Employment equity and transformation

Workforce diversity

Our transformation goals aim to reflect the demographic profile of South Africa, in line with the economically active population at all levels. These goals are set to address areas of underrepresentation in terms of diversity by race and gender at all levels. To realise our growth strategy, we focus on the attraction, development and retention of skills within the Group and in the broader South African context.

Initiatives to promote BBBEE

Omnia regards BBBEE as a business fundamental that is crucial to the future of South Africa and its economy. It is an essential process required to bring about increasing black participation in the South African economy and reducing the existing disparity between income inequalities.

Our BBBEE imperatives are based on the principles that:

	Poverty can only be effectively dealt with in a high-growth environment.
	Wealth must be generated and opportunities created to ensure a more equitable society.
	It is a moral necessity, required to address the legacy of a past in which the majority of South Africa’s citizens were excluded, on the basis of their race, from enjoying the benefits to be derived from being participants in the mainstream economy.

Omnia has completed its financial year 2009 (based on the annual report for the year ended 31 March 2009) BBBEE formal verification and it has, in line with its strategy, achieved a Level 5 status, with an overall score of 58,42 in terms of the Department of Trade and Industry’s (the dti’s) BBBEE Codes of Good Practice. Omnia’s verification was conducted by Empowerdex, a SANAS-accredited verification agency.

A Level 5 status affords a BBBEE procurement recognition of 80% for customers of the Omnia Group. A copy of the new certificate and report is available on the intranet and the Omnia website at www.omnia.co.za.

Omnia performed well in terms of skills development, enterprise development and socio-economic development, having exceeded some of the targets set by the Codes in these categories. This is a reflection of the Group’s focus on developing employees and communities, and addressing the skills challenge faced by the Group. The Group has also done well in preferential procurement. We are hopeful that ownership will improve in the 2010 financial year verification, when our employee share scheme, Sakhile 2 is included. Our concerted efforts towards employment equity within all divisions will, however, continue. Omnia is within six points (a score equal to or greater than 65) of achieving a Level 4 status with a 100% BEE recognition level, which is in line with our target for 2010.

Omnia also participated in the Financial Mail/Empowerdex survey for 2010, and based on recent information, although not tested to the degree performed during a formal verification, achieved a score of 63,74, and is ranked 59th overall in the Top 100 Empowerment Companies index in South Africa, published by the Financial Mail in April 2010. We have once again performed better than some of our competitors. We will commence the 2010 verification process in the last quarter of the 2010 calendar year.

Equity ownership

Omnia established the Sakhile equity scheme for employees, which places 10% of the company in the hands of our South African employees, in 2007. At the time of the launch, eligible employees were awarded 1 000 shares each. The Sakhile initiative ensures that the Group’s broader employee base benefits directly from its growth over the longer term, thus aligning their interests with those of shareholders. A separate legal entity, Sakhile, is now overseen by a board of directors who are nominated to their positions by members.

The Omnia Board has long recognised the need for significant management ownership participation within the Group and believes that the Group’s success is related to the excellence and long-term dedication of its key management personnel. The Board also believes that an effective partnership arrangement between the shareholders of Omnia and management enhances the wealth of the group.

According to these objectives, a second phase of the employee share scheme, Sakhile 2, was launched during 2010. Aimed at black members of Omnia’s management team, a portion of the shares allocated to the scheme are to be used to attract skilled individuals to the Group and to retain talented black board members, executives and employees.

Employment equity

At Omnia we believe that a diverse workforce contributes to cross-cultural understanding, broadens perspectives and helps to enhance our competitive edge. We are therefore committed to transforming Omnia’s workplace by systematically implementing an employment equity plan, which, based on a robust set of principles, guides the actions and initiatives we take to build a truly representative workforce. These principles include:

	Offering equal opportunities to all employees, irrespective of race or gender.
	Providing an enabling environment which allows people to develop to the full extent of their capabilities.
	The payment of remuneration packages that take account of individual performance and union agreements.
	The provision of a consultative environment for workforce representatives.
	Fostering a sense of ownership.
	Fostering an internal focus of control.

Part of Omnia’s process of developing the employment equity plan was establishing employment equity committees at plant-level across all divisions. These ground-based committees report to the divisional committees, who then report to the central Group employment equity committee.

Plant and divisional-level committees debate strategies and monitor legislative compliance, while the central committee evaluates progress against set objectives and targets in each business on a quarterly basis. All committees have received training as to their roles, and produce annual reports on their progress.

The introduction of plant-level committees has proven highly effective. Beyond setting and driving compliance with targets, the committees have empowered employees at plant-level to take ownership of the employment equity process, and serve as a platform for employees to voice a broad range of concerns which are then escalated within the division and Group.

Omnia’s employment equity status for the year under review is reflected in the table below.

