Social, Ethics and Transformation Committee's report

Dear stakeholders,

I am pleased to report on the activities of the Committee for the financial year ended 31 May 2019.

The Committee was formed in February 2012 in accordance with section 72(4) of the Act and operates under Board-approved terms of reference, which include holding at least three meetings per financial year.

As prescribed by the Act, the role of the Committee is to monitor the Group's activities in respect of:

• social and economic development, including the Group's compliance with the Broad-Based Black Economic Empowerment Act and the Employment Equity Act;
• consumer relations and the Group's compliance with consumer protection laws;
• the Group's standing in terms of the ILO protocol on decent work and working conditions, the Group's employment relationships and its contribution to the educational development of its employees;
• good corporate citizenship, including the Group's promotion of equality, prevention of unfair discrimination and reduction of corruption, contribution to development of the communities in which the Group operates, and its record of sponsorships, donations and charitable giving;
• the environment, health and public safety and the impact thereon of the Group's activities; and
• the 10 principles of the United Nations Global Compact.

This year the Committee met three times in line with its terms of reference. Areas discussed with management included transformation across the Group's workplace focusing on continuous improvement in meeting the Company's transformation objectives and regulatory compliance. The Committee ensured that the Group published its consolidated B-BBEE rating in respect of the 2019 financial year as required by the JSE of all listed entities and published a consolidated B-BBEE scorecard on its website, issued a SENS announcement and submitted a report to the B-BBEE commissioner.

In addition to monitoring and reporting on progress to date, the Company continued to explore implementation strategies to increase its B-BBEE compliance levels in line with our good corporate citizenship commitments. The Committee reviewed the impact of the revised and implemented dti codes of good practice to the Group and satisfied itself that management is ensuring a rigorous process to ensure compliance at individual subsidiary levels and that divisional management incorporates the Company's transformation objectives as an integral part of their day-to-day performance scorecards.

The Committee interacted with Senior Management and the Group's joint CEOs to ensure inculcation of the guidance and recommendations of the Committee into both strategic and operational plans within the Group and its subsidiaries.

The Committee continues to monitor progress of the roadmap to address the Company's equity targets and B-BBEE shortfalls. We will continue to review current initiatives and their effectiveness and make appropriate recommendations to the Board.

The following items were also considered and implemented during the year:

• The Committee approved the establishment of a dedicated B-BBEE and transformation business function to drive and support meaningful transformation across the Group.
• The Committee noted and approved the revised final CSI policy whose intention was to ensure that the principle of shared value for all stakeholders is embedded into all Group CSI initiatives. The new philosophy of Group CSI is around creating shared value and centralised co-ordination of resource application for high impact and Group outcomes.
• The Committee noted the establishment of the Trust Blu Foundation, the non-profit arm of the Group. The objective of the foundation is to collaborate with non-profit organisations and social enterprises with a view to create more synergies and better alignment with our shared value ethos. Please refer to the socio-economic and community development report on Socio-economic and community development.
• The Committee continued to monitor all CSI projects in particular our ongoing support of the flagship project since 2011; the Boys and Girls Clubs, which the Group is proud to be associated with as well as the cricket and educational youth development initiative in Alexandra.
• The monitoring of the coaching and skills development initiatives to ensure targeted spend of Group priorities and transformational objectives.
• Employment equity, including feedback from the Group Employment Equity Committee.
• The Committee continued to monitor Group compliance with the 10 principles of the United Nations Global Compact (UNGC). We are glad to report that the Group has implemented measures for the prevention and combating of all forms of corruption in line with all applicable local legislation and the 10th principle of the UNGC. Monitoring of the ethics statement and the implementation of the Whistleblowing Policy of the Group remained a key monitoring tool for the Committee.
• The Committee further noted that all health and safety policies and procedures continue to be well managed and co-ordinated via the Health and Safety Committee.

Key focus areas for 2020:

• Continue to evolve Blu Label's CSI approach in pursuit of shared value by leveraging Trust Blue Foundation to ensure that our initiatives are aligned to deliver on RITE;
• Increase integration of the Group's institutional capabilities to further support our CSI programmes;
• Continue to support the integration of socio-economic and enterprise development initiatives with marketing campaigns to increase synergy;
• Oversee the implementation of the approved stakeholder management programme, which is in line with the principles of King IV;
• Continue to review and assess stakeholder relations;
• Continue to provide oversight on the activities related to global diversity and inclusion;
• Oversee the development of a Group enterprise and supplier development policy to transform the supply chain by introducing 51% black-owned entities, 30% black women-owned entities as well as exempt microenterprises and qualifying small enterprises;
• Ensure the embedding of ethics is done in an ethical, safe and responsible way; and
• Monitor and evaluate the implementation of ethics management.

The Committee believes that the Group complies with the statutory duties, save for issues being addressed by management with regard to employment equity and aspects of procurement as the Group purchases mainly from the networks and power utilities. In addition, work continues to be undertaken to improve on the Group's B-BBEE equity scorecard.

I look forward to reporting on our progress next year.

SJ Vilakazi

Chairman

29 October 2019