Physical address: Postal address: 24 Johnson Road PO Box 75480 The Maples Office Park Gardenview Bedfordview 2047 Johannesburg Tel: +27 (0)11 723 1400 | Fax: +27 (0)11 453 9353 AirportsCompanySA @Airports_ZA www.airports.co.za Run Airports | Develop Airports | Grow Footprint ABBREVIATIONS ACI Airports Council International MIAL Mumbai International Airport Private Limited ACSA Airports Company South Africa SOC Ltd NEHAWU National Education, Health and Allied Workers Union AMSIS Airport Management Share Incentive Scheme NICD National Institute of Communicable Diseases APEX Airport excellence in safety NUMSA National Union of Metalworkers of South Africa ASQ Airport Service Quality PFMA Public Finance Management Act, No. 1 of 1999 B-BBEE Broad-based black economic empowerment PIC Public Investment Corporation CEO Chief Executive Officer PPE Personal protective equipment CFO Chief Financial Officer (Pty) Ltd Proprietary Limited Companies Act Companies Act, No. 71 of 2008 ROCE Return on capital employed COO Chief Operating Officer ROE Return on equity DFI Development Finance Institution SAA South African Airways EBITDA Earnings before interest, tax, depreciation and amortisation SACAA South African Civil Aviation Authority ESAT Employee satisfaction survey SANDA South African National Deaf Association GDP Gross domestic product SANS South African National Standards GRU Guarulhos International Airport SAPS South African Police Service GruPar Guarulhos Participações S.A SED Socio-economic development IAR Integrated Annual Report SMMEs Small, medium and micro enterprises IATA International Airlines Transport Association SOC State-owned company ICAO International Civil Aviation Organisation SPE Special purpose entity ICT Information, communication and technology STI Short-term incentive IFRS International Financial Reporting Standards TSA USA Department of Homeland Security’s Transportation Security Administration IIRC International Integrated Reporting Council AIRPORTS ISO International Standards Organisation CTIA Cape Town International Airport IT Information technology KSIA King Shaka International Airport King IV King Code of Governance for South Africa 2016™ ORTIA O.R. Tambo International Airport KPI Key performance indicator PLZ Port Elizabeth International Airport LTI Long-term incentive TABLE OF How we integrate 2 Messages from leadership 44 Navigation icons Message from the Strategic Pillars 46 Chairman of the Board About our Integrated Annual Report 4 CONTENTS Run airports Message from the CEO 49 Group overview 6 Transformation 52 Develop airports Our mandate 8 Transforming our people 56 Our shareholding 8 Transforming our supplier base 58 Grow footprint Our geographical footprint 8 Transforming our society 62 Our South African statistics 9 Sustainability Framework Socio-economic impact 63 Our legal structure 10 Transforming our environment 64 Areas of recognition 12 Our business Linking our impact to the National 66 Development Plan and the UN’s How good governance preserves value 14 Sustainable Development Goals Our people and society creation Transformation ecosystem 67 contributions to our Sustainability Governance approach 16 Framework Our environment Board of Directors 18 Outlook 67 Governance of functional areas 20 Online information Executive committee 20 Performance review 68 Performance report back 70 Page reference How our strategy creates value 22 Message from the CFO 72 Our strategic intent 24 Run airports 80 Develop airports 88 Understanding our new normal 26 Grow footprint 92 Our value creation process 28 Business enablement 96 Our materiality process 29 Our value creation outcomes 42 Statistical review 100 Group information 102 Airports Company South Africa Integrated Annual Report 2020 1 HOW WE INTEGRATE Airports Company South Africa SOC Ltd (the Company) owns and manages nine South African airports. We also participate in equity investments abroad as well as provide technical advisory and consultancy services to other airports globally. The Company and its subsidiaries constitute the Group. Our majority shareholder, with a 74.6% stake, is the South African Government. In line with the government’s developmental objectives, we aim to create sustainable value over the short, medium and long term which will positively impact not only our business, but our people, the society in which we operate and our environment. This is achieved by managing Airports Company South Africa in an integrated manner. The diagram below illustrates how our business processes interact to develop our integrated strategy and approach to reporting. Appropriate governance controls and oversight are in place throughout the Company to ensure effective control and a strong sense of ethics and legitimacy, which is reflected in