Status Update Scope of PSC PSC Deviations Applicable Elements - - PowerPoint PPT Presentation

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AMENDED PROPERTY SECTOR ALLIGNMENT 17 March 2016 Status Update Scope of PSC PSC Deviations Applicable Elements Weighting Score Complex Structure QSE Threshold Priority Elements Ownership New

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SLIDE 1

17 March 2016

AMENDED PROPERTY SECTOR ALLIGNMENT

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SLIDE 2

 Status Update  Scope of PSC

 PSC Deviations

  • Applicable Elements
  • Weighting Score
  • Complex Structure
  • QSE Threshold
  • Priority Elements
  • Ownership
  • New code: Economic Development
  • Property Complex Structures
  • QSE Threshold (code 800
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SLIDE 3

 PSC gazetted under section 9(5) – gazette no. 39341

  • Public Commentary closed 30 Dec 2015
  • Analysis of the comments – done
  • Report generated and discussed with DTI and our

stakeholders

  • Factored relevant inputs
  • No major changes

 PSC to gazette under section 9(1)

  • Timing – next few weeks- April 2016
  • Waiting final for necessary compliance documents for

gazetting

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SLIDE 4
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SLIDE 5

 Commercial Property

Industry

  • Office Property Industry
  • Industrial Property industry
  • Retail Property Industry
  • Leisure Property Industry
  • Zoned land

 Residential Property Industry

  • Houses
  • Community schemes

 Flats, Clusters, Town Houses etc

  • Zoned land
  • Property Services

– Property development – Property Ownership – Property Letting – Property Management – Facility Management – Property Sales – Property Broking – Estate Agents – Property Valuation – Asset Management

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SLIDE 6

 Clause 7.3.1

  • If you own property merely for the execution of your

primary business – Not included in the scope

  • If you lease/rent any portion of that property – you

are included in the scope (income generation)

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SLIDE 7
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SLIDE 8

Property Sector Code Deviations

  • Applicable Elements
  • Weighting Score
  • Complex Structure
  • QSE Threshold
  • Priority Elements
  • Ownership
  • New code: Economic Development
  • Property Complex Structures
  • QSE Threshold (code 800)

Use COGP as base document

  • Where PSC is silence – COGB applies
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SLIDE 9

 PSC – has 7 elements

  • Split between management Control and Employment Equity
  • Has new element – Economic Develop

CURRENT RENT PSC

Ownership

✓

Management Control

✓

Employment Equity

✓

Skill Development

✓

Preferential Procurement

✓

Enterprise Development

✓

Socio-Economic Dev

✓

Economic Development

✓

REVI VISED CODES

✓ ✓ ✓ ✓ ✓

5

ALIGNED NED PSC

✓ ✓ ✓ ✓ ✓ ✓ ✓ 7

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SLIDE 10

PSC DEVI VIATIO ATIONS NS

  • Aligned PSC Weighting Scores

Generic Entities QSE

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SLIDE 11

PSC DEVI VIATIO ATIONS NS

  • How you arrive at the total Generic Scorecard Weighting points

Generic Entities

+3% +2%

  • 2%
  • 4%
  • 3%

+4%

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SLIDE 12
  • Weighting determines the importance of the

element

Aligned ed PSC Weightin ting g points ts Aligned ed PSC Bonus s points ts Total Aligned ed PSC weighti ting points ts Ownersh ship 30 30 3 33 33 Managem ement ent Control

  • l

9 2 11 11 Employment ent Equity ty 13 13 3 16 16 Skill Devel elopm pment ent 19 19 3 22 22 Enter erpri rise se & Supplier er Devel elop

  • pment

ent 39 39 4 43 43 Socio-Eco Econom

  • mic

Devel elop

  • pment

ent 2 2 Economic Devel velop

  • pmen

ent 5 5 TOTAL 117 117 132 132 117 117

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SLIDE 13

 Complex

lex Struc ructure ture

Interna rnal Managem gemen ent t PLSA SA/RI /RIETS ETS Unlisted ted Public c mandated d collective tive Investm estmen ent Prop Management ent servi vices es Estate te Agents ts Asset set Managem ement ent PLSA SA Proper erty ty Loans Stock k exter ernally managemen ent Prop Owners /RIET ET (Exter ernal Managem ement ent) APUTS Ownersh ship ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Managem ement ent Control

