Qualifying Small Enterprise

Black Economic Empowerment Plan

As contemplated in section 11 (2) (c) of the
Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of 2003)

ChemWash Manufacturing CC

A Close corporation duly registered in terms of

the Close Corporation Act with registration number:

CK 2005/108005/23

with main place of business:

7 Schenk Road
Pinetown
KwaZulu Natal

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Introduction

The purpose of this document is to reflect the present situation of ChemWash

Manufacturing CC trend over a specific period for the business to become
BEE compliant.

On the date of compiling and accepting this Black Economic Empowerment

Strategy (the BEE Plan), the business did not fall within the scope of any Sect
oral Code. The business therefore falls within the scope of the Qualifying
Small Business Scorecard as contemplated in the Code of Good Practice and
the Broad-Based Black Economic Empowerment Act, 2003 (Act No. 53 of
2003). At the time of compiling and acceptance of this BEE Plan, targets had
been set in the Draft Codes to the Act to be applied by those entities outside
the scope of Sectoral Codes.

The business takes note of the contents of the Black Economic Empowerment
Strategic Framework to develop Sectoral Codes for all major industries by the
year 2008 and that the following industries have been identified as priority
sectors to increase the number of black people who have ownership and
control, namely:

 agriculture and agro-processing

 mining
 minerals and metals beneficiation
 clothing and textiles
 automation and communication technology sector
 chemicals
 culture industries, including media, film, music and crafts, and
 high-value added services.
 automobiles and components

Whereas no sectoral charter has been accepted as a code of good practice

with regard to the business, and in the absence of empowerment targets, the
business hereby wishes to develop a BEE Plan of its own to indicate its
willingness to be considered a BEE contributor.

The business is aware that this BEE Plan is subject to any Sectoral Charter
that may be accepted as a code of good practice and that may be published
in future or targets set in terms of the Generic scorecard or Qualifying Small
Business Scorecard.

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Interpretation

“BUSINESS” shall include:

the particular business to be assessed irrespective of the relevant business
form (e.g. partnership, Close Corporation, etc.)

“the Act” means the Broad-Based Black Economic Empowerment Act, 2003
(Act No. 53 of 2003)

“BEE” – Broad Based Black Economic Empowerment

“BEE Commission” means the commission established in May 1998 under the
auspices of the Black Business Council, entrusted with the objective of
researching and reporting on BEE in South Africa

“Black-empowered enterprise” means an enterprise that is at least 25,1%

black-owned and where there is substantial management control

“Black-owned enterprise” means an enterprise that is 50,1% black-owned and

where there is substantial management control

“Black people” is a generic term for Africans, Coloreds and Asians (Indians)
who are citizens of the Republic of South Africa

“ Broad based BEE” means the economic empowerment of all black people,
including women, workers, youth, people with disabilities and people living in
rural areas, through diverse but integrated socio-economic strategies

“code” means the Codes of Good Practice published by the Department of

Trade and Industry specifying government’s approach in the measurement of
BEE compliance

“control of enterprises and assets” means equity ownership where the

relevant person assumes liability for risk and profit and has corresponding
voting rights and economical interest

“contributor to BEE” means the level of contribution according to the relevant

Broad Based Black Economic Empowerment scorecard, namely:

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 Level 1 Contributor > 100 on relevant BBBEE Scorecard
 Level 2 Contributor > 85 but < 100 on relevant BBBEE Scorecard
 Level 3 Contributor > 75 but < 85 on relevant BBBEE Scorecard
 Level 4 Contributor > 65 but < 75 on relevant BBBEE Scorecard
 Level 5 Contributor > 55 but < 65 on relevant BBBEE Scorecard
 Level 6 Contributor > 45 but < 55 on relevant BBBEE Scorecard
 Level 7 Contributor > 40 but < 45 on relevant BBBEE Scorecard
 Level 8 Contributor > 30 but < 40 on relevant BBBEE Scorecard
 Non-compliant Contributor < 30 on the relevant BBBEE Scorecard

“conversion factor” enables a business to reflect progress made against the

specific black economic empowerment targets set by the enterprise

“employment equity” refers to the achievement of an equitable representation

of black people in all occupations and at all levels of an enterprise over a
period of time, including at an operational, professional and executive level

“enterprise development” refers to cumulative contributions made by a

measured entity as a percentage of the earnings before tax and depreciation to
designated entities with acceptable Black Economic Empowerment contributor
status.

