INTEGRATED ANNUAL REPORT 2011 GRI RESPONSES  

EC1 - EC9

  • EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.

    Integrated annual report 2011 - Salient features
    Integrated annual report 2011 - Financial and non-financial indicators
    Integrated annual report 2011 - Statement of total value added

    Statement of total value added
    for the year ended 30 September

        2011
    Rm
    % 2010*
    Rm
    % 2009*
    Rm
    %  
      Revenue from continuing operations 49 823   40 830   45 269    
      Revenue from discontinued operations     1 219   1 451    
      Paid to suppliers for products and services 39 086   32 149   34 768    
      Value added 10 737   9 900   11 952    
      Income from investments^ 133   104   203    
      Total value created 10 870   10 004   12 155    
      Value distribution              
      Employees (note 1) 6 786 62 6 351 63 7 054 58  
      Capital providers: 1 012 9 1 056 11 1 580 13  
      Finance costs 755   833   1 146    
      Dividends to Barloworld Limited shareholders 223   189   396    
      Dividends to non-controlling interest in subsidiaries 34   34   38    
      Government (note 2) 642 6 856 9 1 093 9  
      Communities (Corporate social investment) 16   11   8    
      Reinvested in the group to maintain and develop operations 2 414 23 1 730 17 2 420 20  
      Depreciation 1 620   1 926   2 145    
      Retained profit 679   (175)   428    
      Deferred taxation 115   (21)   (153)    
                     
        10 870 100 10 004 100 12 155 100  
      Value added ratios              
      Number of employees (30 September) 18 671   18 167   18 918    
      Revenue per employee (Rand)# 2 704 979   2 267 709   2 372 236    
      Value created per employee (Rand)# 590 163   539 517   617 193    
      Corporate social investment – % of profit after taxation,              
      excluding exceptional items 1.6   2.1   1.0    
      Notes:              
      1. Employees              
      Salaries, wages, overtime payments, commissions, bonuses and              
      allowances** 5 864   5 459   6 055    
      Employer contributions+ 922   892   999    
        6 786   6 351   7 054    
      2. Central and local government              
      Current taxation 389   200   603    
      Rates and taxes paid to local authorities 66   68   59    
      Customs duties, import surcharges and excise taxes 163   566   418    
      Skills development levy 24   22   13    
        642   856   1 093    

    ^ Includes interest received, dividend income and share of associate companies and retained profit from ‘joint ventures’.
    # Based on average number of employees.
    ** Represents the gross amounts paid to employees including taxes payable by the employees.
    + In respect of pension funds, retirement annuities, provident funds, medical aid and insurance
    * Reclassification of interest paid in the leasing business from cost of sales to finance costs.

    VALUE DISTRIBUTION
    (%)

    VALUE DISTRIBUTION

    *** See statement of total value added for value distributed.

     

  • EC 2 Financial implications and other risks and opportunities for the organisation's activities due to climate change.

    Integrated annual report 2011 - Limiting our environmental footprint
    Integrated annual report 2011 - Limiting our environmental footprint

    Barloworld has identified risks associated with climate change and financial implications. These, together with the group’s responses to the identified risks, are disclosed in its response to CDP 2011 (view pdf download - pdf 1.05MB ). The group also completed the Water CDP 2011 which also addressed risks and opportunities as well as their financial implications. In identifying sustainable development as a strategic focus area, the group acknowledges the significance of such risks and opportunities and includes these in its strategic planning process.

    For its submission to the 2011 Carbon Disclosure Project (view our CDP 2011 response ), the group assessed the financial implications of climate change risks. Given our reliance on motor vehicles as a core part of our business, these risks could be significant, including an increased cost base and decreased revenue. There are opportunities for competitive products and solutions with reduced carbon footprints.

     

  • EC 3 Coverage of the organisation's defined benefit plan obligations.

    Integrated annual report 2011 - Risk management
    Integrated annual report 2011 - Note 16 - Other non-interest-bearing liabilities

    It is the policy of the group to encourage, facilitate and contribute to the provision of retirement benefits for all permanent employees. To this end the group's permanent employees are usually required to be members of either a pension or provident fund, depending on their preference and local legal requirements.

