BBBEE

BROAD-BASED BLACK ECONOMIC EMPOWERMENT

Overview
Fourteen years after the advent of democracy, broad-based black economic empowerment and socio-economic transformation remain key challenges for South Africa. At Omnia, our commitment to broad-based black economic empowerment (BBBEE) is focused on the spirit, beyond the letter, of transformation. Our aim is to play an active role in the transformation process in a manner that is sustainable, credible and of benefit to the Omnia Group, our stakeholders and the country as a whole. We are determined to broaden the base of the South African economy and promote participation in the economy by all citizens.

We follow measurements and scorecard targets as set out in the Department of Trade and Industry’s Codes of Good Practice for Broad-based Black Economic Empowerment. While each business has specific targets and initiatives relevant to the regulatory framework in its particular sector, all activities are directed and monitored at Group level to ensure a centralised approach to BBBEE. In addition, the board oversees the Group’s efforts.

Omnia Group (Pty) Ltd Empowerdex Certificate 2010 - (111KB)

Equity ownership
Omnia has always believed in the value of employee ownership schemes. It is for this reason that the Group chose to include employees in a BEE transaction. The longterm nature of the transaction and the involvement of all employees enable them to benefit in the future long-term growth of the Group and share in the wealth they have helped to create.

Omnia has always believed that its people are its most important asset. A number of schemes offering employees the chance to participate in the growing wealth of the company have been implemented in the past.

The Group spent considerable time planning a meaningful and sustainable transaction to embrace broad-based BEE in South Africa. The BEE Codes of Good Practice were finalised in February 2007 and Omnia decided to again deepen the partnership with its people whose hard work and dedication have made Omnia what it is today. Employees were the empowerment partners of choice. Consequently, the Omnia board formed a new company called Sakhile Limited, Sakhile meaning “we have created something”.

Employees initially received 1 000 shares each in Sakhile and Omnia assisted the new company to borrow enough money to own 10% of the Group.

Highlights

The main beneficiaries are Omnia’s full-time black employees (including Indian and coloured employees) working for Omnia in South Africa, and all other fulltime employees working for Omnia in South Africa who do not participate in the Partnership with Management 3 Incentive Scheme, all of whom will own shares in Sakhile, irrespective of length of service.

Following the restructuring, Omnia effectively sold 10% of its shares and claims in Omnia Group (Pty) Ltd to Sakhile for R278 million. Sakhile will be entitled to 10% of the economic interest and full voting rights in Omnia Group (Pty) Ltd. Sakhile funded the transaction by:

• borrowing R218 million from the bank to pay for interest-bearing loan accounts in Omnia Group (Pty) Ltd; and
• issuing a Preference Share of R60 million to Omnia Holdings Ltd to pay for interest-free loan accounts in Omnia Group (Pty) Ltd.

Omnia Holdings Ltd will also hold a call option, the terms of which will permit Omnia to call the shares that Sakhile holds in Omnia Group (Pty) Ltd at market value with the exercise price being settled by an issue of shares in Omnia Holdings Ltd.

For at least seven years from inception, Sakhile will need to use all its investment in Omnia Group cash flows to repay its loans. No dividend will be paid until the loans are repaid.

All employees will receive full entitlement to their Sakhile shares at the end of year eight although the release of these shares will only take place after year 12. Sakhile will then exchange the shares that it has in Omnia Group (Pty) Ltd for an equivalent value of Omnia Holdings Ltd shares and distribute these to employees over a three- year period in years 12, 13 and 14.

This transaction is an important step forward in the Group’s transformation strategy and is a further affirmation and formalisation of staff empowerment.

Employment equity
Understanding that a diverse workforce contributes to crosscultural understanding, broadens perspectives and helps to enhance our competitive edge, we are committed to transform ing the Omnia workplace by systematically implementing our employment equity policy which calls for:

• Equal opportunity for all employees irrespective of race or gender, by eliminating all forms of discrimination.
• Empowering all employees to the fullest extent of their capabilities through interventions such as training and development.
• Market-related compensation packages with due regard for individual performance and union agreements.
• Due consultation with representatives of the entire workforce.

Employment equity (EE) committees at plant and divisional level set targets, debate strategies and monitor legislative compliance, while a central EE committee evaluates progress against set objectives and targets in each business on a quarterly basis.

Against a backdrop of increasing mobility in an era of globalisation and acute shortages of technical skills, meeting our EE targets is proving to be challenging. However, we are attempting to meet the challenge by developing a pipeline of talent through training interventions and by fast-tracking high-potential achievers.

Skills development and training
Training and developing our current and potential workforce are cornerstones of our strategy. In addition to ensuring a pool of motivated, skilled employees, building individual capabilities contributes fundamentally to more sustainable societies. Development initiatives are underpinned by a focused effort to identify and address specific training needs at every level. In addition, these initiatives are aimed at entrenching a culture of lifelong learning and giving our people the life and technical skills they require to succeed in a rapidly-changing world.

Internal programmes
Ongoing learning is facilitated through a range of initiatives and includes on-the-job training, in-house development projects and financial assistance for external studies ranging from Adult Basic Education and Training (ABET) to post-graduate degrees. Depending on the assistance granted, recipients may be required to work back a certain amount of time, thereby facilitating the transfer of skills to colleagues.

Omnia is registered as a Training Outside Public Practice (TOPP) training provider in terms of which accountants are trained.

External programmes
Omnia’s external programmes are targeted at black South Africans and aim to increase the skills pool in areas relevant to the Group’s business.

The low rate of mathematics and science passes at matriculation level in South Africa, particularly among black South African learners, remains a major concern. Government’s Accelerated and Shared Growth Initiative for South Africa (ASGISA) has identified engineering and information communication technology as priority sectors, both of which require a strong knowledge base of maths and science. The Omnia Group shares Government’s concern and accordingly, has initiated several programmes targeted at learners who show promise in these fields through tuition support and through the provision of bursaries for further education.

The Group’s bursary programmes offer financial assistance for tertiary education at universities and technikons in disciplines including accounting, agriculture, engineering, information technology, marketing and general business management

Financial assistance is made available to one child per employee family towards tertiary studies on a full-time basis at a university, technikon or technical college. Passing each year is a prerequisite for receiving assistance the following year.

Our bursary and external education programme extends to countries outside South Africa where we are involved in lecturing and in commissioning research at tertiary institutions.

Procurement
The Omnia Group is actively seeking ways to increase procurement from BBBEE-accredited suppliers. Services currently procured from BEE suppliers include raw material suppliers, transport contractors, courier and security services, cleaning material suppliers and labour brokers.

Enterprise development
This is a focus area for us, as we believe entrepreneurs form the backbone of a vibrant economy.

Protea Chemicals has developed strong business relationships with several black-owned businesses, providing assistance in the form of shared infrastructure, extended payment terms and by imparting business knowledge and expertise.

The Agriculture division contributed to the sector with practical assistance through agricultural best practices in a wide range of agronomic applications. Government is planning to redistribute 20 million hectares to emerging farmers by 2014. If this land were to be divided into plots averaging 200 hectares in size, 100 000 new farms would be created, each one needing to be run by a farmer. Agronomic assistance is a critical success factor and Omnia is committed to helping emerging farmers establish their own farming businesses.