Business risks

Changing technology remains a key risk. Our widespread of activities and refusal to become dependent on one technology help us manage the risk. We constantly scan the technology horizon for new developments.

Techno development is also an area of opportunity as we are well resourced and in the past have shown that we are capable to adopting new technology and making new investment at a faster rate than some competitors.

We depend on skilled people. Training is one form of people risk management; so is our position as industry leader. Ambitious people can build a strong career with the company and take pride in their length of service.

Currency risk is managed by the taking of forward cover.

For local paper supplies we remain dependent on a duopoly. This is a continuing risk factor, but we retain the capacity to bring in overseas supplies should local prices move to unacceptable levels.

Sustainable development

Pride in resilience is increasingly evident. Our business is constantly evolving and teams take pride in the fact that many pressures on the industry were anticipated and that new growth areas were identified in good time.

Craft and company pride was always strong. Group pride is now coming to the fore.

Economic performance – We have improved our BEE rating for the DTI Codes from level 4 to level 3. As a value-adding enterprise, our customers can now claim 137,5% of their procurement spend with us for their own BEE rating purposes. In turn, we have applied our web-based tool to help register BEE suppliers. These now represent more than 50% of our domestic procurement spend.

Environment – As clients convert from paper to electronic processes, we have increased our offering of one-stop solutions to administrative needs and entered the market for on-demand digital printing solutions. Silveray Manufacturing won the eThekweni (Durban) energy-saving competition for installing a 6 000-litre solar water-heating system for its workers.

Human resources – Half our employee-base is unionised and we enter into wage negotiations at 16 businesses annually. We deadlocked in eight and referred these for conciliation and mediation. Seven were resolved amicably, but one resulted in a 13-day strike at our Lufil plant, affecting 5% of employees, but with significant impact on the operation. Total training spend (and training spend per employee) more than doubled as we continued to take more responsibility for industry training following the collapse of the industry SETA. We increased learnerships by 57%, and are aiming for the DTI’s target of 5% of employees in learnership positions. Gender equality is a challenge in our factory environments where jobs focus on physical labour and shift work. We assessed 400 employees for adult basic education and training and 260 signed up nationally for this learning initiative; 91% passed, enabling participation in further career development.

Health and safety – LTIFR increased despite improved housekeeping and attention to health and safety matters.

Labour disputes – CCMA cases brought against the business remain low with only eight findings against the division.

Society – We embarked on an awareness campaign to ensure ethical business practices, including an externally managed survey, followed by a debate with staff around anti-competitive behaviour and corrupt practices in the work environment. The audit committee plays an oversight role, recording no significant incidents of fraud, corruption or anti-competitive behaviour.

Corporate social investment – Each operation adopts a disadvantaged school in its area and supports learners and staff with donations of scholastic stationery and books. CSI spend has increased by 21%.

QUICK LINK: Divisional sustainability report

Future

We will aim for double-digit growth in trading profit, but performance depends on continued economic recovery and a revival of consumer spending. The diversification strategy has proved sound and will be continued. Greater consistency will be sought in the volume of export business and efforts will be stepped up to widen our product and service offering. Growth will be sought in paper-based packaging manufacture and distribution. Cost efficiencies and working capital management remain focus areas.

PRINTING AND RELATED

Personalisation and mail

Teams achieved sustained growth and Lithotech Africa Mail put in another strong performance as the leading provider of high-volume mailing solutions. It was a breakthrough year for our full-colour digital printing business.

Printing and conversion

The business suffered a significant fall in revenue and trading profit as corporate customers cut back on printing work. Big cuts in marketing budgets worsened the situation. Teams did well to cut their own costs while seeking replacement volumes.

Sales and distribution

Teams benefited from a pragmatic approach. As volumes fell in conventional print work, they pursued new opportunities in procurement and fulfilment services.

ALTERNATIVE PRODUCTS

Strong growth was achieved, though the base remains relatively small. Many new accounts were gained as the market witnessed a strong trend to e-mail billing. International business is being sought in collaboration with value-added resellers in Australia. A proof-of-concept site has been set up. E-mail billing, on the server-to-server model, offers considerable saving to Australian corporates, though initial reticence is a challenge.

PACKAGING AND LABEL PRODUCTS

The expanding subdivision achieved strong sales and profit growth. Rotolabel performed strongly. At the beginning of the period, the business was severely affected by the retail downturn, but grew volumes by expanding into new markets. A rebound by the retail sector ensured a good end to the year. The Cape-based label factory had a good year.

STATIONERY DISTRIBUTION

The stationery market was subdued, but Silveray Stationers replaced trade volumes with retail chain business. Penetration of the retail market will be assisted by acquisition of the Parker pen agency. Strong sales and profit growth was achieved, but changes in government buying patterns in the scholastic products market threaten to squeeze paper stationery margins.