During the year, the representation of black men and women in management, professional and skilled positions moved from 33,6% to 34,9%, and overall black representation in the Group was 63,1%.

Procurement

Where possible, the Group seeks opportunities to increase its procurement of products and services from accredited BBBEE suppliers. In 2009, 49,2% of total procurement spend was with such suppliers, an increase of 14% over the previous year. At the same time, spend with enterprises that have a 50% black ownership increased from less than 1% to 8,95%.

Enterprise development

We believe entrepreneurs form the backbone of a vibrant economy. To this end, Protea Chemicals has developed strong business relationships with several black-owned businesses, providing assistance in the form of shared infrastructure, extended payment terms and by imparting business knowledge and expertise.

Omnia’s Agriculture division contributes to the vitally important agricultural sector of the economy with practical assistance on agricultural best practices in a wide range of agronomic applications. Government is planning to redistribute 20 million hectares to emerging farmers by 2014. If this land were to be divided into plots averaging 200 hectares in size, 100 000 new farms would be created. Agronomic assistance is a critical success factor in the economic viability and sustainability of these new farmers, and Omnia is committed to helping emerging farmers establish their own farming businesses.

Moreover, with agriculture as one of Omnia’s primary areas of focus, we have long been aware of the disparity that exists within the South African agricultural economy, which is characterised by a well-developed commercial sector and poorer, subsistence farming operations.

To address this disparity, Omnia actively provides development and emerging farmers with assistance and advice by making available the expertise of our trained agronomists. We offer assistance and support to new entrepreneurs to set up their own businesses wherever possible, contributing to the sustainability of enterprise development in the sector by offering input and practical assistance through agricultural best practices, not only in plant nutrition but also in other agronomic practices, for example soil cultivation, tillage systems and environmental programmes. Reduced tillage systems not only increase farmers’ profitability and reduce their production risk, but are also more environmentally friendly. Through the use of Omnia’s in-house developed technology, including OmniSap®, OmniBio™ and OmniPrecise™, our agriculturalists are able to further increase farmers’ margins and reduce their financial risk.

A dedicated agricultural unit, established specifically to assist emerging farmers, spent R9,9 million during the year under review on helping farmers establish their enterprises. Selection is made on the basis of farmer ability and agronomic due diligence – the potential of the farmer and the farm to be economically viable and sustainable in the long term.

Dryden Project

In 2006, Omnia, ABSA and Monsanto initiated a collaborative approach to support individual black farmers become sustainable commercial farmers. Implemented in the Delmas area, the Dryden project is now in its fourth year, and is fast becoming one of our most successful projects.

Initially in 2006, two farmers planting on 260 hectares were supported to ensure a successful and sustainable implementation process. Unfortunately, extreme drought resulted in poor yields and a subsequent loss made by the two farmers. As we took a long-term approach to this project, the partners agreed to write off the bad debt and continue the initiative. In 2007, the intervention grew to five farmers planting on 1 000 hectares, with a total finance requirement of R6 million. This second year resulted in much better yields and small profits. 2008 saw seven participating farmers planting maize and sunflower on 1 600 hectares, with a total finance requirement of R8 million. During this year, farmers increasingly began to use their own equipment, reducing their reliance on contractors. A basic form of precision farming was also implemented to introduce a technological approach to farming, and the principle of investing 50% of profits back into inputs for the next season has been agreed with the farmers.

Yields of up to eight ton per hectare of maize have been recorded and all of the 14 farmers currently participating in the initiative are profitable. This project has grown to more than 3 700 hectares in 2009, with a finance requirement of R20 million as these farmers expanded their farming operations. Crop rotation practices have been introduced, as well as further investment in equipment.

One of the challenges going forward will be to increase the farmers’ footprint so they can operate on a more commercial scale and leverage the benefits of economies of scale.

Omnia is a full-time partner in the initiative, providing project management, dedicated agronomical support, products, services and training support.

In 2010, Omnia obtained finance from the Land Bank to assist participating farmers in the Dryden project, as well as 10 farmers from the Free State. The project was subsequently renamed the Land Bank project, and a section 21 company, the Grain Farmer Development Agency (GFADA), was established through the Value Chain Network.

Two of Omnia’s personnel function as project managers in the Dryden and the Free State areas where the project is being implemented, and are also involved in marketing the grain produced. They successfully negotiated and established a partnership with NU-Pro commodities in Bethlehem to assist with the forward contracting of grain, which means that about 50% of farmers’ grain was contracted at a price almost R250 per ton higher than the current SAFEX price – a big step in making these farmers more profitable.

Discussions with the Land Bank are also under way to increase the number of farmers in this project for the next season, while discussions have been initiated with the Bank to assist the VKB, OVK and NWK co-operatives, with whom Omnia has established further agricultural development projects. If Omnia’s negotiations with the Land Bank to assist these co-operatives and share their risk are successful, these initiatives will be in a position to expand much more rapidly.

