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Profit with Purpose: Sustainable Value CreationReport 2015

Evolution One Fund Portfolio Investments August 2015

INSPIRED

Investment ManagementEVOLUTION

About Inspired Evolution

INSPIRED


Board of Directors

• ChristopherClarke Director and Managing Partner• WayneKeast Director & Managing Partner

Publication Editorial Team

Editor and publisherChristopherClarkeLead: Sustainability Strategy and Reporting, Evolution One Fund, Managing Partner, Inspired Evolution Investment Management

Additional editorial and research contributionsGwendolynZornSustainability Consultant, EBS Advisory

Sub-editorMarleneRoseText editor, translator, proofreader and indexer

Design, layout and media production assistanceJanineBriceGraphic Designer, EBS Advisory

Office506,5thFloor|SunclareBuilding|21DreyerStreet|Claremont|7708|CapeTown|SouthAfrica|Tel:+27217021290|Fax:+27217021483|Web:www.inspiredevolution.co.za|Email:[email protected]

Inspired Evolution Investment Management Proprietary Limited (Inspired Evolution)wasestablished in2007as a specialised investmentbusinessandauthorisedfinancialservicesproviderlocatedprincipallyinSouthAfrica.InspiredEvolutionoffersfirst-moveradvantagewith proprietarymarket intelligence and is positioned to lead sustainableclean energy and resource-efficiency investments across sub-Saharan Africa. Thecompany’sdedicated,multidisciplinary,professionalinvestmentteamhasasoundtrackrecordandtargetssuperiorreturnswithmeasureddevelopmentoutcomes.

InspiredEvolutionmanagestheEvolutionOneFund–itsfirstspecialisedinvestmentfundofc.USD100million–capitalisedthroughcommitmentsfrominternational,regionalandlocal investors.The EvolutionOne Fundmakespredominantly infrastructure-type andgrowthequityandinvestments,withlimitedlater-stageinvestments,primarilyforcontrolorsignificantminoritypositionsinmarket-leadinggrowthbusinessesandinfrastructureprojectslocatedprincipallyinsub-SaharanAfrica.

Inspired Evolution has demonstrated that capital deployment to investments in thisspecialised asset class can generate exceptional returns at the nexus of social equity,ecologicalintegrityandresponsibleeconomicgrowth.Thisliesattheheartofsustainableinvesting.

In Inspired Evolution’s view, contributing to sustainability through the accelerationof clean energy, energy-efficiency and resource-efficiency technologies, services,infrastructure and relatedbusinessmodels is notonly the responsibilityof all citizensinarapidlyglobalisingworldbutalsodefinesthefutureofallsuccessfulbusinessandinvestmentdecisions.

Inspired Evolution is an active investment partner, offering investee companies andprojects a compelling post-investment value proposition as a result of our strongcommercialandtechnologyplatformandfinancialandsustainabilitycredentials:

• We offer global experience and specialised knowledge across clean energy andresource-efficiencyinvestments.

• Ourexpertiseenablesustofunctionasaportalforappropriate,best-of-breedandproventechnologies,whichincludesskillinstructuringcleanenergyandresource-efficiencyventures.

• Wehavea rangeofglobalnetworks toenhance theexportof localand regionaltechnologies,goodsandservices.

• We offer tested broad-based black economic empowerment (B-BBEE) orindigenisationdeal-structuringexpertise,which isaparticularlyvaluableofferingforSouthAfricaninvesteecompanies.

• Weofferflexible,rapiddecisionmaking,includingcustomised,packagedfinancialsolutions(equityandquasi-equity)andalsofacilitatedebtstructuring.

• We have in-house sustainability expertise to guide environmental, social andgovernance(ESG)riskmanagementandstrategy.

Asanactiveinvestor,InspiredEvolutionparticipatesontheboardofdirectorsofinvesteecompanies and offers guidance on best-practice governance.Webring to themarketa global network of leading venture capital and private equity firms, universities andbusinessesthatprovidesuswithvaluablemarketinsights,relationshipsandchannels.

Inspired Evolution Investment Management Proprietary Limited Profit with Purpose: Sustainable Value Creation Report 2015

Inspired Evolution Investment Management Proprietary Limited Profit with Purpose: Sustainable Value Creation Report 2015