“fronting” means any practices or initiatives which are in contravention of or

against the spirit of any law, provision, rule, procedure, process, system,
policy, practice, directive, order or any other term or condition pertaining to
black economic empowerment under the codes.

“human resource development” refers to the transfer of skills, generally, and

advanced professional skills, in particular core and critical skills

“indirect empowerment” refers to mechanisms short of black ownership and

control that serve the objectives of black economic empowerment

“ownership” means equity ownership where the relevant person assumes

liability for risk and profit and has corresponding voting rights and economical
interest

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“preferential procurement” means the procurement of goods or services by
the State and the private sector from an enterprise with a sufficient Broad
Based Black Economic Empowerment status, i.e. a rating of 30% and above

“Superior Contributor” is a level one to four contributor

“Transformation charter” refers to the policy instruments, as developed by

various industry sectors, which serve as a framework for promoting the
empowerment of blacks in the South African economy as referred to in section
12 of the Act

Reference to any specific year shall be deemed to be 31 December of that year.

Legislative framework

- Broad-Based Black Economic Empowerment Act, 2003 (Act No.53 of

2003)

- Employment Equity Act, 1998 (Act No. 55 of 1998)

- Skills Development Act, 1998 (Act No. 97 of 1998)

- Skills Development Levies Act, 1999 (Act No. 9 of 1999)

- Preferential Procurement Act. 2000 (Act No. 5 of 2000)

- Code of Good Practice in terms of section 9 and 10 of the Act

Guidance

This plan was drafted with the following as guide:

- The BEE Commission Report as published by the BEE Commission in 2001

- The King Report on Corporate Governance

- Already developed Transformation and Sectoral Charters, although not

directly applicable to the business

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 - Broad-Based Black Economic Empowerment Strategic Framework

- Draft Codes of Good Practice as published by the Department of Trade and

Industry

Objectives of this BEE Plan

The main objectives of this BEE Plan are:

 To increase the number of black people, including black women and other
vulnerable groups such as those with disabilities, workers and the youth,
who directly own and control private enterprises;

 To eliminate and discourage the practice of token ownership on the part of

blacks and whites alike, otherwise commonly referred to as fronting;

 To set acceptable targets for levels of membership interest by black

people in the cc.

 To explore the notion of collective ownership through co-operatives and

other similar structures; and

 To encourage BEE compliance of the business’ suppliers.

Aim of empowerment in respect of equity management and control

Empowerment goodwill

It has been submitted that the inclusion of previously disadvantaged individuals in the
equity ownership of a business should be regarded as a valuable contribution to a
new partnership.

Employee share ownership programmes

It has been submitted that it is imperative for black employees to play a substantial
and meaningful role in equity ownership in the enterprises that employ them.

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DIRECT EMPOWERMENT AND CONTROL EMPOWERMENT

Equity ownership

The business at present has the following members:

Membership Beneficial holding

Interest

(including Race and Class of shares Members Per value Total Member
beneficial owner gender Interest ship
if held through interest
nominee)

RA Shave White Male N/A 35 R100.00 R3500.00 35%

JC Mouton White Male N/A 55 R100.00 R5500.00 55%

R Maharaj Black Male N/A 10 R100.00 R1000.00 10%

Target and rate:

1. The business is a Qualifying Small Enterprise and currently has 10%

Membership interest in Black Hands. The business aims to increase this
membership interest to 25.1% in the next five years.

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Management & Control

The business has the following members.

Name Race Gender Job Title Date of Country of % Ownership

appointment residence

RA Shave White Male Member 01/04/2006 RSA 35%

JC Mouton White Male Managing Member 01/04/2006 RSA 55%

R Maharaj Black Male Member 01/04/2006 RSA 10%

Targets and rate:

1. The business is a Qualifying Small Enterprise and has one black member who
holds 10% membership interest with equal exercisable voting rights and
entitlement to economic interest.

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HUMAN RESOURCE DEVELOPMENT

Employment equity

Aim of employment equity

 To align employment equity targets with skills development programmes and

objectives.

 To embark on a diversity management programme for all employees at all

levels.

 To focus specifically on the participation of black people, including black

women, in the first-line decision-making process.

 To ensure that black people, including black women, participate at all levels of
management of the business, especially at operational level.

Present situation

The business employs 21 (twenty one) people at present.