Lowveld Emerging Farmers

Omnia’s involvement with emerging farmers in the Lowveld commenced in 1998, with the South African Sugar Association’s launch of the first sugar cane projects in the area. Omnia disseminates knowledge of plant nutrition management and the principles of sugar cane fertilization during numerous farmers’ days held at the different projects. This assists emerging farmers to build successful businesses, as they are able to gain an understanding of all aspects of sugar cane production. More recently, finding solutions for finance availability for these farmers has become an additional focal point.

The Bethlehem Farmers’ Trust

The Bethlehem Farmers’ Trust (BFT) was established in Bethlehem in 1998, with the intent of progressing land reform in South Africa by establishing emerging farmers in local communities to produce apples in the eastern Free State as a sustainable agriculture project. The project is financed by the Industrial Development Corporation (IDC), and Omnia contributes agronomic advice, farming skills and fertilizer products. This 110-hectare apple project has been very successful and the majority of the produce is destined for the export market.

Batswa ko Pele

A collaborative project with the NWK co-operative to support 20 black farmers growing maize and sunflower on about 3 000 hectares in the North West, this project is now in its third year. Although implementation during the first year proved problematic, mainly due to difficulties in sourcing adequate finance, “teething” problems have been overcome and the farmers are going from strength to strength. In the last two years of the intervention, all the farmers were profitable. Omnia is a full-time partner in this project, providing dedicated agronomic support, products, services and training.

Agristart

Although the Agristart initiative has been in existence for a few years, it has experienced difficulties due to a lack of finance and the non-continuity of financiers. Based in the previous Bophuthatswana homeland, it also holds a unique challenge in that farmers rarely own more than 15 hectares each – really too small to establish viable commercial enterprises. This requires that progressive farmers need to rent substantial tracts of additional land. In 2008, the project saw the introduction of the NWK co-operative as a long-term financier, with support from the Northwest Department of Agriculture, and has become very successful. It now consists of about 90 participating farmers planting maize and sunflower on close to 1 100 hectares. Omnia is a full-time partner in this intervention, providing dedicated agronomic support, products, services and training.

In 2010, the Agristart and Batswa ko Pele projects were combined to create a system where individual farmers can grow their businesses as viable, sustainable agricultural enterprises, and is now known as the NWK project.

To further assist these farmers, NWK has embarked on a training programme which includes a broad spectrum of subjects – from financial management to cattle and crop farming – with the latter module presented by Omnia personnel.

OVK Project

A collaborative project in the South-eastern Free State with OVK, GrainSA and other role-players, this initiative has grown from humble beginnings to deliver very positive results. Now in its third year of implementation, the project is poised to grow significantly to 12 farmers planting 3 000 hectares in 2010.

VKB Project

Omnia’s expertise in Agri-BEE projects has seen a new collaborative partnership established in 2008 with VKB in the eastern Free State. Starting out with six commercial farmers planting maize on 700 hectares but lacking proper support, the project already achieved significant positive results in its first year of operation, and grew to more than 8 500 hectares in 2009. Omnia is a full-time partner in this initiative, providing project management, dedicated agronomic support, and products, services and training.

Brooksby Project

The Brooksby project is a unique initiative conceived by a white commercial farmer to uplift his neighbouring community by providing inputs, mechanisation and technical expertise to black farmers, which have enabled them to plant 1 100 hectares of maize. His dedication to and the successes he has achieved in the development of emerging farmers prompted Omnia to support this initiative, and since 2008 Omnia and NWK have provided dedicated expertise.

Small-scale farmer development

Although Omnia’s main focus is on creating profitable and sustainable black commercial farmers, we are cognisant of the huge challenges inherent in finding lasting solutions for the upliftment of small-scale farmers in rural areas – home to millions of people often caught in a poverty trap. The initiative includes products such as seed, fertilizer and chemicals being made available to project participants, enabling such entrepreneurs to become intermediary input suppliers by selling these products and at the same time training more people in their communities.

Socio-economic development

Investing in communities

Omnia understands that contributing to the development of the communities in which it operates makes good business sense. Over its more than 50 years of operation, Omnia’s agriculture business has earned a strong reputation as a champion of the farming community, and continues to play an active role in the development of the domestic agriculture sector. Omnia’s contributions centre on supporting the development of emerging farmers, and actively contributing to agriculture and environmental education. In this way, we hope to support the sustainable development of African agriculture at both the formal and informal level by transferring skills and best practice.

As indicated earlier in this report, Omnia plays an important role in the development of emerging farmers to enable them to establish and manage commercially sustainable businesses. Our expertise and experience enable us to provide superior education services to emerging farmers, reducing their risk in a tough, competitive environment. But Omnia employees also offer their time and knowledge to assist with various complementary developmental projects in the agricultural environment.

