Bee Policy

Barloworld’s BEE policy has been in place for four years. This policy is translated into shorter-term objectives aligned to Barloworld’s five-year strategic planning horizon.

Barloworld’s operations in South Africa comply with the letter and spirit of broad-based black economic empowerment through the implementation of its BEE policy.

Black employees and previously disadvantaged communities should have an equity stake in our South African business interests. Our target for historically disadvantaged South Africans (HDSAs) ownership is an effective 25.1% over the
value of South African assets. We do, and will continue to participate in joint ventures and other commercial arrangements with black enterprises.
In South Africa Barloworld will:

finalise an appropriate BEE structure for the Barloworld group that recognises the leadership role that Barloworld needs to assume, in terms of transformation of the South African economy, ensuring BEE delivers
long-term shareholder benefits;
promote initiatives aimed at progressing broad-based black economic empowerment (BBBEE);
identify and pursue BEE opportunities at all levels to either unlock value for the business or preserve current value into the future;
choose BEE partners, where possible, who have both a broad-based ownership structure and can play an appropriate value-adding role in our businesses;
promote the productive and sustainable participation of black enterprises and black people in Barloworld; and
ensure that joint ventures or partnership arrangements are meaningfully structured with equitable division of the risks and rewards to each party.

Management.

As an international organisation, Barloworld Limited’s board must reflect the international nature and composition of its various business units and the geographic regions in which it operates.

Likewise, management structures of our regional business units must reflect the demographics of the societies in which we operate. In South Africa and other African regions, targets are in place in all business units to ensure that this objective is achieved.

Indirect empowerment
Through our South African operations’ procurement initiatives (Barloworld black economic empowerment through
preferential procurement) Barloworld aims to:

set affirmative procurement targets;
increase its procurement from enterprises that have made significant progress in the area of BEE and are rated as good or satisfactory contributors to BEE, based on the South African Department of Trade and Industry (DTI) balanced scorecard;
reduce the cost of goods and services we purchase; and
monitor and report on our procurement performance.

In conjunction with company-wide procurement initiatives, each business is required to actively pursue BEE procurement initiatives. Barloworld uses DTI approved, independent rating agencies to rate Barloworld’s key suppliers’ empowerment status.

We focus on enterprise development as a means of increasing our HDSA supplier and customer base. As evidence of this commitment we launched Barloworld Siyakhula and other initiatives.

Strategic objective
It is our intention to ensure our South African business units achieve a Level 5 rating by end 2008 and Level 4 rating by end 2009 in terms of the BBBEE codes of best practice. BBBEE compliance is expressed in terms of eight recognition levels. These are:

Level 1 contributor (BEE recognition level: 135%)
Level 2 contributor (BEE recognition level: 125%)
Level 3 contributor (BEE recognition level: 110%)
Level 4 contributor (BEE recognition level: 100%)
Level 5 contributor (BEE recognition level: 80%)
Level 6 contributor (BEE recognition level: 60%)
Level 7 contributor (BEE recognition level: 50%)
Level 8 contributor (BEE recognition level: 10%)
Non-compliant contributor (BEE recognition level: 0%).

Level 4 is considered fully compliant with the codes on BBBEE. Being at Level 4 allows companies that procure from you to claim 100% of the procurement spend, thus assisting them with the procurement elements of the scorecard.

Performance in empowerment related areas during 2006.

Direct empowerment.

New equity transactions in 2006. Barloworld Motor Franchises (South Africa) has been awarded a Level 6 BEE rating on the basis of the BBBEE Codes of Good Practice that were released at the end of 2005.

Previous significant equity transactions, all of which are progressing well, include the following:

In 2005, a 25% stake in our Logistics Africa business was sold to the Letsema Consortium, led by Mr Isaac Shongwe. Letsema paid R118 million for its stake and Mr Shongwe has taken an executive position in the company. His track record in the logistics industry has helped him to integrate immediately into the management of the logistics business;
NMI-DSM joint venture in KwaZulu-Natal operates the flagship DaimlerChrysler brand campus representing the brand centres for:
– Mercedes-Benz, Car Group
– Chrysler/Jeep
– Mitsubishi Motors
This joint venture has set the benchmark for BEE deals in the motor retail industry; and Afripack is operating well under Nozala Investments, who purchased 75% of the business. The company continues to meet its profit and growth forecasts, and Nozala has repaid the vendor loan to PPC one year early in October 2006.

Board composition.

We continue to make progress in this area with Mrs S Mkhabela being appointed to the board as an independent non-executive director during the year.

Human resources development.

All of our South African businesses have employment equity plans, which have been agreed with our various employee representative organisations and have been lodged with the Department of Labour. These are also monitored at divisional board level. Comprehensive internal training programmes are in place at all levels.

This page was updated on 12 February, 2008

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