TABLE OF CONTENT SECTION 1 Introduction to transformation and Broad Based Black Economic Empowerment (8 slides) Understanding The Property Sector (8 Slides) SECTION 2 Transformation Statistics Of The Residential Industry (14 slides) SECTION 3 BBBEE And Sector Charters/Codes (6 slides) Application Of Transformation And BBBEE (4 Slides) SECTIONS 4 Revised Codes Of Good Practice (1 slide) Changes in the Codes (11 slides) SECTION 5 Amendment Bill & Verification Process & Amendment Bill (10 slides)
SECTION 1
What is Transformation? Its an integrated and coherent socioeconomic process that directly contributes to the economic transformation of South Africa and bring about significant increases in the number of black people to meaningfully participate in the mainstream economy, in order to significantly decrease in inequalities
Why is transformation necessary in SA SA was forced to take steps to deal with its past in order to attempt to redress the inequalities in all spheres of life cause by the previous system of apartheid One of these steps was the development of a strategy which would achieve economic transformation- to address inequalities Transformation is a pragmatic growth strategy that aims to realise the country s full economic potential by ensuring all citizen can participate in the mainstream of the economy in a sustainable manner. All citizen means Its people and their enterprises
Expected results of Transformation BBBEE strategy emphasis: Growth Development Well implemented BBBEE sustainability Profitability Growth Global competitiveness Innovativeness
LEGAL AND COMMERCIAL STATUS B-BBEE and Sector Codes do not impose legal binding obligation of any company to comply; BUT B-BBEE is an important fact to be taken into account by any company conducting business in SA. B-BBEE is an important consideration to successfully tender for Government and State Owned Entities contracts or in some instances to obtaining government licence and in Private Public Partnership (PPP).
What Transformation is Not BBBEE is NOT Affirmative Action, although Employment Equity forms part of it. Nor does it merely take the from white people and give it to blacks. It is simply a growth strategy, targeting SA s weakest point: inequality. No economy can grow by excluding any part of its people. This threatens sustainability, growth etc
Who is responsible for Transformation The DTI (Department Trade and Investment) is the custodian of Transformation/Broad Based Black Economic Empowerment (B-BBEE) The DTI s mandate is to increase Trade and Investment in the country in order to allow the economy to grow The DTI has four Mission statements of how they will achieve their mandate and one of them is : Grow the economy through Inclusive Participation There are a number of tools to drive Inclusive Participation and one of them Broad Based Black Economic Empowerment (B-BBEE)
BBBEE as a tool of Transformation BBBEE use 7 elements to drive transformation Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Development
How does BBBEE drive Transformation EQUITABLE ECONOMIC OPPORTUNITIES Ownership equity THE OPPORTUNITY BARRIER Preferential procurement Management control Enterprise development THE BUSINESS BARRIER Skills development THE SKILLS BARRIER Employment equity Socio Economic Development THE POVERTY BARRIER Mainstream economy upper class Majority are white Wealthy with economic choices Business owners Upper middle class & investors High income Positive net asset value Invest in shares Majority are white Entrepreneur middle class Self employed Owner managed businesses Small Medium & Micro Enterprises Majority are white The professional middle class Formal employment (Black Diamonds) School leavers/graduates Artisans/professionals Good number of black since 1994 But majority is still white Second economy The majority are black With no economic earning ability No technical or tertiary skills Dependant on grants (Unemployable) Subsistence on land produce
UNDERSTANDING THE PROPERTY SECTOR
SCOPE OF THE PROPERTY SECTOR Commercial Property Industry Office Property Industry Industrial Property industry Retail Property Industry Leisure Property Industry Residential Property Industry Houses Freehold Lease Community schemes Flats, Clusters, Town Houses etc Zoned land
The Size of the SA Property Sector South African property sector R4.9 trillion Non residential R780 billion Residential R3.0 trillion Public R570 billion Zoned urban land R520 billion Retail R340 billion National R188 billion Office R228 billion Provincial R342 billion Industrial R187 billion Local R37 billion Hospitality, leisure, other R25 billion SOE R6 billion
The Size of the SA Property Sector Review of the size of SA property sector: Result in 2015 est Increased by +20% est Increased by +30%? SOE has increased Government unknown? Stable 2014 house Transactions in the residential market is R5.2 Billion
Review of market Size Key focus Government National using available DPW asset register Provincial Use asset register and confirm with provincial offices 9 Metros SOE Residential Informal settlement (not captured by Deeds Office) Land Confirm the size against exercise done by other department
