1

Presentation on AgriBEE Charter

2

Agenda

Achieving Broad-based BEE OwnershipStatement 100

Consolidation of Economic Control through ManagementStatement 200

3

AgriBEE - Ownership ScorecardELEMENT Weighti

ngIndicator Category

Indicator Indicator Weighting

TARGET

Ownership 20% Voting Rights

Exercisable voting rights by black people 3 pnts 30%

Exercisable voting rights by black women 2 pnts 10%

Economic Interest

Economic interest in the enterprise to which black people are entitled

3 pnts 30%

Economic interest in the enterprise to which black women are entitled

2 pnts 10%

Economic interest in the enterprise to which black employees and workers are entitled

2 pnts 10%

Realisation Points

Ownership fulfilment 1 pnt No Restrictions

  Net Equity InterestAchieved accordingly:10% of the Target (Year 1)20% of the Target (Year 2)40% of the Target (Year 3-4) 60% of the Target (Year 5-6) 80% of the Target (Year 7-8) 100% of the Target (Year 9-10)

7 pnts 30%

Bonus Points

Involvement in the ownership of the Enterprise of black new entrants; black Deemed Participants of Broad-Based Ownership Schemes; or black Participants in Co-operatives

3 pnts Bonus per each level of 5%

Contribution to achieving more than 30% land transfer 5 pnts Bonus point per each

percentage of land

transferred above 30%

4

Agenda

Achieving Broad-based BEE OwnershipStatement 100

Consolidation of Economic Control through ManagementStatement 200

5

Management Scorecard (Same as the BEE Codes)

Exercisable voting right by black people 3%

Members of the Board who are black people 1%

Members of the Board who are black women 1%

Black Senior Executive Representation 2%Black Women Senior Executive Representation

1%

Black other executive representation 1%Black women representation as other executives

1%

Black independent director representation (Bonus)

1%

50%

50%

25%

40%

40%20%

40%20%

Allocation of Management Points

Board Representation

50%

Executive Management

Representation50%

Maximum Achievable Points in the Management Scorecard

0

2

4

6

8

10

12

Black Management (NoBlack WomenParticipation)

Total Management Score Involvement of BlackWomen Management

6

Structure and Content: Phase 2

Human Resources Elements(Statement 300~400)

Procurement, Enterprise development and Residual(Statement 500~900)

Additional Statements on Ownership(Statement 102~105)

Qualifying Small Enterprises(Statement 1000~1700)

Agenda

7

Criteria Weighting points Compliance targets

Black people with disabilities employed by the Measured Entity as a percentage of all full-time employees

2 4%

Black people employed by the Measured Entity at Senior Management level as a percentage of employees at Senior Management level

2 60%

Black women employed by the Measured Entity at Senior Management level as a percentage of employees at Senior Management level

2 30%

Black people employed by the Measured Entity at Professionally Qualified, Experienced Specialists and Mid-management level as a percentage of employees at Professionally Qualified, Experienced Specialists and Mid-management level

2 75%

Black women employed by the Measured Entity at Professionally Qualified, Experienced Specialists and Mid-management level as a percentage of employees at Professionally Qualified, Experienced Specialists and Mid-management level

1 40%

Black people employed by the Measured Entity at Skilled Technical and Academically Qualified Workers, Junior Management, Supervisors, Foremen, and Superintendents as a percentage of employees at Skilled Technical and Academically Qualified Workers, Junior Management, Supervisors, Foremen, and Superintendents level

1 80%

Employment Equity Scorecard (Same as BEE Codes)

8

Criteria Compliance targets

Senior Management 60%

Senior Management (BlackWomen)

30%

Middle Management 75%

Middle Management(Black Women)

40%

Junior Management 80% 0%

10%

20%

30%

40%

50%

60%

70%

80%

SeniorManagement

SeniorManagement

(Black Women)

MiddleManagement

MiddleManagement

(Black Women)

JuniorManagement

Black people with Disabilities

20%

Senior Management

40%

Middle Management

30%

Junior Management

10%

Employment Equity Scorecard Allocation

9

Category Skills Development Element Weighting points

Compliance Target

Skills Development

Skills development spend on black employees as a percentage of Leviable Amount. (85% of spend focused on core and critical skills as defined by the relevant SETA).

6 2%

Skills development spend on black women as a percentage of Leviable Amount (85% of spend focused on core and critical skills as defined by the relevant SETA).

2 0.93%

Spend on black employees with disabilities as a percentage of Leviable Amount

1 0.2%

Recognised Training Programmes

Number of black employees participating in training programmes that lead to recognised qualifications as percentage of total employees.

