South African Port Operations SOUTH AFRICAN PORT OPERATIONS

South African Port Operations SOUTH AFRICAN PORT OPERATIONS BEE SUPPLIER POLICY AND STRATEGY 1 – FILENAME

South African Port Operations SAPO PROCUREMENT POLICY STRIVES TO • promote the effective and efficient development of suppliers and contractors from previously disadvantaged communities • Ensure that these suppliers build sustainable businesses and in so doing build long term relationships with SAPO’s business units • Ensure that SAPO continues to receive a service of the highest quality at competitive prices 2 – FILENAME

South African Port Operations TENDER EVALUATION • All tenders need to be technically and commercially compliant. Thereafter evaluation weighting is as follows; • For contracts of less than R 500, 000 a weighting of 80% on price and 20% on BEE • For contracts exceeding R 500, 000 a weighting of 90% on price and 10% on BEE 3 – FILENAME

South African Port Operations BEE EVALUATION IS BASED ON THE FOLLOWING • BEE Shareholding and voting rights • Active Management & Employment equity within the company • Gender – promotion of female owned business • Promotion of business owned by disabled persons • Procurement policies within the company • Community and social responsibility 4 – FILENAME

South African Port Operations SHAREHOLDING & VOTING RIGHTS • Require proof of Shareholding eg. Share certificates • Joint ventures will be evaluated on effective % of the JV held by HDI’s eg Traditional supplier enters into a 50/50 JV with a company that has 40% BEE shareholding. JV will be rated at 50% of 40% = 20% BEE • Voting rights must be reflective of shareholding 5 – FILENAME

South African Port Operations ACTIVE MANAGEMENT & EMPLOYMENT EQUITY • Preference is given where the BEE shareholders are active participants in the management of the company as opposed to merely “investors” • Evidence of genuine skills transfer to promote continued involvement and sustainability of the individuals in the business • Employment equity polices of the enterprise 6 – FILENAME

South African Port Operations PROCUREMENT POLICIES / SOCIAL RESPONSIBILITY • Preference is given to enterprises that also promote the use of BEE subcontractors or service providers • Enterprises that play an active social responsibility role are recognised eg. Building of a clinic in a previously disadvantaged community 7 – FILENAME

South African Port Operations PRESENT STRATEGY • Increasing procurement management resources at SAPO HQ and port level • Advertise in appropriate media eg Ilanga, Sowetan, Isolezwe • Stipulate BEE participation in tender documents • E-procurement business is only awarded to BEE suppliers • Relaxation of customary requirements for performance and retention guarantees depending on scope of work and risk 8 – FILENAME

South African Port Operations PRESENT STRATEGY (cont) • Setting of internal BEE spend targets – for this year it is set at 45% of total spend • Certain categories of business is specifically set aside for enterprises owned by females and/or disabled members of the community eg. At Durban port all stationery, refreshments and catering requirements will be allocated to this group 9 – FILENAME

South African Port Operations PRESENT STRATEGY (cont) • Campaigns to educate the supplier base of our requirements and to create awareness of the opportunities. We have held BEE Open days at • Durban – February 2003 • Richards Bay – January & September 2003 • Saldanah – July 2002 • Cape Town – April 2003 10 – FILENAME

South African Port Operations CONCLUSION • SAPO has achieved our initial objectives for promotion of BEE opportunities in the port operations environment • Our intention is to refine and better manage this process going forward to ensure we are assisting in the creation of long-term and sustainable empowerment opportunities • We are committed to ensuring that this is a transparent and fair process in compliance with good corporate governance 11 – FILENAME

South African Port Operations Thank you 12 – FILENAME