Residential Transactions 2014 R52 Billion transaction 5% average commission R2.6 Billion An average transaction is R560K (with average cost of mid-price house at R810k and the low-end house transaction is R310K). The current housing market is driven by affordable housing in terms of sales. According to EAAB 62% of estate agencies have 1-5 Estate Agents 18% of estate agencies have 6-10 Estate Agents
THE IMPACT OF THE SOUTH AFRICAN PROPERTY SECTOR ON THE NATIONAL ECONOMY RESEARCH REPORT 2013 Report released in May 2014
THE IMPACT OF THE SOUTH AFRICAN PROPERTY SECTOR ON THE NATIONAL ECONOMY Research Phases PHASE 1 Measured the amount of existing stock in the country The size of the South African Property Sector PHASE 2 PHASE 2 Measures Economic activity Impact of the South African Property Sector on the National Economy PHASE 3 Analyses transformation using the BBBEE tool with the 7+1 Property Sector Code elements State of transformation in the Property Sector Research elements in phase 1&2 were done in conjunction with Investment Property Databank (IPD)
The Impact of the South African Property Sector on the National Economy SOUTH AFRICAN PROPERTY SECTOR R237.8. Billion Direct Expenditure R93.3 Billion Contribution GDP R191.4 Billion Total Taxes R46.5 TOTAL R237.8 Billion Non-Residential Property Industry R43.9 Billion R80.8 Billion R25.3 Billion R106.1 Billion Residential Property Industry R46.0 Billion R103.7 Billion R20.1 Billion R123.8 Billion End of Cycle R3.3 Billion R6.8 Billion R1.1 Billion R7.9 Billion Note: All cost excluding VAT
Group discussions What is Transformation Why is transformation important for SA economy What is the value size of Residential Industry in the SA economy How much GDP & Taxes - the residential Property Industry contribute to the SA Economy
SECTION 2
TRANSFORMATION STATISTICS OF THE RESIDENTIAL INDUSTRY
SA Demographic statistics South African Population - estimates 2006/2011 79.4% 79.2% 9.2% 8.9% 2.5% 8.9% African Coloured Indian White
National Estate Agents Stats 41200 41100 41110 41000 40900 40800 40763 40700 40600 40500 National 2011 2012
Registered Estate Agents National Estate Agents 41200 41110 41100 41000 40900 40800 40763 40700 There has been an increase of estate agents 2011 vs 2012 There are additional 347 estate agents in 2012 vs 2011 40600 40500 2011 2012
Which province/s drives the industry? 2011 Provincial split 24% 43% 2011 Provincial Split Comments Gauteng, WC & KZN contribute 82% of the agents Gauteng has Half the of that split at 43% 15% 6% Free State, Limpopo and N. Cape have the lowest share total of 6% (3%, 2% and 1% respectively)
Gauteng W. Cape KZN E.Cape Mpumala N.West Free state Limpopo N.Cape other Which province/s drives the industry? 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2012 Provincial Split Gauteng, WC and KZN have highest share total of 81% (44%, 23% and 14% respectively) Gauteng with a major share at 44% Free State, Limpopo and N. Cape have the lowest share total of 6% (3%, 2% and 1% respectively)
Growth by Estate Agents 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2011 2012 Gauteng gained additional 554 agents W.Cape gained additional 8 agents KZN lost 57 agents All other reduced by 159 agents
2011 National Racial Split Whites, 86% Indians, 6% Africans, 7% Coloured, 1% 86% of Estate Agents are white 14% of Estate Agents are Black African and Indians are the majority within the Black category (7% & 6% respectively) KZN has better stats comparatively with whites EA=82% and Blacks=18 WC has the worst stats comparatively with Whites EA=92% and Blacks=8%
2012 National Racial Split 87% of Estate Agents are white Africans 7% Coloured Indians 1% 5% White 87% 13% of Estate Agents are Black African and Indians are the majority within the Black category (7% & 5% respectively) Limpopo has better stats comparatively with whites EA=73% and Blacks=27% WC has the worst stats comparatively with Whites EA=93% and Blacks=7%
National Gender split 2011 & 2012 Male 45% Female 55%
National Gender Split- Principals 2011 vs 2012 8000 7000 6000 Males 56% Females 44% Males 56% Females 44% National there are more females in this industry at 55% 5000 4000 3000 2000 However, there are more males as principals at 56% 1000 0 2011 2012
2011 Gender splits Principals Female Males Blacks, 8% Blacks 0% White, 92% Whites 100%
2012 Gender splits Principals Female Males Blacks 8% Blacks 10% Whites 92% Whites 90%
National Gender Split Estate Agents, Interns & Attorneys Female 61% 2011 vs 2012 2011/2012 The gender split for this category is the same for both 2011 & 2012 at Male 39% 61% whites and 39% Blacks
National Racial Split Estate Agents, Interns & Attorneys 2011 & 2012 2011/2012 Whites 85% Blacks 15% The racial split for this category is the same for both 2011 & 2012 at 85% whites and 15% Blacks
Individual and/or Agency Submission Where and how can we transform the residential industry (you can use the statistics given or any other data) Provide a possible plan/strategy of transformation for your agency Guide:- plan should include: 7 elements of BBBEE
SECTION 3
BBBEE Act & SECTOR CODES
Introduction The Broad-Based Black economic Empowerment Act 53 of 2003 ( BBBEE Act) provides the legislative framework for broad based black economic empowerment in SA. The Generic Codes of Good Practice and Sector Codes are issued under the B-BBEE.
