1. ROAD FREIGHT CHARTER B-BBEE SCORECARD Presenter: Sibongile Zikalala

2. AMENDED B-BBEE CODES PRESENTATION OUTLINE 1.OBJECTIVES OF THE SECTOR CODES 2.PRINCIPLE CHANGES ON AMENDED B-BBEE CODES 3.PROPOSED ROAD FREIGHT GENERIC CHARTER SCORECARD 4.PROPOSED QUALIFYING SMALL ENTERPRISE SCORECARD 5.IMPLEMENTATION AND MONITORING 6.CONCLUSION – THE IMPACT ON BUSINESS

3. OBJECTIVES OF THE ROAD FREIGHT TRANSPORT SECTOR CODES To advance the objectives of the B-BBEE Amendment Act No. 56 of 2013; To constitute a Framework and Establish the Principles upon which B-BBEE will be implemented in the Road Freight Transport Sector; To create Economic growth through Ownership, Management Control, Enterprise and Supplier Development in the Road Freight Transport Sector; To ensure the Entry of women, Youth and people living in Rural areas at all levels of the industry so as to break the stranglehold of the industry by urban- based males; To provide the basis for the Sector’s engagement with other Stakeholders including Government and Labour.

4. PRINCIPLE CHANGES ON THE AMENDED B-BBEE CODES B-BBEE COMPLIANCE

5. AMENDED CODES PRINCIPLE CHANGES REAL JOB CREATION  Supply chain diversification  Growth in EME/QSE Expenditure  Growth in 51% Black Owned Supplier  Import Replacement  Supplier Development SOCIO ECONOMIC DEVELOPMENT  Income generating Activities  Supporting future employees B-BBEE CHANGES  Empowering Supplier Status  Amended Scorecards  Adjusted Recognition Table  Level Discounting FAIR PEOPLE APPROACH  Economically Active Population (EAP)  EE Act alignment and strengthening OPEN SKILLS DEVELOPMENT  Increased target  Increased incentive for disability  Training non employees is recognised  Absorption incentives

6. AMENDED SCORECARD SUMMARY

7. B-BBEE RECOGNITION TABLE Automatic drop two levels down

8. B-BBEE PRIORITY ELEMENTS Ownership –The sub-minimum requirement for ownership is 40% of Net value (40% of the 8 points) based on the Time based graduation Factor provided. Skills Development –The sub-minimum requirement for Skills Development is 40% of the Total weighting points for Skills Development. Enterprise and Supplier Development –The sub-minimum requirement for Enterprise and Supplier Development is 40% for each of the three categories, within the Enterprise and Supplier Development element, namely Preferential procurement; Supplier development and Enterprise Development. –If the scorecard fails to meet any of these sub-minimum targets the acquired level will be discounted one level down.

9. “EMPOWERING SUPPLIER STATUS” Good citizen South African entity; –Complies with all regulatory requirements Meet at least 3 of the following criteria; 1)At least 25% of costs of sales excluding labour costs and depreciation must be procured from local producers or local supplier in SA. Labour costs for the service industry is capped at 15%. 2)50% of jobs created are for Black people provided that the number of Black employees since the immediate prior verified B-BBEE Measurement is maintained. 3)At least 25% transformation of raw material/beneficiation which include local manufacturing, production and/or assembly, and/or packaging. 4)At least spend 12 days per annum of productivity deployed in assisting Black EMEs and QSEs beneficiaries to increase their operation or financial capacity. 5)At least 85% of labour costs should be paid to South African employees by the Service Industry entities.

10. ROAD FREIGHT SUB-SECTOR SCORECARD PROPOSAL B-BBEE COMPLIANCE

11. EQUITY OWNERSHIP IndicatorsCharter Points Charter Targets Generic Points Generic Targets Voting Rights In the hands of Black people425% + 1 vote 4 In the hands of Black Women210%2 Economic Interest In the hands of Black people425%4 In the hands of Black Women210%2 Black Economic interest in Black designated groups Participation in ESOP Participation in BBOS Participation in Co-operatives 33%3 Black new Entrants415%22% Realisation points Net Value/Net Economic Interest810 year target Graduation formula 810 year target graduation formula TOTAL POINTS 2725

12. MANAGEMENT CONTROL IndicatorsCharter Points Charter Targets Generic Points Generic Targets Board Participation % Voting rights of Black people250%2 % Voting rights of Black Women125%1 % Black Executive Directors250%2 % Black Women Executive Directors125%1 Other Executive Management % Black Executive Management260%2 % Black Women Executive Management130%1 Senior Management - EAP Applicable % Black employees for all SM260%2 % Black woman employees for all SM130%1 SUB-TOTAL POINTS12

