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Barloworld - actions following strategic review

Published on 2006-12-19. Author : SpecialChem

In the 2006 Barloworld annual report released, Warren Clewlow, Chairman of Barloworld, said that the Board has conducted a comprehensive review of both the structure and strategic direction of the group during the past year.

To that end, Barloworld and PPC have announced the following strategic actions and management changes:

Unlocking Barloworld shareholder value

Subject to shareholder and regulatory approval and other consents that might be necessary, PPC will be unbundled from Barloworld during 2007. This will further improve the focus of the group and will unlock value for Barloworld shareholders in the near term. It will also greatly enhance tradability and free-float of PPC shares.

Addressing areas of underperformance at Barloworld

The underperformance of certain businesses has been receiving priority attention during 2006. Action by management has already been taken in this regard as evidenced by the sales of the Steel Tube Division and the UK and US leasing books of Barloworld Industrial Distribution. To improve returns further, Barloworld is currently undertaking other disposals including part of Coatings Australia and the Scientific Division. The restricted tender process to dispose of Melles Griot is at an advanced stage and completion of the deal is expected in the next few months. Several options are being considered for the Laboratory business and the chosen option will be implemented in 2007. Proceeds from the disposal of assets will be returned to shareholders. R1 billion emanating mainly from the recent disposals will be returned to shareholders in an optimal manner by the end of March 2007. This will be in addition to the Barloworld dividend of approximately R900 million for the year ended 30 September 2006. The capital structure will be reviewed on an ongoing basis. At all times the capital structure of the group should take into consideration the requirements of, and commitments to, its franchise principals.

Future leadership

At Barloworld, Tony Phillips, who has been with the group for 39 years and CEO for the last eight years, has decided that this is an opportune time to step down from his position as CEO. Clive Thomson, currently CEO of Barloworld Equipment and former finance director of the group, succeeds Tony Phillips as CEO of Barloworld. He will retain his current direct responsibilities for the Equipment Division. The operating divisions reporting to the CEO will be run by Andre Lamprecht (Coatings), Martin Laubscher (Motor), John Blackbeard (Scientific) and Brandon Diamond (Industrial Distribution). Peter Surgey will be responsible for Corporate Office and Group Administration. Don Wilson, who was recently appointed Finance Director, will continue in that role.

At PPC, John Gomersall will continue as CEO. Following his decision to stand down as CEO of Barloworld, Tony Phillips will also relinquish his position as chairman of PPC after the PPC annual general meeting to be held on 23 January 2007. It is the PPC board's intention to appoint a black chairman thereafter.

BEE and transformation

Good progress has been made on Black Economic Empowerment and transformation at Barloworld and PPC. Both companies are expected to finalise meaningful BEE equity ownership transactions in the near future. Barloworld intends concluding a BEE equity transaction involving a number of stakeholders including Ayavuna Women's Investments (Pty) Ltd led by Hixonia Nyasulu. It will also include current and future staff and management, black non executive directors and an educational trust. Further details of the Barloworld transaction will be announced early next year.

PPC is well advanced with its own significant BEE transaction. This will meet the requirements of the Mining Charter and will involve lead investors, current and future staff and management, black non executive directors, construction industry associations and community and educational trusts. Further details will be announced by PPC early next year.

Both of these transactions reflect the firm intentions of Barloworld and PPC, in accordance with government guidelines, to achieve genuine broad based empowerment and senior black management participation.

Board composition and structure

Two new non executive directors have been invited to join the Barloworld board in February 2007, namely Hixonia Nyasulu and Trevor Munday. Ms Nyasulu will assist in the transformation programme and Mr Munday will assist in the disposal programme and provide independent input to the management of the motor and coatings divisions. Warren Clewlow advised that he intends to retire as chairman during 2007 but will oversee the implementation of the Barloworld BEE transaction and PPC unbundling.

Future direction

Barloworld is being positioned for the future as a more focused group comprising market leading businesses. The Barloworld board will continue to review the group structure and further unbundlings or disposals will follow in the future.

Source: Barloworld


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