BBBEE Sector Code What are Sector Codes Development of sector transformation strategy that uses the generic principles of BBBEE and accommodating specific nuances of your sector in order to make transformation more effective and meaningful. Why are sector Codes important The 7 elements of generic codes are critical and important but there are also other elements beyond that the country needs to transform Funding transformation Financial Sector Charter Access to connectivity ICT Charter Development in under-resourced area- Property Sector Charter
2009 BBBEE Sector Code Construction Sector Code Tourism Sector Code Forestry Sector Code Transport Sector Code 2011 Chartered Accountants Sector Codes 2012 ICT Sector Codes Property Sector Code AgriBEE Sector Codes 2013 Financial Sector Codes Sector Charter Section 12 MAC Sector Codes
BBBEE Sector Code BBBEE Sector Codes Bought into being by the BBBEE Act, No.53 of 2003 They are anchored under the generic codes Establishment of Sector Codes needs to have as common factor Use same principles Use Same methodology Use Same calculations Use Same definitions What Sector Codes are at liberty to change are: Targets of the different elements Weighting of the different elements Adding a different/unique element/s
PSCC MEMBERS Nedlac Government NDPW National Department of Public Works Regulators SACPVP SA Council of Property Valuers Profession EAAB Estate Agency Affairs Board Commercial PLSA Property Loan Stock SA APUTS Association of Property Unit Trust Stock SAIBPP SA Institute of Black Property Practitioners SAFMA SA Facility Managers Association SAPOA SA Property Owners SACSC SA Council of Shopping Centers Residential IEASA Institute of Estate Agencies of SA NPF National Property Forum SAFRE SA Forum of Real Estate REBOSA Real Estate Business Owners Association of SA Women AWIP Association of Women in Property WNP- Women Network Properties Professional Body (VA) BPVA Black Professional Valuers Association SABTACO SA Black Technical Association Career Youth NAYEC National Association for Youth Empowerment in Construction Managing Agents NAMA National Association of Managing Agents
SCOPE OF THE PROPERTY SECTOR Commercial Property Industry Office Property Industry Industrial Property industry Retail Property Industry Leisure Property Industry Residential Property Industry Houses Freehold Lease Community schemes Flats, Clusters, Town Houses etc Zoned land
APPLICATION OF TRANSFORMATION AND BBBEE
BBBEE as a toll of transformation Company threshold Large Entities Qualifying Small Enterprise (QSE) medium size entity OLD REVISED COGP LARGE ENTITIES R35M < QSE R5M-R35M Exempted Micro Enterprises (EME) Small entity EME <R5M Exempted
BBBEE as a tool of Transformation BBBEE use 7 elements to drive transformation Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Development
Application Of BBBEE TO Large Entities ELEMENT DEFINITION QSE WEIGHTING OWNERSHIP Measures effective ownership by black people 20 3 BONUS POINTS MANAGEMENT CONTROL EMPLOYMENT EQUITY SKILLS DEVELOPMENT PREFERENTIAL PROCUREMENT ENTERPRISE DEVELOPMENT SOCIO ECONOMIC DEVELOPMENT Measures effective control by black people 10 1 Measures initiatives intended to achieve equity in the workplace under the Act and the Employment Equity Act Measures the extent to which employers carry out initiatives to develop the competencies of black employees Measures the extent to which enterprises buy goods and services from BBBEE suppliers Measures the extent to which enterprises carry out initiatives intended to assist and accelerate the development and sustainability of other enterprises Measures the extent to which enterprises have implemented initiatives that promote access to the economy for black people 15 3 15-20 - 15-5 - SUB-TOTAL 100 7 TOTAL 100 107
APPLICATION OF BBBEE TO QSES ELEMENT DEFINITION QSE WEIGHTING OWNERSHIP Measures effective ownership by black people 25 3 BONUS POINTS MANAGEMENT CONTROL EMPLOYMENT EQUITY SKILLS DEVELOPMENT PREFERENTIAL PROCUREMENT ENTERPRISE DEVELOPMENT SOCIO ECONOMIC DEVELOPMENT Measures effective control by black people 25 2 Measures initiatives intended to achieve equity in the workplace under the Act and the Employment Equity Act Measures the extent to which employers carry out initiatives to develop the competencies of black employees Measures the extent to which enterprises buy goods and services from BBBEE suppliers Measures the extent to which enterprises carry out initiatives intended to assist and accelerate the development and sustainability of other enterprises Measures the extent to which enterprises have implemented initiatives that promote access to the economy for black people 25 2 25-25 - 25-25 - TOTAL 100 7 Total of any 4 of the above 100 107
Where do Estate Agents fit? Are Estate Agents employees or contractors? In B-BBEE it does not matter the main concern is to count them somewhere. They can either be counted as: Employees Service Provider (Preferential Procurement)
Group discussions Why are sector codes important What nuances do you think we should factor for the residential industry What are the 7 elements that drive transformation How do we apply the 7 codes for: large entities QSEs Which elements are estate agents counter under?
