This is Scaw’s third integrated annual report and reflects our aspiration to the highest reporting standards. The report outlines our track record to date and maps our forward-looking strategy.

Our integrated reporting is an entirely voluntary exercise given that Scaw is not listed on JSE Limited and therefore is subject to JSE rules and regulations regarding integrated reporting. Scaw is regulated by the Companies Act. Our aim in this report is to provide you, the reader, with a comprehensive review of how Scaw creates sustainable value by providing insight into the group’s strategy, relevant changes in the macro-environment and consequent risks and opportunities for Scaw. This report presents the annual financial results and the economic, environmental, social and governance performance of the group for the year 1 April 2015 to 31 March 2016, and follows our prior integrated annual report published in July 2015.

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Our vision

Be a South African-led, globally competitive and responsible beneficiator of key raw materials into secondary value-added steel products.

We seek to realise our vision by continually improving our products and processes, expanding our African footprint and consolidating our global reach. By developing a thriving business, we are better able to benefit all stakeholders and help grow the South African economy.

Our operations

Grinding Media

Rolled Products

Cast Products

Wire Rod Products

Our customer sectors

  • Rail
  • Power
  • Mining
  • Construction
  • Industrial
  • Oil and gas

Financial highlights

The group spent R176 million (FY15: R288 million) on capital expenditure during the period to maintain, improve and expand production capacity.

  • Group total revenue of R5,7 billion for the year is 10% below last year on the back of continued lower demand and depressed margins
  • As a consequence, we reported EBITDA loss of R248 million against last year’s loss of R254 million
  • Non‑operating special expense items totalled R138,7 million against last year of R9 million due to R225 million incurred on retrenchment of about 1 200 employees, goodwill impairment of R12 million and R1,7 million loss on the sale of redundant fixed assets reduced by curtailment gain of R100 million on post‑retirement medical aid
  • Finance costs increased to R477 million against last year of R466 million
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Group snapshot

Scaw is one of South Africa’s largest integrated producers of speciality steel products for the mining, construction, industrial, power and rail sectors, with established operations, distribution and marketing channels globally. We boast a substantial footprint of manufacturing plants, mills and foundries across South Africa and internationally.

Integral to our growing business is the recycling of scrap metal into value-added secondary steel products for a wide range of industries, both locally and internationally.

With roots dating back to the 1920s, Scaw was formed in 1998 from the merger of two steel manufacturing giants, Scaw Metals and Haggie Limited. In November 2012, the IDC acquired a 74% stake, driving renewed growth strategy.

UK, north sea and Western Europe

Chain products, fittings and masterlink

Grinding elements castings

PC wire and strand for pre-tensioned applications

PC strand for post-tensioning applications

Mine winding steel wire ropes

Canadian and USA

Chain products, fittings and masterlink

Surface mining ropes

Mexico

Grinding elements castings

USA and Gulf of Mexico

Castings for railway sectors, wheels, couplers, bogie components and loco frames

PC strand for post-tensioning applications

Chain products, fittings and masterlink

China

Mine winding steel wire ropes

South America

Surface mining ropes

Chain products, fittings and masterlink

Ground engaging tools and wear parts

Singapore

Chain products, fittings and masterlink

Drill, anchor and riser tensioner off-shore ropes

Australia

PC strand for post-tensioning applications

Surface mining ropes

Chain products, fittings and masterlink

PC strand for flexible roof bolts

Ground engaging tools and wear parts

Mine winding steel wire ropes

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Our operations

Our group consists of four divisions: Grinding Media, Rolled Products, Cast Products and Wire Rod Products, as well as a number of international businesses complementary to these divisions.

Scaw’s international businesses, together with some wholly owned IDC businesses (managed by Scaw), act as key distribution channels, each with a focus on driving the sales volume of specific Scaw divisions.

Grinding Media

Grinding Media is located in the most industrialised area in Africa and within one of the world’s most intensively mined regions, ensuring access to key raw materials and close proximity to a large and diversified mining market.

