020223JHBPT159ST_P1 06 September 2002 Black Economic Empowerment A Presentation to the Portfolio Committee on Minerals and Energy.

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06 September 2002

Black Economic Empowerment A Presentation to the Portfolio Committee on Minerals and Energy

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BP in context

• Present in 100 countries serving more than 10 million customers per day• 29,000 service stations and 23 refineries worldwide• 107,000 permanent employees• Established operations in Africa, Europe, North & South America and Australasia

BP globally

BP in Africa

• Operated in Africa for more than 80 years• Present in 14 countries• Downstream investment of US$550m and annual operating budget of US$100m • 1,500 service stations, 52 depots and a 50% in the region’s largest refinery - SAPREF

BP in South Africa

• Downstream investment of US$370 million and an annual operating budget of US$70m

• Powerhouse of African operation & performance• Africa operated from Cape Town – BP’s Africa Head Office• Directly employee 1,300 people• 790 service stations & 26 depots• 50% stake in Africa’s largest refinery – SAPREF in Durban• 2 lubes oil blending plants

South Africa considered a core BP geography and a major investment opportunity into the future

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BP values & black economic empowerment

• To increase shareholder value year on year• To deliver a performance standard that challenges the world’s best companies• To attract and retain the best talent• To be number one or two where we choose to compete

To be competitively successful

• To have an unshakeable commitment to human progress• To create energy that fuels growth and gives people freedom – freedom to move, to be

warm, to enjoy better quality of life – this freedom should be inseparable from the responsibility to produce and consume our products in ways that respect both human rights and the natural environment

• To share returns with the communities in which we operate to effect positive societal change

Whilst being a force for good

BP is at the forefront of South Africa’s change and transformation process

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How does BP define success on empowerment?

• In order for empowerment to be successful it must satisfy the following objectives:

– Job creation– Skills transfer– Create opportunities for HDIs to participate in the

economy of South Africa in a meaningful and sustained way

– Create opportunities for education– Provide HDIs with increased influence & control over the

way BP operates in South Africa and beyond

Success on empowerment – a BP definition

Must contribute significantly to poverty alleviation across South Africa Must broaden South Africa’s economic base and be value creating for

BP and its empowerment partners to ensure sustainability

• How will it be achieved within BP:

– Ownership & control– Empowering HDI

employees– Affirmative procurement– Development of SMEs– Meaningful corporate

social investment

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Why MIC/WDB?

• Reputation & strategic ability

– Ethical conduct of company and individuals

– Track record of delivery

– Broad based shareholding

– Active not passive shareholders

– Focus and ability to grow the business

– Capacity to invest own capital

– Fit with existing business(es)

BEE partners – what were we looking for?

MIC & WDB satisfied these requirements and importantly had a history of joint investment together

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MIC/WDB/BP relationship structure

How is MIC/WDB’s equity investment and joint venture in BP structured?

Manufacturing (Refining), Supply, Trading

Commercial &Industrial

LubesRetail

BPSA (Pty) LtdBP

75%

MIC17.5%

WDB7.5%

SAPREF &Blendcor

50%

BP45%

MIC17.5%

WDB7.5%

Spin off

FutureBEE30%

Commercial & IndustrialMarketing Joint Venture

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Why the deal is sustainable

• No incentive to exit

• Participation is encouraged

• No third party finance

• We aim to develop our partners’ expertise

• Commercial interests in common

• Empowerment partners with a broad base of beneficiaries

What else is ground breaking about our black economic empowerment deal?

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Introducing MIC/WDB

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BENEFICIARIES

JB MARKS BURSARY TRUST MINEWORKERS DEVELOPMENT AGENCY

ELIJAHBARAYI

MEMORIALTRAININGCENTRE

(SECTION 21) COMPANY

NUMPROPS

(PTY) LTD

100 %

MIC Team: Clifford Elk ( MD ) Paul Nkuna Keshan Pillay Tshidi Madima Anton Hugo

(SECTION 21) COMPANY

NATIONAL OFFICE BEARERS

Trustees

MIC shareholding structure (where does the value go?)

R40m distributed to date and R52m committed over the next 6 years.

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WDB Group structure

What is the WDB Group’s structure?