SECTION 4
REVISED CODES OF GOOD PRACTICE
Reason for Revision of Codes The Generic scorecard adjusted in accordance with government key priorities Job Creation Supplier Development Localisation Industrialisation Skill Development We had to re-focus our effort based on the achievements and lack thereof
CHANGES TO THE CODES IMPLICATION TO THE PROPERTY SECTOR CODE
Revised Codes Update The Amended Codes are in effect from 1 May 2015 B-BBEE verification in respect of financial years ending on or before 30 April 2015 can be conducted using old codes of good practice. B-BBEE verification in respect of financial years ending on or after 1 May 2015 can be conducted the amended Codes of Good Practice except Sector Codes All valid B-BBEE Certificates issued under the old codes or sector codes should remain valid therefore be acceptable and be treated as conferring empowered supplier status until 30 April 2016. During this period EMEs will also be deemed to be Empowering Suppliers.
Sector Codes/ Property Sector Codes Sector codes are extended until end Of October 2015 Sector Codes/ Property Sector Code will be effective on the 1 November 2015 All companies scoped under Property Sector Code have additional 6 month transitional period to review and change your BBBEE strategies to take account of the aligned Property Sector Code
Sector Codes/ Property Sector Codes Sector codes are extended until end Of October 2015 Sector Codes/ Property Sector Code will be effective on the 1 November 2015 All companies scoped under Property Sector Code have additional 6 month transitional period to review and change your BBBEE strategies to take account of the aligned Property Sector Code
CHANGES TO THE CODES Its implication to PSC Elements to the Codes Current PSC Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Dev Economic Development TOTAL 8
CHANGES TO THE CODES Its implication to PSC Elements to the Codes Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Dev Current PSC Revised Codes Economic Development TOTAL 8 5
CHANGES TO THE CODES Its implication to PSC Elements to the Codes Ownership Management Control Employment Equity Skill Development Preferential Procurement Enterprise Development Socio-Economic Dev Economic Development Current PSC TOTAL 8 Revised Codes 5 Aligned PSC 7
CHANGES TO THE CODES Its implication to PSC COGP company classification Old Codes Large entities R35M < QSE EME R5M-R35M <R5M Exempted
CHANGES TO THE CODES Its implication to PSC COGP company classification Old Codes New Codes Large entities R35M < R50M< QSE R5M-R35M R10M-R50M EME <R5M Exempted <R10M - Exempted
CHANGES TO THE CODES Its implication to PSC COGP company classification Old Codes New Codes Large entities R35M < R50M< QSE R5M-R35M R10M-R50M EME <R5M Exempted <R10M -Exempted PSC company classification LARGE ENTITIES ASSET BASED COMPANIES Above R400M ALIGNED PSC THRESHOLD PROPERTY COMMERCIAL SERVICES Above 50M PROPERTY RESIDENTIAL SERVICES Above R35M QSE R80M-R400M R10M-R50M R2.5M R35M EME Less than R80M BELOW R10M Less than R2.5M
CHANGES TO THE CODES Its implication to PSC COGP company classification Old Codes New Codes Large entities R35M < R50M< QSE R5M-R35M R10M-R50M EME <R5M Exempted <R10M -Exempted PSC company classification LARGE ENTITIES ASSET BASED COMPANIES Above R400M ALIGNED PSC THRESHOLD PROPERTY COMMERCIAL SERVICES Above 50M PROPERTY RESIDENTIAL SERVICES Above R35M QSE R80M-R400M R10M-R50M R2.5M R35M EME Less than R80M BELOW R10M Less than R2.5M
CHANGES TO THE CODES Its implication to PSC COGP company classification Old Codes New Codes Large entities R35M < R50M< QSE R5M-R35M R10M-R50M EME <R5M Exempted <R10M -Exempted PSC company classification LARGE ENTITIES ASSET BASED COMPANIES Above R400M ALIGNED PSC THRESHOLD PROPERTY COMMERCIAL SERVICES Above 50M PROPERTY RESIDENTIAL SERVICES Above R35M QSE R80M-R400M R10M-R50M R2.5M R35M EME Less than R80M BELOW R10M Less than R2.5M
CHANGES TO THE CODES Its implication to PSC Weighting Points Large Entities Current PSC Ownership 20 Management Control 10 Employment Equity 15 Skill Development 15 Preferential Procurement 20 Enterprise Development 10 Socio-Economic Dev 2 Economic Development 15 TOTAL 107
CHANGES TO THE CODES Its implication to PSC Weighting Points Large Entities Current PSC Ownership 20 Management Control 10 Revised Codes 25 Employment Equity 15 Skill Development 15 Preferential Procurement 20 Enterprise Development 10 Socio-Economic Dev 2 Economic Development 15 TOTAL 107 19 20 40 5 109
CHANGES TO THE CODES Its implication to PSC Weighting Points Large Entities Current PSC Ownership 20 Management Control 10 Employment Equity 15 Skill Development 15 Preferential Procurement 20 Enterprise Development 10 Socio-Economic Dev 2 Economic Development 15 TOTAL 107 Revised Codes 25 19 20 40 5 109 Aligned PSC 30 9 13 19 39 2 5 117