    Altogether 51% of employees belong to one defined benefit and nine defined contribution retirement funds in which group employment is a prerequisite for membership. Of these, the defined benefit and five defined contribution funds are located outside of South Africa and accordingly are not subject to the provisions of the Pension Funds Act of 1956. 22% of employees belong to defined contribution funds associated with industry or employee organisations."                                                             
                                                                                      
    Defined contribution plans                                                                   
    The total cost charged to profit or loss of R472 million (2010: R428 million; 2009: R390 million) represents contributions payable to these schemes by the group at rates specified in the rules of the schemes.                                                                            
                                                                                      
    Defined benefit plans                                                                                                                   
    The triennial valuation of the United Kingdom defined benefit pension schemes was completed as at 1 April 2011 and updated at September 2011. The schemes reflected a deficit, calculated in terms of IAS 19 Employee Benefits, of £70.9 million at the end of the financial year. The scheme was closed to new entrants from 1 April 2002, with all new employees in the United Kingdom required to join the defined contribution scheme.

    The estimated contributions to be paid to the plan during the next financial year amounts to £2.1 million (R26 million).

     

  • EC 4 Significant financial assistance received from government.

    No significant benefit was received from government. If any, assistance is generally applicable in terms of legislation and across the relevant industries. It is principally in the context of training allowances and reimbursements from government such as Sector Educational Training Authorities (SETA’s) in South Africa, training subsidies in Spain and Portugal, or various allowances under taxation legislation.

     

  • EC 5 Range of ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation.

    Integrated annual report 2011 - Our people

    All remuneration and employee benefits are in line with relevant legislation.
    Remuneration exceeds legislated minimum wage levels. However, where industry-negotiated agreements and other relevant legislation apply, payment is made according to these obligations. Similarly, apprenticeships and learnerships are usually paid at industry levels.

    Given the vast range of countries and industries in which Barloworld operates, as well as the significant number of job categories in the group, it is not practical to disclose specific wage minimums as well as related Barloworld levels and ratios. As noted, the material issue for the group is that it does not pay below minimum legislated wage levels, is not exposed to risk in this regard and that its remuneration policy aligns with its need to attract and retain the required talent to realise its value creation objectives.

    As the group has implemented the Towers Watson global grading system in all operations, its positions are graded accordingly. Wage and salary levels are benchmarked by country and category. This ensures equity and non-discrimination in remuneration practices.

     

  • EC 6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation.

    Integrated annual report 2011 - Equality, empowerment and transformation
    Integrated annual report 2011 - Role in communities

    Barloworld is committed to stakeholder value creation and supporting local communities as far as possible. A significant aspect of this spend is remuneration for locally resident employees. The number of employees by region who benefit from employment is reflected below.

    Workforce by region

    Region 2011   2010
      2009
     
    RSA 11 403   11 267   11 018  
    Rest of Africa 1 905   1 650   1 496  
    UK, Europe & Russia 3 743   3 198   3 558  
    Middle East & Asia 291   771   769  
    Australia 492   477   439  
    North America 837   804   833  
    Total 18 671   18 167   18 113  

    By operating in communities, Barloworld creates significant value for local suppliers including original equipment manufacturers (OEMs) and sub-contractors. This is reduced where plant and equipment can only be sourced from offshore principals, in which event the commitment is to spend the balance locally.

    In the Automotive division, some 99% of spend is local (including salaries and wages).

    In South Africa, Handling and Equipment divisions’ products are sourced from overseas principals while Automotive division sources vehicles through local OEMs. Sourcing varies by regions of activity and division. Handling in the Netherlands and Belgium respectively source 99% and 100% locally, while UK and South African operations respectively source some 99% and 45% from local suppliers.

    Logistics business sub-contracts a large portion of its business to local contractors.

    Direct value for communities includes the group’s support for enterprise development initiatives under Barloworld Siyakhula and other community investment activities.
    These principally benefit communities in South Africa, as do our preferential procurement initiatives under the BBBEEE umbrella which amounted to some R13 billion for the year.