2 5%

Number of black women participating in training programmes that lead to recognised qualifications as percentage of total employees

2 2.5%

Number of people who are members of Black Designated Groups participating in training programmes that lead to recognised qualifications as percentage of total employees (The score in this element will be adjusted directly proportionate to the level of absorption of the participants in training programmes in the measured enterprise until a level of 80% absorption is attained)

1 1%

AgriBEE - Skills Development Scorecard

10

Organisational Transformational Index

Existence of a comprehensive Black Economic Empowerment strategy and which is being implemented

Yes 1

Employment of a Skills Development Facilitator Yes 1

Existence of a policy on non-discrimination widely published within the Enterprise

Yes 1

Compliance with all relevant employment related legislation Yes 1

Implementation of an effective human resource management plan Yes 1

Existence of a program designed to give practical effect to the stated policies and programs

Yes 1

Bonus Points

Support land reform beneficiaries and Black persons to create sustainable business through the transfer of specialized skills in

qualifying mentorship programmes

Qualifying mentorship programmes as accredited by relevant SETA

authority

5

Category Skills Development Element Weighting points

Compliance Target

AgriBEE - Skills Development Scorecard(continues)

11

• Direct training costs (which must represent at least 50% of all such spend)

• Indirect training costs (allowed but is limited)

• Compliance with the skills development Act is a pre-requisite

• Registration with the relevant SETA

Other Skills Development Considerations

12

Structure and Content: Phase 2

Human Resources Elements(Statement 300~400)

Procurement, Enterprise development and Residual(Statement 500~700)

Additional Statements on Ownership(Statement 102~105)

Qualifying Small Enterprises(Statement 1000~1700)

Agenda

13

Criteria Weighting points

Compliance target

BEE Procurement Spend from all suppliers based on the BEE Procurement Recognition Levels, QSE Recognition Levels or the Deemed Micro Enterprise Recognition Levels (as the case may be) as a percentage of Total Measured Procurement Spend

15 70%

BEE Procurement Spend from Qualifying Small Enterprises based on the QSE Recognition Levels as a percentage of Total Measured Procurement Spend

4 15%

BEE Procurement Spend from Exempted Micro Enterprises based on the Deemed Micro Enterprise Recognition Level as a percentage of Total Measured Procurement Spend

1 5%

Preferential Procurement Scorecard (Same as BEE Codes)

14

Cost of Sales

Operational Expenditure

Capital Expenditure

TotalSpend

TOTAL MEASURED PROCUREMENT SPEND

Allowable Exclusions:-Salaries-Third party costs-Loans and Donations-Certain imports-Rates & Taxes, levies-Post retirement funding -Medical aid contributions,etc.-Imports accepted to a maximum of 75%. (25% local content)

BEE Spend Non-BEE spend

Statement 500 – Preferential Procurement

15

Criteria Weighting Points Compliance Target

Cumulative contribution to enterprise development as a percentage of Net Profit After Tax measured from the commencement / Inception Date to the

date of measurement

10 2%

Bonus Points: Contribution towards increased employment 1

Lease of 20% of land or capital assets on a long term basis to black persons 3 Lease longer than 10 years

AgriBEE - Enterprise Development Scorecard

16

Criteria Weighting Points

Compliance Target

Cumulative rand value of non-recoverable qualifying corporate social investment contributions as a percentage of net profit after tax over five years measured from the commencement date of this statement or the Inception Date until the date of measurement.

6% 1.5%

Land1 made available to farm dwellers for the purpose of household use measured from the commencement date of this statement or the Inception Date until the date of measurement2.

(Making land available for farm workers shall not trigger the application of the tenure rules for a period of 10 years. However this provision does not affect the ESTA rights of the affected persons who have lawful claims on the land)

4% 10%

Bonus point for qualifying residual contributions benefiting black people in rural communities or geographic areas identified by government

1

AgriBEE – Rural Development, Poverty Alleviation and Corporate Social Investment

1The land that is made available is the land not subject to the Land Tenure Act.

2Enterprises that have fully contributed to the ownership element of the scorecard have an option of only contributing to the CSI portion of this element which will then have a corresponding 10 weighting points.

17

Structure and Content: Phase 2

Human Resources Elements(Statement 300~400)

Procurement, Enterprise development and Residual(Statement 500~700)

Additional Statements on Ownership(Statement 102~105)

Qualifying Small Enterprises(Statement 1000~1700)

Agenda

18

Micro Enterprises

Qualifying SmallEnterprises

(As per Statement 1000)

OtherCompanies(Exceed

Revenue orEmployee limits)

Generic Scorecard,with all seven elements(Statement 000~900)

QSEs can elect to implement the entire QSE scorecard (with enhanced recognition)

QSE Scorecard,Select five of the seven elements

(Statement 1000~1700)

All elements weigh 20%

Indicators adapted to QSEs

Micro Exemption,Automatic Level 4

Recognition

Framework for Measuring BEE in QSEs

19

Key Principles Description Implication

Qualifying Small Enterprises (Definition)

Qualifying small enterprises classified according to the National Small Business Act, based on turnover and employee number

• The qualification criteria for QSEs differs across sector• A table provided for classification of QSEs by turnover and employee number

Exemption of Micro Enterprises

Micro Enterprises with annual revenue below VAT registration exempted from the Codes

AgriBEE – Enterprise with an annual turnover less than R1.5m. (To be finalised once research is concluded)

• Automatic Level 4 recognition for Micro-Enterprises• Companies are not penalized for buying from exempted micro enterprises

Application of the QSE Scorecard

Allows QSEs to apply the entire QSE scorecard

QSE scorecard allows company to elect five out of seven BEE factors for BEE scoring purposes.