CHANGES TO THE CODES Its implication to PSC Weighting Points QSE (now you do all Elements) Current PSC Ownership 25 Management Control 25 Employment Equity 25 Skill Development 25 Preferential Procurement 25 Do only 4 out of the 7 elements Enterprise Development 25 Socio-Economic Dev 25 Economic Development TOTAL 100
CHANGES TO THE CODES Its implication to PSC Weighting Points QSE (now you do all Elements) Current PSC Ownership 25 Management Control 25 Employment Equity 25 Skill Development 25 Preferential Procurement 25 Enterprise Development 25 Socio-Economic Dev 25 Economic Development TOTAL 100 Revised Codes 25 15 25 30 5 100
CHANGES TO THE CODES Its implication to PSC Weighting Points QSE (now you do all Elements) Current PSC Ownership 25 Management Control 25 Employment Equity 25 Skill Development 25 Preferential Procurement 25 Enterprise Development 25 Socio-Economic Dev 25 Economic Development TOTAL 100 Revised Codes 25 15 25 30 5 100 Aligned PSC 27 9 8 17 35 2 4 105
Internal Management PLSA/RIETS Unlisted Public mandated collective Investment Prop Management services Estate Agents Asset Management PLSA Property Loans Stock externally management Prop Owners /RIET (External Management) APUTS CHANGES TO THE CODES Complex Structure Its implication to PSC Ownership Management Control Employment Equity X X X Skill Development X X X Enterprise Supplier Development Socio-Economic Development X Economic Development X X X X
Internal Management PLSA/RIETS Unlisted Public mandated collective Investment Prop Management services Estate Agents Asset Management PLSA Property Loans Stock externally management Prop Owners /RIET (External Management) APUTS CHANGES TO THE CODES Complex Structure Its implication to PSC Ownership Management Control Employment Equity X X X Skill Development X X X Enterprise Supplier Development Socio-Economic Development X Economic Development X X X X
Internal Management PLSA/RIETS Unlisted Public mandated collective Investment Prop Management services Estate Agents Asset Management PLSA Property Loans Stock externally management Prop Owners /RIET (External Management) APUTS CHANGES TO THE CODES Complex Structure Its implication to PSC Ownership Management Control Employment Equity X X X Skill Development X X X Enterprise Supplier Development Socio-Economic Development X Economic Development X X X X
Internal Management PLSA/RIETS Unlisted Public mandated collective Investment Prop Management services Estate Agents Asset Management PLSA Property Loans Stock externally management Prop Owners /RIET (External Management) APUTS CHANGES TO THE CODES Complex Structure Its implication to PSC Ownership Management Control Employment Equity X X X Skill Development X X X Enterprise Supplier Development Socio-Economic Development X Economic Development X X X X
Internal Management PLSA/RIETS Unlisted Public mandated collective Investment Prop Management services Estate Agents Asset Management PLSA Property Loans Stock externally management Prop Owners /RIET (External Management) APUTS CHANGES TO THE CODES Complex Structure Its implication to PSC Ownership Management Control Employment Equity X X X Skill Development X X X Enterprise Supplier Development Socio-Economic Development X Economic Development X X X X
CHANGES TO THE CODES Its implication to PSC 3 Priority Elements Elements that require focus and concerted effort Ownership 40% of the Net Value targets must be realised Skill Development 40% of total weighting points Enterprise and Supplier Development 40% of targets for sub-categories of the ESD namely: Preferential Procurement Supplier Development Enterprise Development Failure to meet the minimum requirement of 40% Discount of one level down from the total final level score
YEAR PSC Target Schedule 40% threshold Year 1 10% 4% Year 2 20% 8% Year 3 40% 16% Year 4 Year 5 60% 24% Year 6 Year 7 80% 32% Year 8 PSC Net Equity target Year 9 100% 40%
CHANGES TO THE CODES Its implication to PSC 3 Priority Elements Elements that require focus and concerted effort Ownership 40% of the Net Value targets must be realised Skill Development 40% of total weighting points Enterprise and Supplier Development 40% of targets for sub-categories of the ESD namely: Preferential Procurement Supplier Development Enterprise Development Failure to meet the minimum requirement of 40% Discount of one level down from the total final level score
CRITERIA Skill Development (19 points) Weighting points Compliance target SKILLS DEVELOPMENT EXPENDITURE ON ANY PROGRAM SPECIFIED IN THE LEARNING PROGRAMME MATRIX FOR BLACK PEOPLE AS A PERCENTAGE OF LEVIABLE AMOUNT Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black people as a percentage of Leviable Amount Skills Development Expenditure on Learning Programmes specified in the Learning Programme Matrix for black people with disabilities as a percentage of Leviable Amount LEARNERSHIPS, APPRENTICESHIPS AND INTERNSHIPS: Number of black people participating in Learnerships, Apprenticeships and Internships as a percentage of total employees Number of unemployed black people participating in Learnerships, Apprenticeships and Internships as a percentage of total employees 40% thresholds 19 7.6 8 5% 3 0.3% 4 2.5% 4 2.5%