In 2010, Omnia expanded its involvement in two projects in the North West Province – at Marotse Primary School and at the Uitkyk village feeding scheme – by donating two family drip irrigation systems with tanks for vegetable growing. Omnia personnel also provides advice on growing these vegetables, contributing to food security in vulnerable communities.

Omnia’s socio-economic development spend in 2010 amounted to 3% of net profit after tax, against a target of 1%, compared to 0,94% in 2009. In addition to our involvement in developing the emerging agricultural sector, Omnia has established partnerships in a variety of agricultural projects, including the following:

Grain Value Chain Network (GVCN)

The GVCN, an NGO established by a number of members, including Omnia and Grain SA, aims to co-ordinate the efforts and resources of role-players in commercial agriculture, specifically those involved in grain production, to make a meaningful and focused contribution to the commercialisation of black farmers. Omnia is playing a leading role in co-ordinating this effort, and supports the organisation in various ways, such as creating partnerships for Agri-BEE projects, finding solutions to long-term finance and insurance challenges, and liaising with the Departments of Agriculture, Forestry and Fisheries, and Rural Development and Land Reform to create more successful land reform and post-settlement support. At ground level, we provide project management, advisory and training services, and agricultural products. We believe the GVCN will have a profound impact on the mainstreaming of black commercial farmers, as the success of the approach has been proven beyond doubt.

Education

Mathematics and science skills underpin Omnia’s intellectual capital base. As such, the promotion of education, especially in these disciplines, is a key focus for the Group.

Zakhe Agricultural College

Omnia is a sponsor of Zakhe Agricultural College in KwaZulu- Natal, which gives young people the skills and motivation required to succeed in the modern agriculture environment. Besides teaching subjects such as mathematics, science, biology and various agricultural specialisations, the college provides a practical learning experience, with students running their own farming projects during the year. All participating students are black.

Elgin Community College

The Elgin Community College aims to promote job creation by providing training in all aspects of deciduous fruit farming through a two-week winter school programme. The students are mostly farm workers from Elgin and Grabouw in the Western Cape.

Buhle Farmers’ Academy

The Buhle Farmers’ Academy is a renowned training institution at Delmas that provides training and practical experience to aspirant black farmers in a host of agricultural specialisations. With the support of various private sector partners, the Academy has trained over 1 400 farmers since its inception in 2000. Omnia sponsors all fertilizer used on the 90-hectare farm where students have the opportunity to hone their practical skills. Omnia personnel are also part of the teaching staff, specifically focusing on crop production. Omnia’s involvement further extends to assisting farmers, on completion of their studies, to access finance from financial institutions such as the Land Bank. We also play a pivotal role in sourcing land for graduates through our close association with the Department of Rural Development and Land Reform. In these ways, Omnia plays an active role in the alleviation of poverty and the promotion of sustainable economic development and resource use in South Africa.

Unobhala school in rural KwaZulu-Natal

Unobhala is one of the many disadvantaged rural schools situated in the Nkanyezini area in KwaZulu-Natal. The school has been operating in difficult conditions since 1983. Starting out as a Junior Secondary School, Unobhala gained Senior Secondary School status in 1997 and has about 375 pupils, 55 of whom are in Grade 12.

There has been a marked improvement in the fortunes of Unobhala High School since Zetachem stepped in with practical support in 2003.

Zetachem, together with Protea Chemicals KZN and African Amines, have supported the school well beyond their original pledge, as we believe a properly functioning school is critical to this community. Our hope is to see the learners and community of Nkanyezini continue to benefit from the project and that the community and the learners use the opportunity to succeed.

Education and infrastructure development support in Zambia

During the period under review, BME Zambia built a school, which also functions as an orphanage, for about 60 children in the Chingola area of Zambia, close to the company’s offices. The project is of enormous value to the company and the community, as the intention is a genuine attempt to uplift people of the surrounding area where the company operates, and to make a significant difference in the lives of generations to come, as true freedom and better livelihood choices are only introduced through access to improved education.

Two full-time teachers ensure the learners receive relevant tuition, while BME funds the building maintenance and part of the running costs. The project is also important for BME employees’ morale, and both the country manager and financial manager are involved in looking after the project’s finances and infrastructure.

Importantly, within each stage of building the school, various partnerships were established to ensure those community members involved in the project had certain responsibilities to undertake and achieve. Given that the people of the area are also involved in feeding schemes and brick-making, we believe this partnership will be long-lasting and sustainable. Founded on the principle of continued support, our integrated approach ensures the viability and success of the project.

The table below reflects the Omnia Group’s socio-economic development spend for the year under review, compared to the previous two reporting periods.