1. IDF Fund Raising Presentation B-BBEE CODES OF 2013 – How do they impact on your business?

2. OUTLINE • Introduction • The journey to date • The State of the economy • Changes to the codes and implications 2

3. INTRODUCTION • B-BBEE Amendment Bill developed and approved for public release and commentary in November 2011 • Amendment Bill presented to Cabinet in November 2011 and approved for public release • Public commentary period concluded • Bill going through parliamentary process for imminent finalisation • Revised Codes gazetted on 11 October 2013 • Effective date of new Codes 12 October 2014 • Far reaching changes as a result of new provisions of the Bill and the revised Codes 3

4. Where we were - 2007 4

5. Where we are - 2011 Source: 2011 KPMG BEE Survey 5

6. EQUALITY IN THE SA ECONOMY 6

7. UNEMPLOYMENT LEVELS • Only 41% of the working age population in South Africa is working, well below the average of similar countries. 7

8. Framework of the amended B-BBEE Codes of Good Practice 8

9. KEY CHANGES • Revised allocation of points on all elements of the scorecard to emphasise new areas of importance to Government • Revised the qualification criteria for awarding of a B-BBEE status • Compliance with sub-minimums for Ownership, Preferential Procurement, Enterprise Development and Skills Development is now a requirement for eligibility for scoring on the Generic and QSE scorecards • Elevated more than 50% black owned and 30% black women owned, black youth-owned or black designated groups-owned EMEs automatically qualify as a level 2 contributor; and • 100% black owned and more than 50% black women owned, black youth-owned or black designated groups-owned EMEs automatically qualify as a level 1 contributor • EME and QSE thresholds increased from R5 million to R10 million and from between R5 and R35 million to between R10 million and R50 million respectively • QSEs must comply with all the scorecard elements • Total points on the scorecard increased from 100 to 105 • Number of scorecard elements reduced from 7 to 5 (collapsed Management Control and Employment Equity) 9

10. Revised Generic Scorecard 10

11. QUALIFICATION BEE STATUS RECOGNITION LEVEL Level One Contributor ≥100 points on the Generic Scorecard 135% Level Two Contributor ≥95 but <100 points on the Generic Scorecard 125% Level Three Contributor ≥90 but <95 on the Generic Scorecard 110% Level Four Contributor ≥80 but <90 on the Generic Scorecard 100% Level Five Contributor ≥75 but <80 on the Generic Scorecard 80% Level Six Contributor ≥70 but <75 on the Generic Scorecard 60% Level Seven Contributor ≥55 but <70 on the Generic Scorecard 50% Level Eight Contributor ≥40 but <55 on the Generic Scorecard 10% Non Compliant Contributor <40 on the Generic Scorecard 0% Revised B-BBEE Recognition Levels 11

12. Other implications • Verification of EMEs and QSEs • Sworn affidavit annually re: • Annual turnover; and • Level of Black ownership • Any representation of above represents a criminal offence as per the BBBEE Act • Transitional period • For the first year after gazetting options: • Use the amended codes; or • Use 2007 codes • Thereafter all compliance is to be with the amended codes – 12 October 2014 12

13. Ownership 13

14. KEY CHANGES • The points for ownership broadened to include designated groups in the body of the scorecard and not as bonus points • Inclusion of sub-minimum target of 40% based on net value • Discounting of overall scorecard points if sub-minimum of 40% of points is not met • Removal of bonus points • Inclusion of New Entrants in the body of the scorecard and not as a bonus point • Modified flow through and exclusion principle can’t be used together (SOE and Mandated Investments ownership) • The period over which the continued recognition points are allocated or recognised will not exceed the period over which the shares were held. 14

15. Management Control 15

16. KEY CHANGES • Management Control was adjusted to include Senior Management and Middle from Employment Equity • Management Control was aligned to the Commission for Employment Equity report (CEE Report) • The compliance targets were aligned to the CEE report • Black board participation was also adjusted and aligned to the CEE report • Junior Management no longer measured as the targets have been achieved according to the CEE report • There are some challenges with the current calculation for EAC although the intent is clear 16

17. Skills Development 17

18. KEY CHANGES • Introduced a General Principles section to outline alignment between the element and the broader government objectives • Introduced a sub-minimum as a requirement for scoring • Based the compliance targets for the Skills Development scorecard on the Economically Active Population demographic representation of black people as defined • Broadened the learnership sub-element to include apprenticeships and internships • Removed the focus on training towards employees exclusively and broadened it to encompass the unemployed by also increasing the target • Introduced an absorption target • Revised the learnership matrix to only give recognition for targeted training 18

19. Enterprise and Supplier Development 19

20. KEY CHANGES • Preferential Procurement and Enterprise Development were merged to form an element to be known as Enterprise and Supplier Development • General Principles to outline alignment between the element and the broader government objectives • The weighting for Enterprise and Supplier Development set at 40 points from previous 35 points • Increased targets for > 50% black owned companies to 40% • Converted the >30% black women owned companies target to 51% owned by Designated Group Suppliers and made the target 12 % • Enhanced recognition for procurement from new enterprises, and procurement from black QSEs and EMEs for a 3 year period • Most exclusions are now included as part of Total Procurement Spend • Expanded the scorecard to distinguish between enterprise development contributions and supplier development contributions • Introduced a General Principles section to outline alignment between enterprise and supplier development initiatives with the supply chains of Measured Entities and broader government objectives 20

21. ENTERPRISE AND SUPPLIER DEVELOPMENT: REVISED SCORECARD 21

22. ENTERPRISE AND SUPPLIER DEVELOPMENT: REVISED SCORECARD 22

23. Further considerations • In order to bridge the gap, the codes seek to encourage: • Strengthen local procurement in order to improve SA’s industrial base in critical sectors of production and value adding manufacturing which are largely labour intensive; • Increase local procurement through capacity building achieved by local supplier development programmes by businesses supplying imported goods or services; • Recognise only empowering suppliers – Those that contribute to local production, job creation, beneficiation and skills transfer to black EMEs and QSEs; • Diversifying supply chains by encouragement of procurement from start ups; • Supplier development programmes linked to procurement; • Market access opportunities for EMEs and QSEs through the provision of long term contracts; • Specific encouragement of procurement and enterprise development for the benefit of black EMEs and QSEs • Enterprise and supplier development initiatives to be aligned with the designated sectors of government’s localisation and value adding programmes • The types of programmes encouraged under Enterprise and Supplier Development are by and large similar to those that were previously contained in Code 600 of the previous Codes. 23

24. CONTACT DETAILS IDF Managers 21 Fricker Road, off Chaplin Turner and Townsend Building Illovo 2196 Tel: 011 772 7900 Email: info@idf.co.za 24