CHANGES TO THE CODES Its implication to PSC 3 Priority Elements Elements that require focus and concerted effort Ownership 40% of the Net Value targets must be realised Skill Development 40% of total weighting points Enterprise and Supplier Development 40% of targets for sub-categories of the ESD namely: Preferential Procurement Supplier Development Enterprise Development Failure to meet the minimum requirement of 40% Discount of one level down from the total final level score
MEASUREMENT CATEGORY & CRITERIA PREFERENTIAL PROCUREMENT WEIGHTING POINTS COMPLIANCE TARGETS BBEE Procurement Spend from all Empowering Suppliers based on the B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 2 80% B-BBEE Procurement Spend from all Empowering Suppliers that are Qualifying Small Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend B-BBEE Procurement Spend from all Empowering Suppliers that are Exempted Micro-Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend B-BBEE Procurement Spend from all Empowering Suppliers that are at least 51% black owned Micro- Enterprises based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend B-BBEE Procurement Spend from all Empowering Suppliers that are at least are 30% black womenowned based on the applicable B-BBEE Procurement Recognition Levels as a percentage of Total Measured Procurement Spend 2 15% 2 15% 8 40% 4 12% Percentage of procurement spend with Black owned enterprises (level 1-4) as a percentage of the total property services spend 6 40% SUPPLIER DEVELOPMENT Annual value of all Supplier Development Contributions made by the Measured Entity as a percentage of the target. 10 2% 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. 5 1% of NPAT 9.6 4 2
CHANGES TO THE CODES Its implication to PSC 3 Priority Elements Elements that require focus and concerted effort Ownership 40% of the Net Value targets must be realised Skill Development 40% of total weighting points Enterprise and Supplier Development 40% of targets for sub-categories of the ESD namely: Preferential Procurement Supplier Development Enterprise Development Failure to meet the minimum requirement of 40% Discount of one level down from the total final level score
B-BBEE CONTRIBUTOR STATUS Level One CHANGES TO THE CODES Its implication to PSC Level Two Level Three Level Four Level Five Discounting effect: Any entity that fails to meet threshold will be discounted one (1) level down Even if the entity fails to meet 2 of the threshold, it will only be discounted one (1) level down Level Six Level Seven Level Eight Non-Compliant
CHANGES TO THE CODES Its implication to PSC Ownership Taken elements that were bonus points into the main line and increase points from 20 to 25 points Points for Broad based participants Point for New Entrants For the PSC (30 weighting points) 2 Ownership scorecards Property asset companies and all other Bonus Points Disposal of assets Venture Capital
Ownership Large Company OWNERSHIP INDICATOR ALL OTHER PROPERTY COMPANIES WEIGHTING POINTS COMPLIANCE TARGETS Voting Rights Exercisable Voting Rights in the Enterprise in the hands of black 25% + 1 5 people vote Exercisable Voting Rights in the Enterprise in the hands of black women 2 10% Economic Interest of black people in the Enterprise 5 25% Economic Interest of black women in the Enterprise 2 10% Economic Interest Economic interest of the following black natural people in the measured entity: 1. black designated groups; 2. black Participants in Employee Ownership Schemes; 4 3% 3. black beneficiaries of Broad based Ownership Schemes; or 4. black Participants in Co-operatives New entrants 2 2%
Ownership - QSE WEIGHTING POINTS MEASUREMENT CATEGORY & CRITERIA COMPLIANCE TARGETS All Other Property companies Voting Rights Exercisable voting rights in the enterprise in hands of black 5 25% + 1 vote people Exercisable voting rights in the enterprise in the hands of 2 10% black women Economic interest Economic Interest of black people in the Enterprise 5 25% Economic Interest of black women in the Enterprise 2 10% New entrants or Black Designated Groups 3 2% Realisation Points Net Value 10 Y 1 =10%; Y 2 =20%; Y 3 = 40%; Y 5 = 60% Y 7 = 80%; Y 9 = 100% TOTAL 27 TOTAL 27