AgriBEE: (To be finalised once research is concluded)•less than R20 million in primary agriculture;•less than R30 million in beneficiation of agricultural products; and•less than R30 million, service provision to the agricultural sector.

•QSEs can present a BEE score comprising five out of the seven BEE elements•QSEs can also elect to apply entire scorecard (enhanced recognition)•QSEs can potentially score 100 points without BEE ownership

Bonus Provisions(Enhanced recognition)

Different Bonus provision for QSEs where black ownership exceeds 20 points and where QSEs use all seven elements of the scorecard

•Provide additional recognition for black owned QSEs• Encourage B-BBEE initiatives by QSEs

Statement 1000 – Framework for QSE’s

20

QSE Identification and Classification Table

0

5,000

10,000

15,000

20,000

25,000

30,000

An

nu

al R

even

ue

Micro QSE Lower Limit QSE Upper Limit

Qualifying Small Enterprises

Exempted Micro Enterprises

21

Ownership and Management for QSEs

BEE Elements Code Ref. Weighting Indicators Indicator Weighting

Compliance target

Ownership BEE 1100 20% Exercisable Voting Rights by black people

5% 30%

Economic Interest in the Enterprise to which Black people are entitled

7% 30%

Ownership Fulfillment 1% No restrictions

Net Equity Value 7% 10% - 100% staggered over a 10 year period

Bonus Points:Involvement in the ownership of the Enterprise of:

-Black Women and/or-Black Employees/Workers

3% 15%

Contribution to achieving over 30%

land transfer 5% Bonus point per each

percentage of land

transferred above 30%

Management Control

(Same as BEE Codes)

BEE 1200 20% Black representation at Owner-Manager level;

20% 25,1% Owner-Manager Representation,

Bonus Points: Black Women representation at Owner-Manager

2% 10%

22

BEE Elements Code Ref.

Weighting Indicators Indicator Weighting

Compliance target

Employment Equity

(Same as BEE Codes)

BEE 1300

20% Black representation at Manager-Controller level

6% 40%

Black women representation at Manager-Controller level

6% 20%

Black employees as a percentage of total employees

4% 70%

Black women as a percentage of total employees

4% 35%

Employment Equity for QSEs

23

BEE Elements Code Ref.

Weighting Indicators Indicator Weighting

Compliance target

Skills Development BEE 1400

20% Employee enrollment/ involvement in Recognised Training Programmes

5% Yes

Skills development spend on black employees in addition to Skills Development Levy (except where the enterprise is exempted from payment of the skills development levy) as a percentage of the Leviable Amount (or as a percentage of total annual payroll, for entities exempted from the skills development levy).

15% 1%

Bonus Points - Support land reform beneficiaries and Black persons to create sustainable business through the transfer of specialized skills in qualifying mentorship programmes

5% Qualifying mentorship programmes as accredited by relevant

SETA authority

AgriBEE - Skills Development for QSEs

24

BEE Elements Code Ref.

Weighting Indicators Indicator Weighting

Compliance target

Preferential Procurement

(Same as BEE Codes)

BEE 1500

20% BEE Procurement Spend from Suppliers based on the BEE Procurement Recognition Levels or Deemed Micro Enterprise Recognition Levels as a percentage of Total Measured Procurement Spend

20% 50%

Preferential Procurement, Enterprise Development and Residual for QSEs

25

BEE Elements Code Ref.

Weighting Indicators Indicator Weighting

Compliance target

Enterprise Development

BEE 1600

20% Enterprise development contributions made by the Qualifying Small Enterprise as a percentage of Net Profit After Tax

20% 2%

Bonus Points - Lease of 20% land or capital assets on a long term basis to

black persons

3% Lease longer than 10

years

Rural Development BEE 1700

20% Qualifying residual contributions made by the QSE measured as a percentage of net profit after tax, made to corporate social investments and/or industry specific contributions measured from the commencement date of this statement or the Inception Date until the date of measurement.

12% 2%

1Land made available to farm workers measured from the commencement date of this statement or the Inception Date until the date of measurement2.

8% 10%

AgriBEE - Enterprise Development and Rural Development for QSEs

1The land that is made available is the land not subject to the Land Tenure Act.

2Enterprises that have fully complied with the ownership scorecard have an option of only contributing to the CSI portion of this element which will then have a corresponding 10 weighting points.

26

The Road Ahead

20 Dec 2005: Release of First Draft 2nd Phase

31 March 2006: Deadline for Submissions

March/April 2006: Review of Submissions

November/December 2006Promulgation of Phases 1 and 2

May/Sept 2006: Development of Final Draft