13. MANAGEMENT CONTROL CONT. IndicatorsCharter Points Charter Targets Generic Points Generic Targets Middle Management – EAP Applicable % Black employees for all MM275%2 % Black woman employees for all MM138%1 Junior Management – EAP Applicable % Black employees for all SM288%1 % Black woman employees for all SM144%1 Youth Employees – EAP Applicable Youth in technical/professional positions215%N/A Operational staff – EAP Applicable Black women % in Semi & unskilled levels215%N/A Employees with disability % Black employees for all office staff22%2 % Black woman employees for all office staff11%N/A TOTAL POINTS2519

14. SKILLS DEVELOPMENT IndicatorsCharter Points Charter Targets Generic Points Generic Targets Skills Development Expenditure on programme specified in the Learning Programmes Matrix Skills Development Expenditure on Black people as a % of the Leviable amount 86%8 Skills Development Expenditure on Black disabled employees as a % of the Leviable Amount 50.50%40.30 Learnerships, Apprenticeships and Internships Number of Black people participating on learnerships, apprenticeships, and internships and training specified in the learning programme matrix as a % of total employees 42.5%4 Number of Black unemployed participating on learnerships, apprenticeships, and internships and training specified in the learning programme matrix as a % of total employees 42.5%4 Bonus Points Number of black people absorbed by the measured entity at the end of Learnership programme 5100%5 TOTAL POINTS2120

15. ENTERPRISE AND SUPPLIER DEVELOPMENT IndicatorsCharter Points Charter Targets Generic Points Generic Targets Preferential Procurement as a percentage of the Total Measured procurement spend Procurement spend from all Empowering suppliers based on their Procurement Recognition Level. 580%5 Procurement spend from all Empowering suppliers that are Qualifying Small Enterprises. 315%3 Procurement spend from all that are Exempted Micro Enterprises 415%4 Procurement spend from all Empowering suppliers that are 51% black owned. 940%9 Procurement spend from all Empowering suppliers that are 30% black woman owned. 412%4 Bonus Points Procurement spend from designated group Suppliers that are 51% black owned. 22%2 SUB- TOTAL POINTS25

16. ENTERPRISE AND SUPPLIER DEVELOPMENT IndicatorsCharter Points Charter Targets Generic Points Generic Targets Supplier Development Annual value of all Supplier Development Contributions made by the measured entity as a percentage of the target 102% of NPAT102% of NPAT Enterprise Development Annual value of Enterprise Development Contributions and Sector Specific programmes made by the Measured entity as a percentage of the target 51% of NPAT5 Bonus Points For the graduation of one or more Enterprise Development beneficiaries to the Supplier Development Level 11 For creating one or more jobs directly as a result of Supplier Development and Enterprise Development initiatives 11 TOTAL POINTS40

17. SOCIO-ECONOMIC DEVELOPMENT IndicatorsCharter points Charter targets Generic points Generic targets Socio economic development initiatives – % of NPAT Annual value of Socio Economic Development contributions made by the Measured entity. 101.5% of NPAT51% of NPAT List of projects for Enhanced Recognition points: Carbon Offset projects - Accredited green programmes (Trees for Africa) Wellness programmes – Bargaining Council Wellness and Community Clinics Research & Development projects - Fatigue management by DoT or MEC Road Safety projects – Captain Safety, National Prayer day by DoT NSEWA Road Safety Learning Network – Enhancing driver skills and health

18. ROAD FREIGHT GENERIC SCORECARD SUMMARY OWNERSHIP –No changes compared to the Generic Scorecard MANAGEMENT CONTROL –Additional points for Junior Management, –Additional sub-elements for Youth Employees and Operational female employees, –The exclusion of Drivers in the calculation for Disabled employees, SKILLS DEVELOPMENT –1% Skills Development Levy is included for the Transport Charter Industry only. –List of Mandatory training has been submitted with reasons for inclusion. ENTERPRISE AND SUPPLIER DEVELOPMENT –List of Procurement exclusions from 51% Black owned companies submitted to the Department of Transport for consideration at 100% on: Fuel, Oil, Maintenance Spares, Banks, Tyres, Insurance, Vehicles and Trailers. SOCIO-ECONOMIC DEVELOPMEMT –List of Enhanced recognition projects has been submitted for approval.

19. DRAFT ROAD FREIGHT QSE SCORECARD B-BBEE COMPLIANCE

20. Micro Enterprises Exemption and Classification Exempted Micro Enterprises (EME) – R0 to R10m –75% black beneficiaries qualifies for Level one Contributor, B-BBEE Recognition Level of 135% –51% black beneficiaries qualifies for Level two contributor, B-BBEE Recognition Level of 125% Qualifying Small Enterprises (QSE) – R10m to R50m –75% black beneficiaries qualifies for Level one Contributor, B-BBEE Recognition Level of 135% –51% black beneficiaries qualifies for Level two contributor, B-BBEE Recognition Level of 125% Both 51% black owned QSEs and EMEs to obtain a Sworn Affidavit annually confirming their Total Revenue/Allocated Budget/Gross receipts of R50 million or less, and the Level of black percentage of beneficiaries.