Rolled Products

Rolled Products is attractively positioned to meaningfully benefit from potential upside in the steel cycle. Flexibility exists to change the product mix of the division based on demand from other Scaw businesses and the external market. The division has strong long standing relationships with key customers, as well as transport contractors resulting in preferential rates and reliability of service delivery. The business is ideally situated to make fast and efficient deliveries to customers in Gauteng and surrounding provinces – the area of highest customer concentration.

Cast Products

Cast Products has developed a reputation for meeting customers’ product, quality and delivery requirements and has developed strong long-term relationships with leading players in its targeted sectors. The division operates four foundries in South Africa and a distribution network in Australia.

Wire Rod Products

Wire Rod Products has an extensive manufacturing and distribution network in southern Africa, Australia and North America. Its internationally recognised brands include Haggie®, under the SWR division, and McKinnon® and Max-Alloy, under the Chain Products division, with relevant certifications being obtained in key geographies, enabling the division to service key industries around the world.

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Acting sustainably

Scaw is committed to being a good corporate citizen by creating social value to make a meaningful change in South Africa. The company invests and allocates resources to this end and continually tries to improve the quality of life in the communities in which we operate, be this in education, health or sports development.

Scaw actively supports the development of local businesses with strong enterprise and supplier development partnerships in place. The company also regards the protection of the environment in our areas of operation as a priority.

Achieved
B‑BBEE
level 2
on the new DTI codes

A first mover:
level 2
B‑BBEE
steel manufacturer in South Africa

Produced 455kt of steel (FY15: 521 kt)

We employ over 4 200 permanent people (FY15: 5 500)

482 trainees at Scaw

We conducted over 392 000 hours of training in FY16 (FY15: 379 000)

We spent R44,4 million on training and skills development (FY15: R20,9 million)

We were awarded the SEIFSA Best Artisan Programme Supports government’s priority of developing technical and artisan skills as well as the objectives of the National Youth and National Skills Accords

A large majority of the photos used in this report are of women working at Scaw

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We support over 560 small, medium and macro‑enterprises

We invested R1,5 million in corporate social investment

We awarded bursaries worth R934 772 (FY15: R539 736)

We invested R3,85 million in enterprise and supplier development

We spent R4 billion discretionary spend with more than 2 800 suppliers

Scaw procures from 152 black‑owned businesses

Scaw spent R366 million on these black‑owned businesses

Scaw procures from 68 black women‑owned businesses

Scaw spent R458 million on these black women‑owned businesses

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We were awarded the SEIFSA Best SHE Programme for the Steel Wire Ropes site

We had zero fatalities

18 sites recorded zero LTIs during past financial year

Our sustainable SHE programme continued to deliver improvements

We continued our R210 million emission control project at Union Junction Cast Products plant

All our provisional emission licences were converted to final licences

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R1,2 billion value added

R18,3 million paid taxes and local metros (FY15: R17,4 million)

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Case studies

Building a solid manufacturing partnership

Scaw’s track record in the manufacture of steel wire and strand products used for different applications has over the years secured an array of local and international customers throughout different industries placing Scaw and South Africa on a competitive global map.

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Engaging openly

Two of our values, “teamwork” and “care and respect”, help Scaw foster a culture of proactive and open employee engagement. The significance of this came sharply to the fore in the year with the restructuring of our business as a result of tough economic conditions.

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Skills development – producing excellence

Scaw has taken the lead in professionalising production to become an attractive career option for shop-floor employees, particularly in the steel manufacturing and engineering sectors.

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Women to the fore

Scaw has made a public commitment to encouraging and promoting women in the workplace. To this end the group launched the Scaw women’s forum (SWF) during 2015. The forum is tasked with driving the agenda of women in the workplace and developing a plan to uplift female employees. Its objectives include nurturing and mentoring female employees with the end goal of increasing gender diversity, making Scaw an organisation that attracts high‑quality females. We will strive to offer attractive opportunities for women within both the technical – electrical, mechanical and metallurgical engineering – and professional administration fields.

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Supporting localisation through supplier development

Scaw’s enterprise development programme provides opportunities for small organisations to participate in a meaningful development programme that could ultimately lead to them becoming a vendor. One such beneficiary is Torque Services. Scaw identified an opportunity to support a local supplier in developing a range of products that would enable the group to not only support a black women-owned company but foster localisation by eradicating the need to import these particular products..

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