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Barloworld Limited JSE SRI 23 August 2012
Christopher WhitakerExecutive: Strategy and Sustainability
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JSE SRI – 23 August 2012
Agenda
Overview
Integrated approach
Strategic framework
Governance
Conclusion
3
JSE SRI – 23 August 2012
Agenda
Overview
Integrated approach
Strategic framework
Governance
Conclusion
4
JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
Geographic spread
27 countries, 5 continents
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JSE SRI – 23 August 2012
Divisions and brands
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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
Agenda
Overview
Integrated approach
Strategic framework
Governance
Conclusion
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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
Agenda
Overview
Integrated approach
Strategic framework
Governance
Conclusion
12
JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
Profitable Growth: Bucyrus acquisition
A sense of scale
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JSE SRI – 23 August 2012
Profitable Growth: Caterpillar mining product line – pre Bucyrus
Caterpillar only participated in ~23% of surface and underground mobile equipment
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JSE SRI – 23 August 2012
Caterpillar meeting the challenge of providing expanded value chain solutions
Profitable Growth: Caterpillar mining product line – today
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JSE SRI – 23 August 2012
Agenda
Overview
Integrated approach
Strategic framework
Governance
Conclusion
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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
Agenda
Overview
Integrated approach
Strategic framework
Governance
Conclusion
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JSE SRI – 23 August 2012
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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JSE SRI – 23 August 2012
Conclusion: Strategy execution – Aligned and consistent
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JSE SRI – 23 August 2012
Cle
ar v
isio
n an
d st
rate
gy
Focu
s on
the
core
Mar
ket l
eade
rshi
p
Inte
grat
ed c
usto
mer
sol
utio
ns
Glo
bally
com
petit
ive
empl
oyee
s
Dec
isiv
e m
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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JSE SRI – 23 August 2012
Thank you