Management Control Large Company MEASUREMENT CATEGORY CRITERIA WEIGHTING POINTS COMPLIANCE TARGETS BOARD PARTICIPATION: Exercisable voting rights of Blacks members as a percentage of all Board members Exercisable voting rights of Black female board members as a percentage of all Board members Black Executive Directors as a percentage of all executive directors Black Female Executive Directors as a percentage of all executive directors OTHER EXECUTIVE MANAGEMENT Black Executive Management as a percentage of all executive Management Black female executive Management as a percentage of all executive management 2 50% 1 25% 2 50% 1 25% 2 60% 1 30%
Management Control - QSE MANAGEMENT CONTROL INDICATOR Board participation WEIGHTING POINTS COMPLIANCE TARGET Exercisable voting rights of black board members as a percentage of all voting board members Exercisable voting rights of black female board members as a percentage of all voting board members Other executive management Black executive management as a percentage of all executive managers Black female executive management as a percentage of all executive managers 4 50% 2 25% 2 60% 1 30% TOTAL 9
Employment Equity Large /QSE Companies MEASUREMENT CATEGORY & CRITERIA WEIGHTING POINTS COMPLIANCE TARGET Black practitioners as a percentage of total practitioners 4 50% Black female practitioners as a percentage of total practitioners Black people in management as a percentage of total Management Black female in Management as a percentage of total Management Black people in administration as a percentage total administrators Black females in administration as a percentage of total administrators 3 50% 2 35% 1 18% 1 30% 2 40% TOTAL 13
CHANGES TO THE CODES Skill Development Its implication to PSC Increased from 15 points to 20 points (PSC weighting 19 points) Increased targets from 3% to 6% for COGP (PSC target is 5%) Training can be done to both Internal and External sector participants Enterprise and Supplier Development Increased points from 35 to 40 points Supplier development being the new element The requirements for an Empowering Supplier - to meet 3 of the 4 conditions Procure from local producers 50% of Jobs created must be for black people New Use at least 25% transformation of local raw material/ manufacturing/assembling/ packaging Skills transfer - at least spend 12 days per annum of productivity in assisting QSE & EME At least 85% of labour costs should be paid to South African employees by service industry entities No preferential points will be obtained if a supplier does not comply with the above
Socio-Economic Development MEASUREMENT CATEGORY & CRITERIA WEIGHTING POINTS COMPLIANCE TARGET Average Annual value of all socio-economic Development Contribution made by measured entity as a percentage of the target 2 1 % of NPAT
CHANGES TO THE CODES Its implication to PSC Scorecard points & Qualification criteria for awarding of B-BBEE status levels adjusted B-BBEE Contributor Status Level One Level Two Level Three Level Four Level Five Level Six Level Seven Level Eight Non-Compliant 100 points Current Qualification 85 but <100 points 75 but <85 points 65 but <75 points 55 but <65 points 45 but <55 points 40 but <45 points 30 but <40 points <30 points
CHANGES TO THE CODES Its implication to PSC Scorecard points & Qualification criteria for awarding of B-BBEE status levels adjusted B-BBEE Contributor Status Current Qualification New Qualification Level One 100 points 100 points Level Two 85 but <100 points 95 but <100 points Level Three 75 but <85 points 90 but <95 points Level Four 65 but <75 points 80 but <90 points Level Five 55 but <65 points 75 but <80 points Level Six 45 but <55 points 70 but <75 points Level Seven 40 but <45 points 55 but <70 points Level Eight 30 but <40 points 40 but <55 points Non-Compliant <30 points <40 points
CHANGES TO THE CODES Its implication to PSC Gazetting Elements Effective date REVISED PROPERTY SECTOR CODE ALIGNMENT TIMELINES (21 Jan 2015) June 2015 July 2015 Aug 2015 Sept 2015 Oct 2015 Nov 2015 ACTIVITY Wk 1 Wk 2 Wk 3 WK 4 Wk 1 Wk 2 Wk 3 WK 4 Wk 1 Wk 2 Wk 3 WK 4 Wk 1 Wk 2 Wk 3 WK 4 Technical Comm workshop Done Submission of Input Done Consolidation of inputs Done Technical Comm Meeting Done Council Meeting approval & sign off on final draft PSC Done Meeting with DTI 1 st draft of aligned PSC Done Technical comm Meeting review DTI s comments Done Meeting with DTI for Final Approval of the aligned PSC Done Gazette of aligned PSC under section 9 (5) 60 days Analyse Public Inputs 30 days Finalise the aligned PSC doc with public input Presentation to DTI for sign off the gazette Gazette the final document under 9 (1) Effective date of Aligned PSC
CHANGES TO THE CODES Its implication to PSC 3 Priority Elements Ownership, Skill Development and Enterprise & Supplier Development Deviation in the various Elements Bonus Points
Group discussions What is the QSE threshold for: Companies under COGP Residential Industry Why is the QSE threshold different for residential Industry When will the new Sector Codes be effective?