  • l

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Employment ent Equity ty ✓ ✓ ✓ ✓ ✓ X X X Skill Devel elop

  • pmen

ent ✓ ✓ ✓ ✓ ✓ X X X Enter erprise se Supplier er Devel elop

  • pment

ent ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Socio-Eco Econom

  • mic

Devel elop

  • pment

ent ✓ ✓ ✓ ✓ ✓ ✓ ✓ X Economic Devel velop

  • pmen

ent ✓ ✓ X X X ✓ ✓

X

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SLIDE 14

PS PSC DEVIAT VIATIONS IONS

REVISED COGP THRESHOLD ALIGNED PSC THRESHOLD

ASSET BASED PROPERTY COMMERCIAL SERVICES ESTATE AGENCIES; BROKERS; VALUATION

LARGE ENTITIES Exceed Rev R50M Above R400M Above 50M Above R35M QSE Turnover R10M-R50M R80M-R400M R10M-R50M R2.5M – R35M EME Turnover R10M & below Less than R80M Below R10M Less than R2.5M

  • Threshold
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SLIDE 15

 Complex

lex Struc ructure ture

Intern rnal al Manag agement nt PLSA/ A/RIET IETS Unlisted d Public ic mandat ated collect ctive ive Invest stment nt Prop p Managem emen ent servi vices es Estate Agents Asset Management nt PLSA A Prope pert rty y Loans s Stock extern rnally ally management nt Prop p Owners rs /RIET T (Externa rnal l Management) APUTS

Owners nershi hip ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Mana nagem gemen ent t Contr trol

  • l

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Employ loyme ment nt Equi uity ty ✓ ✓ ✓ ✓ ✓ X X X Skil ill Devel evelop

  • pme

ment nt ✓ ✓ ✓ ✓ ✓ X X X Enterp erpri rise e Supplier er Develop lopme ment ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Soci cio-Eco cono nomic mic Devel evelop

  • pme

ment nt ✓ ✓ ✓ ✓ ✓ ✓ ✓ X Econo nomi mic c Develo lopme ment nt ✓ ✓ X X X ✓ ✓

X

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SLIDE 16
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SLIDE 17
  • Ownership
  • 2 types of companies

 Property owning companies  All other companies

  • All other companies

 Follow the ownership as per the COGP

  • Property owning Companies

 Have a defined ownership codes with deviations from COGP

PSC PSC DE DEVI VIATIO ATIONS NS

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SLIDE 18
  • Ownership

PSC SC DEVIATIO VIATIONS NS OW OWNERSHIP ERSHIP

OWNERSHIP HIP INDICAT ATOR

PROPERTY ASSET OWNI NING NG COMP MPANIES WEIGHTING NG POINTS COMP MPLIA LIANC NCE TARGETS

Voting g Rights ts

Exercisable Voting Rights in the Enterprise in the hands of black people

4

27% Exercisable Voting Rights in the Enterprise in the hands of black women

2

10%

Economic

Intere rest st

Economic Interest of black people in the Enterprise

4

25% Economic Interest of black women in the Enterprise

2

10% Economic interest of the following black natural people in the measured entity:

4

3%

  • 1. black designated groups;
  • 2. black Participants in Employee Ownership Schemes;
  • 3. black beneficiaries of Broad based Ownership

Schemes; or

  • 4. black Participants in Co-operatives

New entrants

2

2%

Net Equity

ty

Net equity Value

8

Financial

Financial support to Black owned and controlled companies with at least 51% Black ownership (level 1-3) measured as a % of

