet of
the strategy is the continued
development of the hub concept.
The Linbro Park hub was relocated
to Witkoppen and expanded
to support existing commercial
sales operations in Modderfontein.
Continued growth may soon
prompt a move by the Modderfontein
team to larger premises.
Rebranding of CN Business
Furniture (formerly Cecil
Nurse) gathered momentum
with the introduction of
a redesigned logo. Continued
benefit was derived from
the restructure of the business
into distinct units focused
on specific markets. Forward
momentum is being built by
CN café division (suppliers
to the hospitality and restaurant
sector), a positive sign
as considerable refurbishment
activity is anticipated in
this area on the run-up to
the FIFA World Cup.
Innovations/investments
Our patented mine light
– first unveiled a year ago
– received the 2008 Eskom
award for the most innovative
new product in the field
of electrical supplies and
energy efficiency.
In response to load shedding
and continuing concern about
power availability, new ranges
of generators and inverters
were introduced. This aspect
of the electrical supply
business has become a key
focus area.
Invertors, a battery-driven
short-term solution in the
event of power failure, are
being marketed via a joint-venture
set up late in the period
to ensure quality supplies
of product from a range of
sources.
At Voltex, a new ERP system,
representing an investment
of R70 million over two years,
is being implemented. The
ERP system roll-out at Waltons
continues, while new systems
are going live at CN in September.
Implementation of ERP systems
is complete at Buffalo Executape,
Dauphin and Seating. Implementation
at Afcom will be achieved
later in the financial year.
Further systems investment
is planned.
We have introduced an electronic
procurement tool that simultaneously
undertakes a BEE status-check
and verification. The division
operates in an environment
that is increasingly sensitive
to BEE issues. The tool shows
how seriously we take the
issue while simplifying the
sometimes onerous task of
establishing a company’s
empowerment credentials.
Capital investment for the
year was R84,9 million, largely
driven by the expansion and
refurbishment of branch infrastructure,
fleet replenishment and computerisation.
Risks
The system of risk committees
– a divisional committee
supported by sub-committees
for each operational arm
– continues to prove its
worth. Risks to the business
are little changed, but some
are being given added priority;
for instance, HIV/Aids in
the context of chronic skills
shortages and management
development.
Disclosure of HIV/Aids status
remains a matter for the
individual, and absolute
confidentiality is respected
in all cases. HIV/Aids has
no respect for socio-economic
status and affects all grades
of staff. It will be necessary
to demonstrate our continuing
sensitivity to Aids-related
issues while developing strategies
to respond to any impact
on people development and
succession planning.
Crime remains a major risk.
Vigilance has been stepped
up to combat white-collar
crime while investment in
anti-crime measures is constant.
The high-interest rate environment
accentuates credit and cash
utilisation risk. Credit
controls have been tightened
and steps taken to improve
collections. This does not
mean we will abandon our
policy of being supportive
of small business and start-up
contractors.
Many new entrants to the
sub-contracting sector go
into business with little
capital; some do not have
a bank account. In recent
years, we have developed
ways of “partnering” with
industry newcomers to help
them build a track record
while instituting basic business
disciplines. These processes
will continue as will our
policy of agreeing extended
credit terms where appropriate.
However, we are mindful that
the risk of customer insolvency
has increased and we will
take steps to rigorously
manage our exposure.
BEE scoring represents both
a risk and an opportunity.
We supply parastatals and
major government projects.
The division is also a supplier
to major industrial groups
and the mining industry.
All of these parties are
sensitive to the BEE status
of their suppliers. Efforts
to further improve our BEE
scores are constant. Several
“A” ratings have been received,
including those for Voltex,
Waltons and Contract Office
Products.
Exchange rate and metal
price volatility is an area
of enduring risk. We have
many years of experience
in managing these variables.
Our track record indicates
that we often identify key
market trends at an early
stage. We acknowledge, however,
that sudden, unexpected shifts
can pose a danger.
International sentiment
has largely been supportive
of emerging markets, including
South Africa, but sentiment
can change – especially in
response to statements made
in an election year or to
events in Zimbabwe. Market
effects can then be dramatic
in a country with a weak
balance of payments position.
We remain watchful.
Sustainability factors
Our staff complement remained
static despite the rationalisation
of manufacturing facilities.
Measures remain in place
to retain talent and develop
our people. Regrettably a
delivery driver was killed
in a motor accident and an
employee died of a cardiac
arrest while at work.
The number of employees
trained is up by 136,3% to
5 086.
Voltex training department
commissioned a training provider
to develop accredited training
courses that are being made
available to all businesses
in the division.
Voltex has adopted 11 HDI
students with the aim of
taking them to NQF3 qualifications.
Voltex, Waltons and CN Business
have management development
programmes. The Voltex programme
has entered its second year.
The aim is to develop high
potential managers in the
under-40 age bracket for
a place in upper management. |
