barloworld limited jse sri limited.pdfbarloworld’s reputation by leading in sustainable...

Barloworld Limited JSE SRI 23 August 2012

Christopher WhitakerExecutive: Strategy and Sustainability

2

JSE SRI – 23 August 2012

Agenda

Overview

Integrated approach

Strategic framework

Governance

Conclusion

3


Agenda

Overview

Integrated approach

Strategic framework

Governance

Conclusion

4


A sustainable company….

Founded in Durban, South Africa in 1902

Punch Barlow acquired the

Caterpillar dealership for part of South Africa

in 1927

By the late 1980s Barlow Rand

was the largest industrial company

in South Africa, employed some

245 000 people, and reached No 79 on the

Fortune 500 list of global companies

A series of subsequent unbundlings

and demergersrefocused the

industrial conglomerate back onto its

core distribution and dealership businesses

a 110 year old company

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Geographic spread

27 countries, 5 continents

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Divisions and brands

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49 823

40 830

45 269

2011 2010 2009

Revenue (Rm)

2 289 1 518

2 146

2011 2010 2009

Operating profit (Rm)

946

2 286

1 207

2011 2010 2009

Net cash inflow¹ (Rm) 30 932

25 690

30 0952011 2010 2009

Total assets(Rm)

38.89

40.10

40.37

2011 2010 2009

Petrol and Diesel consumption (ML)

87 296

89 723

87 567

2011 2010 2009

Electricity consumption (MWh)

1 807 244

1 871 756

1 843 7172011 2010 2009

Energy consumption (GJ)

189 043

201 733

199 053

2011 2010 2009

GHG emissions(CO2e tons)

767 731

843

2011 2010 2009

Water consumption(ML)

18 671

18 167

18 113

2011 2010 2009

Number of employees

1.31

1.51

1.27

2011 2010 2009

LTIFR²

15.7

10.7

7.7

2011 2010 2009

Corporate Social Investment (Rm)

2

1

3

2011 2010 2009

Fatalities

1 – before financing activities | 2 – Lost time injury frequency rate = lost time injuries x 200 000 divided by total hours worked

Integrated reporting – Integrated annual report 2011

Econom

icE

nvironmental

Social

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Integrated reporting – Interim results 2012 (Salient features)

Six months ended Year ended31 Mar 2012 31 Mar 2011 30 Sept 2011

FinancialHeadline earnings per share (cents) 244.6 144.3 464.6Dividends per share (cents) 80 50 155Operating margin (%) 4.6 3.6 4.6Net asset turn (times) 2.7 2.6 2.7EBITDA/interest paid (times) 6.0 4.7 5.3Net debt/equity (%) 64.7 58.3 35.5Return on net assets (RONA) (%) 13.1 10.3 13.0Net asset value per share including investments at fair value (cents) 5 774 5 139 5 839Number of ordinary shares in issue, including BEE shares (000) 230 934 230 686 230 878Non-financialEnergy consumption (GJ)^* 982 120 903 412 1 807 244Greenhouse gas emissions (CO2e tons)^* 100 909 94 685 189 043Water consumption (ML)* 386 394 767Number of employees* 19 222 18 440 18 671LTIFR^*+ 1.19 1.26 1.31Fatalities* - - 2dti # B-BBEE rating (level) 2 3 2

Closing rate Average rateSix months ended Year ended Six months ended Year ended

31 Mar 2012 31 Mar 2011 30 Sept 2011 31 Mar 2012 31 Mar 2011 30 Sept 2011Exchange rates (Rand)United States Dollar 7.67 6.76 8.04 7.86 6.94 6.91Euro 10.22 9.59 10.79 10.51 9.46 9.67British Sterling 12.26 10.84 12.52 12.44 11.04 11.12

^Agreed upon procedures at 31 March 2012, no assurance has been provided in this regard by group auditors* Limited assurance provided at 30 September 2011+ Lost time injuries x 200 000 divided by total hours worked# Department of Trade and Industry (South Africa)

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Agenda

Overview

Integrated approach

Strategic framework

Governance

Conclusion

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Integrated approach

Aspects Approach Elements ImageContext Value Based

Management1. Continuous improvement in value creation for all 4 Stakeholders

- Shareholders- Principals- Employees- Customers

2. Responsible Corporate Citizenship Strategy Strategic

Focus Areas1. Integrated Customer Solutions2. People3. Empowerment & Transformation4. Sustainable Development5. Financial Returns6. Profitable Growth

Implementation Employee Value Creation

1. Clear Purpose and Direction2. Alignment3. Inspiring Climate4. Sustainable Competence5. Performance Management6. Structured Team Forums

Values Worldwide Code of Conduct

1. Integrity2. Excellence3. Teamwork4. Commitment

Sustainability 10 Pillars of Sustainability

1. Clear Vision & Strategy2. Focus on the Core3. Market Leadership4. Integrated Customer Solutions5. Globally Competitive People6. Decisive Management

7. Environmental & Social Legitimacy8. Values and Ethics9. Corporate Governance10.Learning Organisation

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Agenda

Overview

Integrated approach

Strategic framework

Governance

Conclusion

12


Strategic framework: Vision

We will achieve this by being a recognised global market leader, providing integrated solutions in distribution, rental fleet management, product support and logistics to

customers in our chosen business segments

To deliver significant incremental value for our

stakeholders through 2015

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Strategic framework: People

• Clear purpose and direction• Inspiring climate • Alignment• Sustainable competence• Performance management • Team forums and collective wisdom• Regular Employee Engagement

assessment and review• Health and safety

Value creation through and for employees by attracting, developing and retaining globally competitive people necessary

to execute our strategy

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Strategic framework: Empowerment & Transformation