21. QSE SCORECARD SUMMARY ELEMENTS20072013 BEE ScorecardPointsBonusPointsBonus Ownership 253 0 Management Control 254150 Skills Development 250 5 Enterprise and Supplier Development 250303 Socio-economic Development 25050 TOTAL 1007 8 40% minimum threshold is applicable on three critical elements

22. EQUITY OWNERSHIP IndicatorsCharter Points Charter Targets QSE Points QSE Targets Voting Rights In the hands of Black people525% + 1 vote 5 In the hands of Black Women210%2 Economic Interest In the hands of Black people525%5 In the hands of Black Women210%2 Black new Entrants or black designated groups32%3 Realisation points Net Value/Net Economic Interest810 year target Graduation formula 810 year target graduation formula TOTAL POINTS25 No change

23. MANAGEMENT CONTROL IndicatorsCharter Points Charter Targets QSE Points QSE Targets Executive Management % Black Executive Management550%5 % Black Female Executive Management225%2 Senior, Middle and Junior Management % Black representation at Senior, Middle and Junior Management. 660%6 % Black female representative at Senior, Middle and Junior Management. 230%2 Youth Employees Youth in technical/professional positions210%N/A SUB-TOTAL POINTS1712 The EAP Calculation is not applicable for the QSE scorecard

24. SKILLS DEVELOPMENT IndicatorsCharter Points Charter Targets QSE Points QSE Targets Skills Development Expenditure Skills Development Expenditure on Learning programmes specified in the Learning Programmes Matrix for Black people as a % of the Leviable amount 203%153% Skills Development Expenditure on Learning programmes specified in the Learning Programmes Matrix for Black females as a % of the Leviable Amount 51%71 Skills Development Expenditure on Learning programmes specified in the Learning Programmes Matrix for Black people with disabilities as a % of the Leviable Amount N/A 30.15 Bonus Points Number of black people absorbed by the measured entity at the end of Learnership programmeN/A 5100% TOTAL POINTS25

25. ENTERPRISE AND SUPPLIER DEVELOPMENT IndicatorsCharter Points Charter Targets QSE Points QSE Targets Preferential Procurement as a percentage of the Total Measured procurement spend Procurement spend from all Empowering suppliers based on their B-BBEE Procurement Recognition Levels. 1560%1560% Procurement spend from all Empowering suppliers that are at least 51% black owned based on their B-BBEE Procurement Recognition Levels. 540%515% Bonus Points B-BBEE Procurement spend from Designated Group Suppliers that are at least 51% black owned based on the B-BBEE Procurement Recognition Levels N/A11% SUB- TOTAL POINTS20

26. ENTERPRISE AND SUPPLIER DEVELOPMENT IndicatorsCharter Points Charter Targets QSE Points QSE Targets Supplier Development Annual value of all Supplier Development Contributions made by the measured entity as a percentage of the target. 51% of NPAT5 Enterprise Development Annual value of Enterprise Development Contributions and Sector Specific programmes made by the Measured entity as a percentage of the target 51% of NPAT5 Bonus Points For the graduation of one or more Enterprise Development beneficiaries to the Supplier Development Level N/A1 For creating one or more jobs directly as a result of Supplier Development and Enterprise Development initiatives N/A1 SUB- TOTAL POINTS30

27. SOCIO-ECONOMIC DEVELOPMENT IndicatorsCharter points Charter targets Generic points Generic targets Socio economic development initiatives – % of NPAT Annual value of Socio Economic Development contributions made by the Measured entity. 51% of NPAT5 TOTAL POINTS55

28. IMPLEMENTATION AND MONITORING Transport Sector B-BBEE Charter Council –An independent body with a mandate to oversee the implementation of the Charter. –Conduct reviews and take decisions in consultation with Stakeholders per sub-sector around the targets that will be applied from the effective date –Undertake a comprehensive mid-term review in 2,5 years and make decisions regarding the implementation of the Charter. –Appoint an Executive to receive, consider and approve annual audits from each measured entities within the sub-sector charter. –Prepare an annual review which outlines progress and evaluates new areas of intervention. –Submit the annual review to the BEE Advisory Council for publication. The association does not believe that the industry should fund the Council but entities are allowed to voluntary contribute.

29. IN CONCLUSION The DTI issued a statement in May 2015 indicating the following; –The Transitional period for the alignment of the Sector Codes is extended to the end of October 2015. –All valid B-BBEE Certificates issued under the Old Codes of Good Practice gazette No 29617, as well as the relevant Sector Codes should remain valid, be accepted and treated as “Empowering Suppliers”. –The statement on Black participants in Broad-Based Ownership Schemes and Employee Share Ownership Programmes has been withdrawn by the DTI until further notice. –Introduced a 5th criteria for the Empowering Supplier Status The Proposed Draft Scorecard will be presented to the Minister for approval before submitting to the DoT for the gazetting process. We urge companies to make use of the extended period to prepare for compliance with the new codes.

30. The End