WDB Trust

WDB Investment Holdings (Pty) Ltd

WDB Micro-creditFinance

100% beneficiary

100% (equity)

WDB Services to date20 575 loans issued16 000 women trainedR20 million loanedR2 million saved

WDBIH DirectorsMr. Colin Hall (Chair)Ms Faith Khanyile (Executive)Ms Mimie SesokoMs Thandi NdlovuMs Tania Slabbert (Executive)Ms Audrey Mokhobo

WDB Trust TrusteesMrs. Zanele Mbeki (Chair)Mr. Colin HallMr. Michael KatzMs Futhi MthobaMrs. Gertrude ShopeMs Sally Motlana

WDB MFMs Mimie Sesoko (CEO)

Key Messages• Wholly owned by WDB Trust• WDB Trust supports rural women – it

advances micro-credit and capital for enterprise development

• Since 1991 WDB has advanced 20,000 business loads, supporting 10,000 jobs and trained over 1,000 women in basic business skills

• Singlemindedly focused on empowering women in the poorest rural communities of South Africa

• Repatriated R11m since inception in 1997

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Achieving black economic empowerment

• Black economic empowerment will be achieved through a range of initiatives – not by one initiative in isolation

How we are achieving black economic empowerment at BP

At present BP is focused on

these important

areas

• Empowering HDI employees

• Affirmative procurement

• Development of SMEs

• Meaningful corporate social investment

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Diversity profile – BP in South Africa

51

25

24

75

25 21

79

Racial profile Gender Diversity profile

(%) (%) (%)

White Black

Asian & Coloured

Female

Male

White males

Diverse population

5724

19

59

41

18

82

White Black

Asian & Coloured

Female

Male

White males

Diverse population

Now

2005Target

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Racial and gender profile of the leadership

65

44

28

12

16

21

23

4051

2000 2002

White

Asian/ coloured

Black

92 87

62

8 13

38

2000 2002

Male

Female

89 most senior positions in BP South Africa – tiers 1, 2 & 3

2005 Target 2005 Target

BP’s commitment to empowerment extends to all levels of the organisation

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Other ways we empower our people

• 84% of BP staff in South Africa participate in the employee share scheme (of which 79% are HDIs) – giving our staff a stake in the future of BP globally

• Under this scheme all employees are entitled to purchase the company’s shares on the London Stock Exchange at 50% of the list price– Soft loans from the company are also available to facilitate access to the scheme

Current value of BP South Africa employee equity ownership approximately R68 million

Employee share scheme

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Other ways we empower our people

• Approximately 75 staff on fast track development programmes in South Africa of which 71% are HDIs– 73% of “Rising Stars” (3-grade potential) are HDIs– 70% of “Oil High Potentials” (assessment supports director level potential) are HDIs

Fast track development programmes

• 40 South African employees currently on international expatriate assignment of which 16 are HDI

• All staff qualify for housing assistance, provident fund contributions, medical aid, thirteenth cheque & annual performance bonuses

International exchange programme

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Affirmative procurement – some BP examples

• Largest single BEE procurement deal in the oil industry to date• Southern Tankers – joint ownership between Dudula (100% black owned) and the Grinrod

Group• Will provide coastal hydrocarbon shipping service to BP .• Value of deal = R300m • Training and development of 40 HDIs at sea

Dudula Shipping

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SMME development – Retail dealers & franchisees

• Retail dealer/franchisee profile at present:

• To support progress in this area we have committed to focus on the recruitment of black, asian, coloured and female entrepreneurs for at least 70% of all new and “churned” Retail franchises

• Additionally we have developed a finance offer with Citibank and the IDC for new and existing dealers– This makes finance far more accessible for HDI entrepreneurs wishing to take on a BP

franchise

Retail dealer/franchisee empowerment

Gender profileRacial profile

33% of all dealers are

HDIs at present, this

includes white females

7

93

Male

Female

30

70

White

Black/asian/coloured

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Corporate social investment

“In the last decade BP has moved from seeing its social performance as an important, additional requirement to doing business, to regarding it as one of the three most important measures of performance that must be reported annually to its shareholders”

• Financial performance• Environmental performance• Social performance

• We have defined “social performance” as– Our behaviour, that is, whether we live up to the values expressed in our company’s

business policies– Our impact on people– Our overall contribution to society

Corporate social investment & empowerment

Financial

Responsible

Social Environmental

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What are the objectives & focus of BP’s CSI programme?

• To contribute to social and economic development wherever we operate• To earn and build our reputation as a responsible corporate citizen• To promote and help the company achieve its business objectives• To encourage and promote employee involvement in community upliftment

Objectives

• Job creation• HIV/AIDS• Road safety• Environment

Focus

Areas that are key to South Africa’s social livelihood

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Q&A