State Diamond Trader Strategic Plan 2012/13

Introduction The State Diamond Trader (SDT): Has been in operation for 5 years Has 92 registered clients Has sold diamonds to an average of 60 clients annually Has provided support to its small clients Has inspected & purchased from all large & medium producers Has been participating in KPCS processes Is currently working on inspecting & purchasing from small producers & diggers Is planning further growth through support for its clients and other work 2

3 Strategic Goals 1. To ensure continued sustainability of the State Diamond Trader 2. Be an efficient and professionally managed organization 1. Promote and uphold efficient governance 2. Ensure constant access to rough diamonds

Strategic Objectives Improve profitability of SDT operations to ensure its sustainability Facilitate support to SDT clients Develop and acquire appropriate Human Resource capacity Develop, implement and maintain systems, procedures and controls in line with PFMA and other applicable policies Develop and maintain trading relations with other African diamond producing countries Improve positive relations with producers to access better quality goods Enforce compliance with the legislation on trading matters 4

5 Improve profitability of SDT operations - ensure its sustainability Key Activities Improve stock turnaround time in terms of SDT Stock Holding Policy Maintain gross margin rates Review and streamline operational expenditure Ensure that trading policies create an enabling environment to deliver required profit Increase number of and value of sales to HDSA clients

Measures 2012/13 Measures: Reduced turnaround times on stocks Gross margin maintained at target Improve efficiencies A review of trading policies Increased number of and percentage value of sales to HDSA clients 6

Targets 2012/13 Targets: Below a weighted average of 14 days Minimum of 4% per trading cycle Operating expenses not exceeding budget September-Annually 20% p.a. for

Key activities: Facilitate technical and business management training Training on branding and marketing Facilitation of training and mentoring of HDSA clients Provide market intelligence Market briefings at Client information sessions on a quarterly basis To sponsor small client participation at Jewellex Show in Sep 2012 Facilitate access to finance 8 Facilitate support to SDT clients

Measures 2012/13 Measures: Number of clients trained Market Intelligence briefings Increased number of trading clients 9

Targets 2012/13 Targets: 10 HDSA clients p.a. Growth in business management confidence Quarterly 10% p.a. 10

Develop and acquire appropriate Human Resource capacity Key Activities: Implement HR policy Review HR Plan Ensure continuous capacity building for all personnel Review and monitor training provided to ensure appropriateness 11

Measures 2012/13 Measure: Compliant HR processes HR Plan responding to SDT requirements Relevant training for all diamond trainee personnel Skills gaps identified and relevant courses/ training initiated 12

Targets 2012/13 Targets: On going, annually April 2012 Annually Quarterly and on going 13

Implement and maintain admin systems, procedures and controls Key Activities: Improve the use of admin processes Ensure quarterly Internal Audits are conducted Training staff on all policies and business processes Develop and get approval of Asset Management Policy Maintain asset register Develop and approve IT Policies and Procedures Acquire and maintain adequate insurance for diamond stock and SDT assets Review and maintain compliant procurement procedures in line with SDT Supply Chain Policy 14

Measures 2012/13 Measures: All approved procedures implemented and monitored Tested internal controls and systems Implementation of and compliance with all policies and procedures Compliant legislative framework on assets Secured assets Secured IT environment Appropriate IT support for SDT business Sufficient insurance for all stock and assets Compliant procurement procedures 15

Targets 2012/13 Targets: Positive Internal Audit results Quarterly April 2012 On going March 2012 On going May 2012 April

Adhere to Corporate Governance, Legislation and Policies Key Activities: Ensure Audit and Risk Management Committee meetings are held Preparation and approval of Statutory reports Address All Audit findings Conduct annual Risk Assessment 17

Measures 2012/13 Measures: Compliance monitoring and guidance to Board Submission of quarterly and annual reports Improved performance on systems and controls Frequently assessed risk profile Risk appropriate mitigation plans 18

Targets 2012/13 Targets: Minimum of 4 Meetings per annum Quarterly and annually reporting March 2012 Controlled risk environment, On going monitoring of environment 19

Enforce legislation compliance Key Activities: Ensure all producers declare their production cycles Inspect rough diamonds produced in SA Purchase up to 10% of total SA production (volume and value) 20

Measures 2012/13 Measures: Increased amount of rough diamonds available to SDT and its clients Increased % of Productions inspected % of SA production purchased 21

Targets 2012/13 Targets: 10 additional Producers trading with SDT by end % by % by

Key Activities: Update client demand analysis Engage producers on suitability of supply per SDT Producer Engagement strategy Improve relations with producers 23

Measures 2012/13 Measures: Report produced December annually Reduced number of disputes with producers 24

Targets 2012/13 Targets: 5% increase of preferred rough diamonds bought by % reduction in disputes and on going 25

Develop and maintain trading relations with other African diamond producing countries Key Activities: Test purchasing with 3 African countries producing diamonds Negotiate supply agreements with 3 selected diamond producing countries Contribute to KPCS development and in RSA KPCS compliance processes Attend KPCS meetings as part of RSA team 26

Measures 2012/13 Measures: Costs and sales analysis of purchases made from 3 countries Supply agreements concluded Compliant KPCS processes locally and internationally Compliance with KPCS on international rough purchases 27

Targets 2012/13 Targets: March country agreement by March KPCS compliant purchase of rough by March 2013 June and November annually 28

In Conclusion The State Diamond Trader: Has spent its formative years creating capacity, and developing skills Instigated procedures that have enabled it to establish itself in the diamond industry 29

30 State Diamond Trader Has proved itself as a viable commercial operation during the most volatile conditions the industry has seen in living memory With no recourse to public funding, it has had to constantly innovate to ensure its sustainability Will continue to improve on its competencies during the year

State Diamond Trader Thank you 31