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• › The Chief Executive
• › Group Executive: Corporate Affairs
• › The Founder and Chairman of Altron
• › The Group Company Chief Executive Officers

• › Introduction
• › Code 100 – Ownership
• › Code 200 – Board and Management Control
• › Code 300 – Employment Equity
• › Code 400 – Skills Development
• › Code 500 – Preferential Procurement
• › Code 600 – Enterprise Development
• › Code 700 – CSI or Socio-Economic Development (SED)

GROUP STRUCTURE     TRANSFORMATION FOR THE FUTURE     MESSAGES FROM:

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BBBEE GROUP STRUCTURE     BBBEE PARTNERSHIPS     KEY DEFINITIONS     BBBEE GUIDELINES:     CONFERENCE RESOLUTIONS     CONFERENCE DECLARATION

CODE 500 – PREFERENTIAL PROCUREMENT

This section is aimed at supporting a vibrant black small medium and micro-enterprises (SMME) sector, as well as encouraging the procurement from enterprises that are BBBEE compliant.

The systems used for recording spend in general and the approaches to measuring or targeting BBBEE suppliers have not been as effective across the Group as they could be and, as a consequence, not many supplier companies within the supply chain have their BBBEE status recorded accurately. This has the negative effect of possibly underscoring the actual preferential procurement spend by the measured entity and the Group.

Implementation guidelines

• The first task is to define accurately the spend that falls within the definition of total measured procurement spend (TMPS). This will exclude:

  –	all revenue generated outside of South Africa (for determination of value-adding supplier status);
  –	all spend on imported products where there is no local equivalent product as defined by the CoGP; and
  –	all intergroup procurement, ie procurement that takes place between the group entities which are being verified together, will be excluded if the measured entity is measured at some form of a consolidated level.

• All suppliers will be required to demonstrate their compliance with the BBBEE regulatory framework by submitting up-to-date verification certificates, issued by an accredited verification agency, to the group which record the supplier’s BBBEE status in accordance with the CoGP. In the event that the particular supplier is subject to a gazetted sector code, the supplier will be permitted to submit its BBBEE status in accordance with that sector code.
• Empowerdex and, consequently, the Altron group, does not accept selfassessments.
• In the case of all other suppliers, verifications will be encouraged. However, self-assessments will be accepted, but only if they are in the prescribed form, which is set out in the group preferential procurement policy.
• In the event that there is no acceptable demonstration of compliance, then the supplier will receive a zero BBBEE compliance score.
• An immediate priority is to record accurately the BBBEE status of all suppliers within the supply chain.
• With regard to existing suppliers, an analysis of suppliers comprising 80% of the annual procurement spend of each entity will immediately be undertaken by each procurement department within the Group. These suppliers will be requested to inform the Group of their latest BBBEE status in accordance with the gazetted CoGP.
• With regard to new suppliers, the BBBEE status will be requested of all new suppliers in accordance with the gazetted CoGP. This status will be reflected on the relevant database, and procurement officers will be encouraged to procure from suppliers whose compliance levels are level 5 and above.
• In addition to the BBBEE status levels, suppliers will be requested to provide information pertaining to whether they are:
  – black-owned or black womenowned;
  – whether they are value-adding suppliers; and¹
  – whether they are QSEs or EMEs.
• Preference shall be given, as set out in the preferential procurement policy, to suppliers who are black or black women-owned, value-adding suppliers and QSEs.
• In the event that core suppliers are not level 5 or above, these suppliers will be requested to update the Group twice per annum of the improvement on their compliance levels.
• Altron will, with immediate effect, adopt a preferential procurement policy rooted in improved supplier management that aligns purchasing requirements with the codes and which will assist Altron to substantially increase its preferential procurement spend.
• All purchasing must align with the proposed policy and the BBBEE imperatives in this strategy, in a consistent manner across all divisions and subsidiaries.
• Companies with a turnover of R5 million or less are not required to have or submit a BBBEE status. However, they will need to indicate to the Company and the rating agency that the turnover is below the R5 million threshold.
• Subholding CEOs and EXCOs will, as an immediate priority, formulate a comprehensive strategy on enterprise development following a collaborative approach which cuts across procurement, skills development and CSI.

¹The definition of a value-adding supplier is an entity where the net profit taxation summed together with the total payroll is greater than 25%  of the total revenue of the entity.