SECTION 5
AMENDMENT BILL & VERIFICATION PROCESS
KEY AMENDMENT TO B-BBEE ACT: COMMISION Fundamental principles form measuring BBBEE Substance takes precedence over legal form Key Amendments to B-BBEE Act Establish a B-BBEE commission (like Ombudsman)- its function Oversee and supervise compliance to the B-BBEE Act Investigate complaints Maintain a register of BBBEE transaction of specific threshold Deal with Fronting Practices Defined as act/conduct that directly or indirectly undermines or frustrate the achievement of the B-BBEE objectives or the implementation of any provision of the BBBEE Act; Misrepresentation of information or engaging in Fronting Practices may result in: A fine and/or up to 10 Years imprisonment for individual or both; and A company may be fined up to 10% of its annual turnover; Any person convicted of an offence is banned from contracting with any organ of state for 10 years.
KEY AMENDMENT TO B-BBEE ACT: REPORTING Enforce reporting obligation For Sector Codes including PSC One of the mandate of PSCC is to Monitor & Evaluate the state of Transformation in the Property Sector PSC 1st Reporting 2014 Council sampled listed and large entities contribution 75% of the total sector value Residential out of 6 estate agencies Only 1 submitted a report Response did not meet the expectation In the future - Failure to report maybe enforced by commission directly Importance of reporting on sector and for the codes Understanding where we are and challenges enables intelligent discussion about where we are going
WHO QUALIFY TO DO YOUR BBBEE VERIFICATION 2 Accrediting agencies SANAS accredited agency Need have extension of Scope for sector Code IRBA accredited Auditors Attended BBBEE MDP course
Verification Process Verification agencies/ Auditors Briefed about your requirement Puts a plan List of required documents Sample interviews (Estate agents and/or Employees) Apply methodology
BBBEE CERTIFICATE BBBEE Verification Company Name of Company Recognition Level Company Details Individual score Certificate Issue Date Certificate Expiry Date Sector compliance Certificate Seal SANAS accredited Agency
BBBEE CERTIFICATE ELEMENTS SCORE Ownership 21.51 Management Control 9.56 Employment Equity 6.69 Skill Development 14.8 Pref. Procurement 16.31 Enterprise Development 11 Socio-Economic Development 10.6 TOTAL 90.47
CHANGES TO THE CODES Its implication to PSC B-BBEE Contributor Status Level One Level Two Level Three Level Four Level Five Level Six Level Seven Level Eight Non-Compliant Current Qualification 100 points 85 but <100 points 75 but <85 points 65 but <75 points 55 but <65 points 45 but <55 points 40 but <45 points 30 but <40 points <30 points Total 90.47
CHANGES TO THE CODES Its implication to PSC Scorecard points & Qualification criteria for awarding of B-BBEE status levels adjusted B-BBEE Contributor Status Current Qualification New Qualification Level One 100 points 100 points Level Two 85 but <100 points 95 but <100 points Level Three 75 but <85 points 90 but <95 points Level Four 65 but <75 points 80 but <90 points Level Five 55 but <65 points 75 but <80 points Level Six 45 but <55 points 70 but <75 points Level Seven 40 but <45 points 55 but <70 points Level Eight 30 but <40 points 40 but <55 points Non-Compliant <30 points <40 points
CHANGES TO THE CODES Its implication to PSC Scorecard points & Qualification criteria for awarding of B-BBEE status levels adjusted B-BBEE Contributor Status Current Qualification New Qualification Level One 100 points 100 points Level Two 85 but <100 points 95 but <100 points Level Three 75 but <85 points 90 but <95 points Level Four 65 but <75 points 80 but <90 points Level Five 55 but <65 points 75 but <80 points Level Six 45 but <55 points 70 but <75 points Level Seven 40 but <45 points 55 but <70 points Level Eight 30 but <40 points 40 but <55 points Non-Compliant <30 points <40 points
How are EME verified? Exempted Micro Enterprise LARGE ENTITIES QSE OLD REVISED COGP R35M < R5M-R35M Automatically become Level 4 If 100% black owned or 51% Black female owned level 3 EME <R5M Exempted
GROUP DISCUSSIONS Why is evaluation & reporting of BBBEE important in the residential Industry? How can we encourage more estate agencies to submit their annually BBBEE Scorecards What is fronting and what are the consequences of fronting practices
QUESTIONS??
Thank You Property Sector Charter Council Contact person : Portia Tau-Sekati Tel: 011 880 9918 Cell: 082 619 2507 Direct email: portia@propertycharter.co.za General email: info@propertycharter.co.za www.propertycharter.co.za