Empowerment

Murray & Roberts has launched the first truly broad-based black economic empowerment initiative in the construction industry with the transfer of 10% of its issued share capital to employees and community organisations

The Murray & Roberts Letsema Broad-Based BEE Initiative represents one of the most important ownership changes in the Group’s history. It facilitates an effective 9,4% direct black ownership and contributes substantially to the strategic target of over 25% broad-based direct black ownership by 2010.

Valued at about R500 million, the transaction allocates the shares to four trusts, each designed to give previously disadvantaged employees, their families and the communities within which Murray & Roberts operates a stake in the company and its future.

The Letsema Bokamoso general staff trust will receive approximately 4,9 million shares, with an expected dividend payment of about R2 million per annum, based on the 2005 dividend. The beneficiaries of the trust will be broad-based and include the majority of Murray & Roberts employees. Approximately 14 000 employees in the Group’s South African operations became shareholders in Murray & Roberts on 19 December 2005 when they each received a grant of 300 shares worth over R6 000 at current market pricing. A five-year moratorium has been placed on the sale of these shares.

“I BELIEVE IN THE PROCESS” Andrew Skudder is the project manager of the Letsema Broad-Based BEE Initiative and is supported by company secretary Sandi Linford. An ex-management consultant who has worked for leading global firms A. T. Kearney and Mitsui, Andrew joined Murray & Roberts in 2004 to develop a growth strategy for the construction materials businesses and facilitate the acquisition of Oconbrick Manufacturing. His involvement with the development of BEE plans for the businesses and exposure to the experiences of other companies kindled an interest in the unfolding process of empowerment in South Africa. Within two months of his appointment as project manager in 2005, Andrew had developed a process ready for implementation.

Andrew Skudder, project manager of the Letsema Broad-Based BEE Initiative

“It is our wish that employees retain their shares after the moratorium as we are facing the potential of sustainable real growth in our industry for the first time in almost three decades. We see these shares as an investment in the South African construction industry and in Murray & Roberts,” says CE Brian Bruce.

The Letsema Khanyisa black employee benefits trust will receive approximately 6,6 million shares with an estimated dividend payment of R3 million per annum, based on the 2005 dividend. It will provide grants for education, housing and medical needs of qualifying black South African employees and their immediate families.

The Letsema Sizwe community trust will receive approximately 11,6 million shares, with an expected dividend of about R5 million per annum, based on the 2005 dividend. The beneficiaries will be researched by Murray & Roberts CSI and selected by an independent panel from designated groups. There will be a focus on broad-based black women’s groups.

The Letsema Vulindlela black executive trust is an employee ownership scheme designed to attract and retain top skilled employees. It will receive approximately 9,9 million shares. Executives who accept an allocation under this scheme carry a payment obligation to the Group. The expected dividend will be about R4,5 million per annum, based on the current dividend. The beneficiaries will be black South Africans who are in top, senior and middle management.

A key differentiating factor of the Letsema initiative is that the dividends paid will be for the immediate benefit of the beneficiaries, with payments being made directly to the beneficiaries of the
general staff, employee benefits and community schemes. Dividends paid to the black executive scheme beneficiaries will be used to repay the loan funding.

Murray & Roberts has implemented a multi-faceted BEE strategy to achieve its 2010 objective. The Group has already concluded a number of BEE partnerships in its operations with partners who are actively involved in the management and strategic transformation of the businesses. The UCW Partnership and Murray & Roberts Cementation are good examples of such relationships.

At a macro level, Murray & Roberts seeks strategic partnerships that bring gravitas to the industry and will support the Group’s long term growth strategies. The Letsema initiative introduces broad-based employee ownership into the holding company.

PLANT THE SEEDS

Murray & Roberts launched a comprehensive communication campaign in December 2005 to engage all its employees on the substance and effect of the transaction.

Based on the Sotho word Letsema, which embodies the concept of team work where it is the tradition of rural communities to come together at the time of ploughing and harvesting to work on the communal fields together, the campaign focused on the planting, nurturing and harvesting of peaches as an analogy for the benefits offered by the initiative.

Murray & Roberts employees were involved in the naming of the initiative and each of the trusts and, with the assistance of award-winning communications company, Unplugged, Murray & Roberts selected and trained a group of its employees at a peach farm in Magaliesberg to facilitate communication sharing workshops at all South African operations.

The 127 workshops reached over 15 000 employees and were completed in just nine days. Posters to create interest and awareness were distributed before the workshops and detailed leaflets – and a fresh peach – were handed to each participant at the presentations. All material used in the campaign was prepared and presented in English, Afrikaans, Sotho and Zulu.