• All SA operations Level 3 or better• Leadership position• Enterprise Development • Socio-Economic Development • Skills development and training • Preferential procurement • Employment Equity, localisation,

gender and disability focus

Establish our credibility, legitimacy and reputation in the eyes of all stakeholders by leading in broad-based

empowerment and transformation

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Develop products and services to capitalise on emerging sustainable business opportunities, realise

cost savings through energy efficiency and other sustainable business practices and enhance

Barloworld’s reputation by leading in sustainable development

• Stakeholder engagement• Integrated management approach• Aspirational energy and emission efficiency

improvement targets set• Reduce and minimise carbon footprint• Competitive customer solutions• Emerging business and cost saving

opportunities• Integrated reporting

Strategic framework: Sustainable Development

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36.3

45.840.7

2011 2010 2009

Energy Intensity GJ/Rm revenue

• Early signatory to the Energy Efficiency Accord in SA

• Signed NBI’s Energy Efficiency Pledge

• Non-renewable fossil fuels & GHG Emissions (CO2e)(Scope 1 and Scope 2), against ‘Business As Usual’ scenario, 12% efficiency improvements off 2009 baseline, to end 2014, intensity measure: Turnover (tons CO2e/Rm’s) Employee (tons CO2e/employee)

• MARSO approach to energy and emission strategy

• Avis RAC SA CarbonNeutral® certification

• Responsible citizenship & commercial rationale

Sustainable Development: Aspirational targets and emissions

3.8

4.94.4

2011 2010 2009

GHG Emissions IntensitytCO2e/Rm revenue

01020304050607080

Oct

Nov

Dec Jan

Feb

Mar Apr

May Jun

Jul

Aug

Sep

Corporate Office electricity savings (MWh)

FY 2011 FY 2010

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Sustainable Development: Opportunities and customer solutions

• Cost savings- Energy bill savings / incentives / carbon tax savings

• Water focus where appropriate- Rainwater harvesting and recycling initiatives

• Improved operational resilience• Product lifecycle responsibility

- Caterpillar Component Rebuild & Remanufacture programmes

• Waste- Recycling/disposal

• ISO 14001 sites• Growth of ‘Green’ Industries• Assisting customers achieve their sustainability objectives• Represent leading and responsible principals

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Sustainable Development: Integrated reporting

• Important aspect of Stakeholder Engagement• Key to integrated management• Covers a range of internal and external initiatives• Aspects of Barloworld Annual Report 2011

- Evolving towards an ‘integrated report’ - Reflects integrated management approach- Reflects strategy and ongoing value creation capacity for all stakeholders- Full response to GRI (G3.1): A+ Application Level (4th in IRAS review)- Third party assurance

• JSE SRI • Investor Carbon Disclosure Project (CDP)

- 6th in JSE Carbon Disclosure Leadership index 2011

• Water CDP• United Nations Global Compact (COP)

- King III compliance

http://www.barloworld.com/sustainability/gri-3-1-responses

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Strategic Framework: Profitable Growth

• Capital allocation to high yield opportunities• Key growth segments identified • Emerging markets• Maximise organic growth • Sustainable development opportunities• Acquisition of Bucyrus South Africa and

Botswana completed for US$175m• Sale of US Handling operation for US$60m

completed• JV signed with EMD/Progress Rail

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Profitable Growth: Bucyrus acquisition

A sense of scale

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Profitable Growth: Caterpillar mining product line – pre Bucyrus

Caterpillar only participated in ~23% of surface and underground mobile equipment

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Caterpillar meeting the challenge of providing expanded value chain solutions

Profitable Growth: Caterpillar mining product line – today

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Agenda

Overview

Integrated approach

Strategic framework

Governance

Conclusion

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Assurance

Governance environment

Reporting

King III

BoardStructures

UN GlobalCompact

Risk StructuresCompliance

Code of Ethics

Tip-OffsAnonymous

Barloworld Code of Ethics• Obey the law• Respect others• Be fair• Be honest • Protect the environment

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Agenda

Overview

Integrated approach

Strategic framework

Governance

Conclusion

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Conclusion: Barloworld Top Imperatives & KPI’s

IntegratedCustomer Solutions

• Market leadership in targeted segments through delivering integrated customer solutions

People

• Drive employee engagement (overall score above 75% for all businesses)• Leadership retention, development and succession aligned with strategic growth

priorities• Ensure required talent is available

Empowerment & Transformation

• Leadership position in industrial sector• dti B-BBEE level 2 or 3 for each South African business unit • Drive localisation, gender and disability equity, and diversity across the group

Sustainable Development

• Aspirational target of 12% non-renewable energy & greenhouse gas emissions efficiency improvements by end 2014 (2009 baseline)

• Cumulative cost savings through sustainability initiatives• Pursue emerging commercial ‘green’ opportunities

Financial Returns

• Top-quartile financial returns on average through the cycle (at or above our cost of equity, measured against relevant peer groups in our chosen business segments)

• Internal targets and hurdle rates set for all businesses

Profitable Growth

• Increase group operating profit by executing turnaround and growth strategies• Strategic growth opportunities pursued• Achieve top-quartile growth in total shareholder returns over five years to 2015

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Conclusion: Strategy execution – Aligned and consistent

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Cle

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d st

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Focu

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the

core

Mar

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eade

rshi

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Inte

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usto

mer

sol

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ns

Glo

bally

com

petit

ive

empl

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Dec

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anag

emen

t

Envi

ronm

enta

l & s

ocia

l leg

itim

acy

Valu

es a

nd e

thic

s

Cor

pora

te g

over

nanc

e

Lear

ning

org

anis

atio

n

Conclusion: Barloworld’s I0 Pillars of Sustainability

Barloworld 10 Pillars of Sustainability

1 2 3 4 5 6 7 8 9 10

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Thank you

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