    Indirect economic impacts include: employee spending, providing products and services, enhancing the image and reputation of areas, and job creation which reduces demand on the fiscus and enables resources to be redirected to other areas.

    In South Africa, an effective way of bringing previously disadvantaged groups into the economy is through procurement. Preferential procurement varies by business unit and is influenced by the source and nature of their requirements, as well as the BBBEE status of represented OEMs/ suppliers. At group level, some R13 billion is procured from black owned and empowered suppliers, or 70% of measured procurement spend in terms of the DTI’s BBBEE codes of good practice.

     

  • EC 7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation.

    Integrated annual report 2011 - Equality, empowerment and transformation
    Integrated annual report 2011 - Equality, empowerment and transformation
    Integrated annual report 2011 - Our people

    At Barloworld, unfair discrimination based on gender, race, religion, sexual preference or age is not permitted. All employees have access to the same opportunities. In South Africa, historically disadvantaged South Africans or HDSAs are actively recruited and promoted. Transformation objectives in this country ensure a commitment to local recruitment and employee development. In other regions, applicable localisation requirements also inform recruitment procedures.

    In South Africa, mandatory employment equity plans and progress reports are submitted to the Department of Labour. These set out employment targets that address race, gender and disability.

    Where the required skills are not available, the focus is on expatriate assignments, with the commitment to develop a local skills base. There is a small contingent of 250 international assignees who principally support operations in southern Africa. Senior managers in all divisions are mostly locally based, with 12 currently in expatriate positions.

    Overall 1.3% of employees are expatriates. We comply with legislation when recruiting locally and procedures for hiring include advertising, developing people from within the company, involvement in the community and schools to source potential employees and learners.

    Empowerment and transformation legislation and objectives in South Africa ensure  commitment to local recruitment and development of employees (see table below for breakdown of employee profile). In other regions localisation requirements also inform recruitment procedures.

      2011 2010
    2009
     
    Category AIC**   White   AIC**   White   AIC**   White  
    Board* 1   4   1   4   1   3  
    Executive 4   13   5   8   6   12  
    Senior management 14   41   11   42   9   40  
    Middle management 648   1006   621   1003   509   1009  
    Skilled upper 3794   2189   3654   2235   3379   2347  
    Semi skilled/ apprentices/trainees 3106   383   3076   383   2980   463  
    Labour/unskilled 199   1   222   2   257   3  
    Total 7766   3637   7590   3677   7141   3877  
    * Includes executive directors only.
    ** African, Indian, Coloured

     

  • EC 8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement.

    Integrated annual report 2011 - Role in communities

    Barloworld is committed to responsible corporate citizenship, including careful custodianship of the environment and efforts to address climate change. We approach these objectives from a moral and commercial perspective, founded on sound business acumen.

    In the course of its business, through extensive, ongoing interactions, Barloworld engages with a wide range of stakeholders to understand their interests and concerns and to construct its value propositions. The group seeks to provide leadership in society by  encouraging its leaders to contribute to the development challenges South Africa faces and act as role models, and by helping to create the responsible leaders of the future.

    Through its social investments, the group has over many years sought strategic partnerships, synergies and innovations in public-service delivery that can be taken to scale by the public sector. Through grants, networking, referrals and its insistence on sound management practices, responsible governance and accountability, Barloworld endeavours to build capacity and sustainability in its development partners, where necessary. The group has invested R64 million in such initiatives over the past five years.

    The main focus of the Barloworld Trust is improving standards and facilitating access to education. In the current circumstances the trust has found value in working with schools that provide centres of excellence and reach out to underperforming schools in their vicinities to strengthen school management and upgrade the quality of teaching and learning, facilitating the transition of students from disadvantaged circumstances to tertiary education.

    In addressing the social and development needs of society’s most vulnerable citizens, Barloworld favours a community-centred approach, endeavouring through support for its NGO and empowerment partners to provide or facilitate access to essential social services and empower vulnerable children, families at risk, aged and disabled people in their communities. Efforts continue to bolster the sustainability of these initiatives through skills development and commercially viable enterprise development.