good performance. Refer to page 16 External focus Our strategic proposition Message from the Chairman of the Board page 46. Through our stakeholder engagement process, we Our strategy reflects our response plan in the short, Message from the CEO on page 49. seek to understand the needs and concerns of our medium and long term, by setting objectives and Performance review on page 68. valued stakeholders. explaining how we aim to achieve them. Message from the CFO on page 72. Performance per strategic pillar on page 80, 88, Refer to page 32. Refer to page 24. and 92. Business enablement on page 96. Internal focus Value creation model Our inward focus is on the risks and opportunities We ensure that our value creation model utilises In these chapters, we also provide an outlook for highlighted by our enterprise risk management system. resources and relationships (our capitals) optimally expected future performance. and is structured to enable strategy execution and Refer to page 35. value creation. Remuneration We remunerate our people based on performance. Holistic focus Refer to page 28. This promotes successful execution of our strategy. Our holistic understanding of the challenges our Group faces and the opportunities available for Performance against strategy Refer to page 96. improvement and growth, enable us to respond to To reflect on the extent to which we have succeeded material matters. in delivering against our strategy, we provide performance feedback in the following sections of Refer to page 30. our report: Our commitment to our stakeholders Our pledge to our customers To build purposeful and responsive relationships with our stakeholders so as to achieve agreed • To embed a culture of service excellence outcomes that support sustainable value creation. Through our business review process, we gain • To build an efficient customer-focused business, while contributing to socio-economic an understanding of changing global trends and how these impact our operating environment. development 2 Integrated Annual Report 2020 Airports Company South Africa Airports Company South Africa Integrated Annual Report 2020 3 ABOUT OUR INTEGRATED ANNUAL REPORT Integrated Annual Report and OUR REPORTING PHILOSOPHY Governance and Remuneration Report Purpose and framework Scope and boundary Assurance We seek to provide investors and other stakeholders with the relevant material information they may require Airports Company South Africa’s FY2019/20 IAR is a The IAR and Governance and • Management and governance oversight. about our performance, strategy and future prospects. report to all our stakeholders. It sets out our short-, Remuneration Report contain • The strategic objectives and key medium- and long-term views on value creation. material information on the Group’s performance indicators were internally We strive to improve the quality and disclosure of our performance for the financial year and externally assured and were audited reporting by aligning with relevant frameworks and The Governance and Remuneration Report provides 1 April 2019 to 31 March 2020 (the both internally and by the Auditor- best practice. further details of our governance structure and financial year under review). General of South Africa as per the Public performance as well as our remuneration practices. Audit Act of South Africa, No. 25 of 2004. Our method for determining • The National Treasury’s Framework OUR REPORTING SUITE These reports are built on the following frameworks materiality is defined and explained on for Managing Programme Performance A digital version of this Integrated Annual Report (IAR) and standards: page 29. Information confirms that performance • International Integrated Reporting Council’s information is useful if indicators and and the documents listed below can be found at (IIRC) International Integrated Reporting <IR> We disclose all relevant internal and targets are well defined, verifiable, www.airports.co.za. Framework external factors that substantially attainable, specific, measurable, time- • IFRS (International Financial Reporting Standards) influence our business, where bound and relevant. We consider these • Companies Act, No. 71 of 2008 (Companies Act) applicable. elements in finalising the information • Public Finance Management Act, No. 1 of 1999 presented in this IAR. The external audit (PFMA) There were no restatements to opinion on the Consolidated Annual • King Code of Governance for South Africa 2016™ comparatives unless otherwise stated. Financial Statements for FY2019/20 (King IV) includes a summary of the work • ISO/ South African National Standards (SANS) The financial reporting boundary was performed. 31000 determined in accordance with IFRS. Consolidated Annual Financial Statements Purpose