4

1-3yrs 1% 4-5 yrs 2%

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SLIDE 19

YEAR Draft aligned PSC COGP

Year 1 3% 10% Year 2 7% 20% Year 3 10% 40% Year 4 15% Year 5 19% 60% Year 6 24% Year 7 30% 80% Year 8 36% Year 9 43% 100% Year 10 50% 7% 7% 13% 30% 41% 50% 57%

  • Ownership

 Net Equity Value Schedule

PS PSC DE C DEVIATIO TIONS NS OWNE NERSH SHIP IP

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SLIDE 20
  • Ownership Bonus Points

HI HIGHLIGHTS GHLIGHTS ON ON KE KEY Y PROP OPOSED OSED DEVIATIONS IATIONS

CRITERIA BONUS POINTS BONUS TARGETS Disposal of assets to Black owned and controlled company with at least 51% black ownership (level1-3) as a % of total asset disposal

3 20%

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SLIDE 21
  • Ownership
  • Mandated Investment

 Given that the majority of the listed share register have a mandated investments that are far beyond 40%, a special consent is given for only property listed companies and property unit trusts to cap the mandated investment at 50%.  Despite this provision, the cap shall remain 40% as in Generic Codes for those Listed Companies and Unit Trusts, unless there is consistent evidence of 50% or more of the mandated ownership 3 years prior to being verified of their BBBEE status

  • For verification

 Requirement: Monthly average share register for 3 years (36 month) from an accredited share reading company

  • Normalisation Formula

 Property Listed companies have high level of dilution of Economic Interest than other listed companies – to address this excessive dilution off BBBEE shareholding

Yx(1+X)ⁿ

 Where:  Y=number of share in issue at the time of doing direct BBBEE deal  X-Average 10 years compounded increase in umber of shares in issue for top 50 listed companies (excl real estate)  N=year of measurement  X in the formula will be calculated annual by independent external party and published by PSCC at the beginning of each year  X=0.8% applicable from 1 Nov 2015-December 2016

PS PSC DE DEVIATIO TIONS NS

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SLIDE 22
  • Ownership
  • Mandated Investment

 Gazette 2 Options –Public Commentary  60% mandated Investment  40% mandated Investment  60% Mandated Investment is depended what we give in return  Recommendation  Develop a programme that the industry supports  Presents one common agreed industry view to DTI before public commentary  Our response to the Public commentary – an agreed industry position  Bonus Points  Disposal of assets  Venture Capital

HIGHLI GHLIGHT GHTS S ON K N KEY EY PR PROPO POSE SED DEV DEVIATIONS IONS

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SLIDE 23

 Management Control and Employment Equity

  • Split between management Control and Employment Equity- For entire sector
  • Management Control

 In the Management Control, all entire Property Sector will not be broken down into the 6 demographic sub targets  Estate Agents/Brokers/Valuers

 There is no Executive directors scores

  • Bonus Points – Management Control

 Black Executives – 2 Points

  • Employment Equity

 For only Estate Agencies, Property Broking companies and Valuation companies - the Employment Equity will not be broken down into the 6 demographic sub targets  Estate Agents

 Different Employment Equity sub-elements: Practitioners, management and administrators

  • Bonus Points – Employment Equity

 All other - Senior and Middle Management – 3 points  Estate agents/brokers/valuation – black practitioners & Black Management & Black Females – 3 points

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SLIDE 24

MEASUREMENT CATEGORY & CRITERIA WEIGHTING POINTS COMPLIANCE TARGET

Practitioners Black practitioners as a percentage of total practitioners

5 50%

Black Female practitioners as a percentage of total practitioners

4 35%

Management Black people in Management as a percentage of total Management

3 35%

Black women in Management as a percentage of total Management

1 18%

Administrators Black people in administration as a percentage total administrators

1 30%

Black Females in administration as a percentage of total administrators

2 40%

Employment Equity – Estate Agents/Brokers/Valuers

  • Focus is on increasing Black estate agents in the industry
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SLIDE 25