    Understanding that our natural environment sustains every form of human endeavour, the group has supported the research, advocacy and conservation work of the Endangered Wildlife Trust and WWF SA for many years.

    Barloworld Siyakhula, the group’s enterprise development vehicle in South Africa, promotes black economic empowerment by providing financial and nonfinancial support to small and medium-sized suppliers, contractors and enterprises in its supply chain. Some R48 million in funds are currently committed to Siyakhula.

    Over the past five years R64 million has been invested through Barloworld’s socio-economic development programmes with R15.7 million being invested in 2011.

    2011 GROUP CSI SPEND R15.7 million

    Group CSI spend

     

  • EC 9 Understanding and describing significant indirect economic impacts, including the extent of impacts.

    Integrated annual report 2011 - Role in communities

    Given the nature of our operations and locations, major indirect impacts result from employee spending and local sourcing. The number of people by region who benefit from employment is reflected below. The overwhelming majority of employees are local.

    Workforce by region

    Region 2011   2010
      2009
     
    RSA 11 403   11 267   11 018  
    Rest of Africa 1 905   1 650   1 496  
    UK, Europe & Russia 3 743   3 198   3 558  
    Middle East & Asia 291   771   769  
    Australia 492   477   439  
    North America 837   804   833  
    Total 18 671   18 167   18 113  

    Indirect economic impacts include: employee spending, providing products and services, enhancing the image and reputation of areas, and job creation that reduces demand on the fiscus and enables resources to be redirected to other areas.

    Indirect impacts also include providing services and customer solutions that address customer needs and enable them to operate. The group’s products and services contribute to the establishing, developing and maintaining of communities, particularly in mining, agriculture, infra-structure, transport and logistical support. Examples include equipment operations in remote mining locations which enable these to continue with benefits for regions and communities.

    Similarly, providing power solutions, such as the Anixas power station in Namibia, provides electricity for local consumption aiding development of communities and industry. On a lesser scale, other power solutions supply power to customers enabling their operations to continue. Handing’s supply of agriculture equipment, services and solutions, often in remote regions, enable farming activities to continue with consequent indirect benefits.

    Equipment South Africa’s Technical Academy has been accredited as a Caterpillar Regional Centre which means it will be conducting various technical courses on behalf of Caterpillar primarily for sub-Sahara Africa dealers including Mauritius, Reunion and Madagascar. As an established mining dealer, mining training will probably also be conducted for Africa, Europe and Middle East Caterpillar dealers.

    Three instructors from Barloworld Equipment South Africa’s Operator Academy, are Africa’s first accredited Caterpillar Dealer Instructors (CDIs) joining an elite group of 188 (CDIs) worldwide.

    More directly, by operating in communities Barloworld creates significant value for local suppliers which include OEMs and sub-contractors. This is reduced where plant and equipment can only be sourced by offshore principals, in which case the commitment is to spend the balance locally. In the Automotive division some 97% of spend is local (including salaries and wages).

    In South Africa, Handling and Equipment divisions’ products are sourced from overseas principals while Automotive division sources vehicles through local OEMs. Sourcing varies by regions of activity and division. Handling in the Netherlands and Belgium respectively source 99% and 100% locally while UK and South African operations respectively source some 40% and 45% from local suppliers.

    Logistics business sub-contracts a large portion of its business to local contractors spreading wealth creation, skills development and efficient logistical support.

    Indirect value for communities also includes the group’s support for enterprise development initiatives under the Barloworld Siyakhula umbrella and other community investment activities. These principally benefit communities in South Africa, as do the group’s preferential procurement initiatives under the BBBEE umbrella which amounted to some R13 billion for the year.

    Barloworld Siyakhula, the group’s enterprise development vehicle in South Africa, promotes black economic empowerment through providing financial and nonfinancial support to small and medium-sized suppliers, contractors and enterprises in its supply chain. Some R48-million in funds are currently committed to Siyakhula.

    Over the past 5 years R64 million has been invested through Barloworld’s socio-economic development programmes with R15.7 million being invested in 2011.

    2011 GROUP CSI SPEND R15.7 million

    Group CSI spend