Occupation Level % Black males % Black females

Middle Management 100% No employees

Managers & Controllers 33.33% No employees

Supervisors No employees No employees

Professionals No employees No employees

Technicians & associate professionals 100% No employees

Clerical / Admin staff No employees 42.86%

Service workers & Sales Staff No employees 33.33%

Plant & machine operators and assemblers 100% No employees

Labourers 100% No employees

Cleaners / elementary occupations No employees No employees

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Black Employees represent 81% of total Workforce. Black Female employees
represent 23.5% of total Workforce.

Targets and rate:

The business aims to increase and maintain the percentage of blacks employed at
the various occupational levels to ensure that black employees are 70% of the total
employees of the business and black women are 35% of the total employees of the
business.

* The business is not a designated employer as contemplated in the

Employment Equity Act. The employment targets and training envisaged in this plan
will therefore form the basis for the business’s future employment and training policy,
and will be aligned with Skills Development Plan.

Skills development

Objectives

 To develop black people sufficiently to increase the number of blacks, including

black women, the youth and black people with disabilities, at management,
technical and specialist levels.

 To develop those black people already on the above levels sufficiently to

manage and operate sustainable businesses of their own.

Present position

The business has an unknown annual payroll figure due to the fact that the business
only commenced 1 February 2006 . The business has done internal training which is
not verifiable.

Targets and rate:

The business is committed to increasing and maintaining the amount of money spent
on training black employees as a percentage of payroll (over and above the Skills
Development Levy) to 2% per year. The business intends to participate in the
CHIETA process comprehensively.

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INDIRECT EMPOWERMENT

Enterprise development

The business acknowledges that, due to a lack of:

 Start-up capital

 Operational capital

 Access to support infrastructure, and

 Shortage of management skills,

black SME are often unable to fund and/or sustain their operations in the long term.

Objectives of enterprise development

To support and encourage the development of enterprises with sufficient black

ownership and/or contributor status by means of infrastructural and operational
support.

Present position

The business does not have any Enterprise Development in place.

Targets and rate:

1. The business as a Qualifying Small Enterprise has opted not to include enterprise
development as a discipline to be rated on the qualifying small enterprise
scorecard.

Preferential procurement

Objective

 To increase the amount of money spent on procurement from BEE-compliant

enterprises and those that score at least 30% on the relevant BEE scorecard
as well as the on procurement from so called micro-enterprises.

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 Procurement from the above enterprises will ensure that the ripple effect of
affirmative procurement is realized throughout the economy.

Present status and targets

In order for the business to be BEE compliant, the suppliers of the business are
urged to become BEE compliant themselves and to have themselve’s independently
rated.

The business is aware of its legal obligation to satisfy itself that those suppliers
claiming to be BEE compliant are indeed compliant.

The business will therefore accept only independent ratings as proof of BEE status
and could insist on a fronting scorecard and a second rating by another rating agency
should any fronting be suspected (see definitions).

Targets and rate:

The business is committed to achieving the target that at least 50% in value of its
procurement is from suppliers with an acceptable BEE contributor status.

For purposes of procurement, the following suppliers will be excluded from the
procurement targets as indicated above:

- lawful tax or levies imposed by an organ of state or person duly authorized

- salaries, wages and contributions to provident and pension funds

- directors emoluments

- loans to associated enterprises

- investments or loans qualifying for recognition under enterprise development

or residual

Residual

Objectives

 The business is committed to industry-specific initiatives, which will result in the

formulation of co-ordinated and sustainable programmes to ensure that
corporate social investments are implemented according to clearly stated and
sustainable long-term objectives.

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 To allocate corporate social investments to benefit black people, black women,
black communities and disabled black people.

Present

The business presently offers the following:

(Taking into account code 700 page 2 state what is presently being offered)

 Donations to the HIV Samaritan Care Centre in Chatsworth.

 Paying 100% contributions to the Infinity Provident Fund I respect of black

employees

 Good Corporate Governance.

Targets and rate:

The target of the business is to spend at least 2% of net profit after tax per year on
qualifying residual contributions namely the following corporate social investments
and Industry specific contributions:

 To continue with the above

 To support a Black School pupil or pupils with furthering Education

Conclusion

This BEE Plan has been compiled with the objective of guiding the business towards
BEE compliance and to encourage other businesses to do the same. Any other
information relating to this plan or any business operations of the business will be
provided in terms of the business' Information Manual drafted in terms of the
Promotion of Access to Information Act. Requests for further information can be
addressed to: Jacques Mouton tel: (031) 702 2576 fax: (031) 701 8496

The business sets as overall target to endeavour to become a superior contributor

within 5 to 6 years.

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