 Estate Agents – Employment Equity

 Can either be an employee or supplier

  • Estate Agents – as employees

 They are not unique – Insurance brokers  If an agent only working for 1 agents – s/he is an employee  Estate agent is defined as practitioner counted under EE  Estate agents – as suppliers  If the agent works for more than one agency – she is a supplier  Counted under procurement

NB: Estate Agents must be counted somewhere

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SLIDE 26

 Skill Development

  • Skill Development expenditure – 5% vs 6%

 Skill Development Bonus

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SLIDE 27

Enterprise and Supplier Development

Addition of Property Services Reallocation of Weighting points

PS PSC C DEV DEVIATIO TIONS NS

MEASUREM EMENT NT CATEGORY GORY & CRITER ERIA IA WEIGHTIN GHTING POINT NTS COMPLIANC LIANCE TARGET ETS

PREFER EREN ENTIAL IAL PROCUREM EMEN ENT

B-BBE BEE Procuremen ment Spend d from

  • m all Empo

powe wering g Suppli pliers based d on the B-BBE BEE Procureme ment t Recogn gniti tion

  • n Leve

vels as a percenta tage ge of Total Measured d Procuremen ment t Spend

2 80% 80%

B-BBE BEE Procuremen ment Spend d from

  • m all Empo

powe wering g Suppli pliers that are Qualifyin ying g Small Enter terpri prises based d on the applicable ble B-BBE BEE Procureme ment t Recogn gniti tion

  • n Leve

vels as a percenta tage ge of Total Measured d Proc

  • curement

t Spend

2 15% 15%

B-BBE BEE Procuremen ment Spend d from

  • m all Empo

powe wering g Suppli pliers that are Exemp mpted ted Micro-Enter terpr prises based d on the applicable ble B-BBE BEE Procureme ment t Recogn gniti tion

  • n Leve

vels as a percenta tage ge of Total Measured d Proc

  • curement

t Spend

2 15% 15%

B-BBE BEE Procuremen ment Spend d from

  • m all Empo

powe wering g Suppli pliers that are at least t 51% black k owned d Micro-Enter terpr prises based d on the applicable ble B-BBE BEE Proc

  • cureme

ment t Recogn gniti tion

  • n Leve

vels as a percenta tage ge of Total Measured d Procuremen ment t Spend

8 40% 40%

B-BBE BEE Procuremen ment Spend d from

  • m all Empo

powe wering g Suppli pliers that are at least t are 30% black k women men-own

  • wned

d based d on the applicable ble B-BBE BEE Procuremen ment t Recogn gniti tion

  • n Leve

vels as a percenta tage ge of Total Measured d Procuremen ment t Spend

4 12% 12%

% of proc

  • curemen

ment spend d with 51% Black k owned d enterpr prises (leve vel 1-3) 3) as a percenta tage ge of the total prop

  • perty

ty servi vices spend

6 40% 40%

SUPPLIER PPLIER DEVELO LOPM PMEN ENT

Annual value of all Suppli plier Deve velop

  • pment

t Contr tribu buti tion

  • ns made by the Measured

d Entity ty as a percenta tage ge of the targe get. t.

10 10 2% of NPAT AT

ENTERPR PRIS ISE E DEVEL ELOPM PMEN ENT

Annual value of Enter terpr prise Deve velop

  • pmen

ment Contr tribu buti tion

  • ns and Sector
  • r Specific Progr
  • grammes

mmes made by the Measured d Enti tity y as a percenta tage ge of the targe get.

5 1% of NPAT AT

TOTAL 39 39

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SLIDE 28

 Enterprise and Supplier Development

  • Bonus Points

ME MEASUREMENT CATEGORY & CRITERIA BONUS POINTS COMPLIAN LIANC E T TARGETS ETS BEE Procure rement ent Spent t from design gnated ted group supplier ers s that are at l least t 51% Black Owned 2 55% Bonus s points s for graduatio tion of one or more Enter erpri rise se Devel elop

  • pment

ent benefic ficiaries es to the Supplier er Devel elop

  • pmen

ent t level el 1 Bonus s points s for creati ting one or more job directly tly in the benefi fici ciary ry entity ty as a result t of supplier er Devel elopment ent or enter erpri rise se devel elopment ent initiatives tives by t the measure red entity ty 1

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SLIDE 29

 Socio - Economic Development

MEASUREMENT CATEGORY & CRITERIA WEIGHTING POINTS COMPLIANCE TARGET Annual value e of all s socio- Economic Devel velop

  • pmen

ent t Contrib ributio tion made by m measured ed entity ty as a a p percenta tage ge of the target et

2 1% of NPAT

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SLIDE 30

 Economic Development

  • Development Investment in under resourced areas or
  • Contribution towards infrastructure development

 QSE - Economic Development

MEASUREMENT CATEGORY & CRITERIA WEIGHTI TIN G POINTS COMPLIAN LIAN CE TARGET ET Economic Devel velop

  • pmen

ent t Invest stment ent in under- resou

  • urced

ced areas as a % o

  • f total annual

investm estmen ent t

5 10% 10%

AND/OR Contrib ributio tion towards ds any E Econom

  • mic

Devel elop

  • pment

ent Program ramme as a a % % of total annual investm estmen ent

5 5% 5%

MEASUREMENT CATEGORY & CRITERIA Economic Devel velop

  • pmen

ent t Invest stment ent in under- resou

  • urced

ced areas as a % o

  • f total annual

investm estmen ent t

4 10% 10%

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SLIDE 31

 For Development in under resourced areas

  • FSC matrix

 Incorporated all Local Municipalities

 Variables  Income  Water  Sanitation  Electricity  Housing

 Index

 Ranking

  • Definition of development is included in the document
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SLIDE 32

Economic Development -QSE

  • If no disposal of assets

 Take away from numerator  Take away from denominator

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SLIDE 33

 Complex

lex Struc ructure ture

Interna rnal Managem gemen ent t PLSA SA/RI /RIETS ETS Unlisted ted Public c mandated d collective tive Investm estmen ent Prop Management ent servi vices es Estate te Agents ts Asset set Managem ement ent PLSA SA Proper erty ty Loans Stock k exter ernally managemen ent Prop Owners /RIET ET (Exter ernal Managem ement ent) APUTS Ownersh ship ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Managem ement ent Control

  • l

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Employment ent Equity ty ✓ ✓ ✓ ✓ ✓ X X X Skill Devel elop

  • pmen

ent ✓ ✓ ✓ ✓ ✓ X X X Enter erprise se Supplier er Devel elop

  • pment

ent ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Socio-Eco Econom

  • mic

Devel elop

  • pment

ent ✓ ✓ ✓ ✓ ✓ ✓ ✓ X Economic Devel velop

  • pmen

ent ✓ ✓ X X X ✓ ✓

X

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SLIDE 34

PS PSC DEVIA EVIATIO TIONS NS

  • Priority Elements

APUTS Pro

rope pert rty y Unit Trust ust/ REITS (extern rnal al Mngt) PLSA A prope perty y Loans s Stock (extern rnal al Mgnt) Asset Management Prope pert rty y Owners/ rs/RE REITS TS Externa rnal l Mngt Prope pert rty y Managers rs Service vices Intern rnal al Mngnt nt with PLSA/RE REITS ITS Unlisted d Public ic Mandat ated d Collect ctiv ive Invest stment nt Scheme Estate Agents Ownership rship

✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓

Management Contro rol

✓ ✓

✓

✓ Skill l Develo lopm pment nt

✓

✓ ✓ ✓ ✓

Enterpr rprise ise & suppli plier r Develo lopm pment nt

✓ ✓ ✓ ✓ ✓ ✓ ✓

Economic c Develo lopm pment nt

✓ ✓

✓

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SLIDE 35

 Enterprise and Supplier Development

  • Addition of Property Services
  • Reallocation of points

 Definition

  • REITS

 NPAT

  • Unique Tiers of Management bands
  • Practitioners (brokers)
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SLIDE 36

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