Contents

AboutInspiredEvolutionInvestmentManagement i

Acknowledgements 2

LetterfromtheSustainabilityStrategyandReportingLead,EvolutionOneFund 3

Glossary,AbbreviationsandCurrency 4

InspiredEvolution:InvestmentPhilosophyandESGManagementApproach 6

IntegratedInvestmentProcess:EnvironmentalandSocialManagementSystem(ESMS) 7

IntroductiontoInvestmentThemes:CleanEnergyInfrastructure,Energyand

Resource-efficiency 8

LocationsofPortfolioInvestments 10

CapitalMarketDevelopmentandFinancialSectorIndicatorsatFundLevel 12

Current Portfolio Companies: Growth Equity

Abagold:Afropulse568ProprietaryLimited 15

SIRACSouthernAfricaProprietaryLimited 19

Previous Portfolio Company: Growth Equity

EnviroServWasteManagementProprietaryLimited 22

Current Portfolio Companies: Infrastructure Development

DemeterOrganicFertilisersProprietaryLimited 24

Current Portfolio Companies: Clean Energy Infrastructure

RustMo1SolarFarm(RF)ProprietaryLimited 26

SlimSun(RF)ProprietaryLimited:SwartlandSolarPark 29

FifthSeasonInvestments134(Pty)Ltd(RF):SolarCapitalDeAar(Pty)Ltd 32

AFPOCLimited:AfricanCleanEnergyDevelopmentsandRenewables

Cookhouse1WindFarm(RF)(Pty)Ltd 35

RedCapKougaWindDevelopmentCompanyProprietaryLimited,

KougaWindFarm(RF)ProprietaryLimited 38

Previous Portfolio Assets: Clean Energy Infrastructure

AFPOCLimited:KarusaWindFarm(RF)(Pty)Ltd 41

AFPOCLimited:NxubaWindFarm(RF)(Pty)Ltd 42

AFPOCLimited:NojoliWindFarm(RF)(Pty)Ltd 43

AFPOCLimited:SoetwaterWindFarm(RF)(Pty)Ltd 44

GibsonBayWindFarmProprietaryLimited 45

Composite Portfolio Indicators 47

Profit with Purpose: Sustainable Value CreationReport 2015

Evolution One Fund Portfolio Investments

1

2 Inspired Evolution Investment Management Proprietary Limited Profit with Purpose: Sustainable Value Creation Report 2015

Acknowledgements

InspiredEvolution isonceagaingrateful for thegenerous supportwe received fromour investeecompanieswhoprovidedtherelevantinputscontainedandevaluatedinthisreport.WewouldliketoextendaspecialwordofthankstoGwendolynZornandherteamwhoassisteduswithcontentinputsandwiththeresearchandupdatingofportfolioinvesteecasestudies.Inaddition,wewouldliketothankEBSAdvisoryforcoordinating,designingandfinalisingthematerial,layoutandgraphics.Finally,thankstoMarleneRoseforherfinaleditingcontributions.

ThisupdatedcompendiumofEvolutionOneFund’sportfolioinvestmentcasestudieshighlightsourcontinuedfocusonsustainablevaluecreationandthe integrationofbest-practiceenvironmental,social and governance (ESG) principles and guidelines. Our aim is to drive improvements in thedevelopment, construction andoperatingperformanceof the various companies andprojects todeliverenhancedfinancialreturnswithmeasureddevelopmentimpact.

Wewouldliketothankthefollowingcompaniesfortheirparticipationinthisinitiative:

Wewouldalsoliketothankourinvestorsfortheirongoingsupportandparticipation:

Disclaimer:InspiredEvolutionhasmadebestendeavourstovalidatetheinformationcontainedinthisreportbutcannotguaranteetheultimateaccuracyorcompletenessofthedataprovided.InspiredEvolutionisnotresponsibleforanydecisionmadeoractiontakenbasedoninformationdrawnfromthisreport.

RustMo1Solar Farm

Fifth Season

Demeter Organic Fertilisers

3Inspired Evolution Investment Management Proprietary Limited Profit with Purpose: Sustainable Value Creation Report 2015

Dear Readers

Wearepleasedto releasethissecondeditionofEvolutionOneFund’sProfitwithPurpose:SustainableValueCreationReport2015.Asbefore,eachexistingportfolio case study has been updated where appropriate and emphasisestheinvestee’sperspectiveonthedecisiontopursueprivateequityfinancingandtopartnerwithInspiredEvolution. Inaddition,afewnewportfoliocasestudiesandrenewableenergyprojectshavebeenadded.ThiscompendiumnowincludesthefullsuiteofEvolutionOneFund’sportfoliosincetheexpiryofit’scommitmentperiodinJanuary2014.

The case studies have been grouped into current and previous portfolioinvestments(insomecasesportfoliosubsidiaryinvestments),wherethelatterrepresentthosethathavebeendivestedbythefund.ThecasestudiesprofilearangeofcompaniesandprojectsoperatingacrossavarietyofsectorsintwocountrieswithinthesouthernAfricangrowthmarkets.ThesamekeythemesasadaptedfromwhatwaspreviouslyidentifiedbytheEmergingMarketsPrivateEquity Association (EMPEA) and reported on by us, are highlighted againbelow:

• First, private equity’s critical role in closing the ‘finance gap’ and providing capital to entrepreneurs, greenfield infrastructure projects and promising growth businesses.

• Secondly, the portfolio case studies demonstrate the suite of skills and innovative financing mechanisms that private equity investors employ to create value in portfolio companies.

• Thirdly, each of the portfolio case studies highlights the positive externalities or development impacts that the asset class can deliver to the local and global communities in which investees operate. As such, these broader impacts that are unique to the active investment management approach adopted by private equity managers, can be a positive force for change.

This report re-emphasises the unique and catalytic role growth equity andinfrastructure-type investments can play in creating sustained value. AtInspiredEvolutionwebelievethatconcreteexamplesdemonstratingprivateequity’sabilitytodrivethesustainabilityagendathroughresponsiblegrowthand optimised development impacts will help key constituencies to betterunderstandtheassetclassonthebasisofthefactual,measureddemonstrationofsustainablevaluecreationwithitssuiteofassociatedbenefits.

AsanintegralpartofourDNAandinvestmentphilosophy,InspiredEvolutionembraces an ESG-centred investment management approach as a keystrategicdriverforenhancingshareholdervalueinitsinvestmentportfolio.The3-to-7-yearinvestmenthorizonforourportfolioinvestmentsisgenerallylongenoughforInspiredEvolutiontomakeconsiderableprogressonsustainabilityinitiatives.Attheveryleast,ouractiveESGapproachallowsfortheentrenchingofthephilosophy,policies,proceduresandmeasurableactionsinembeddedenvironment and social management systems (ESMS), championed by keyseniorexecutive leadership. Simpleoperational and/orbehavioural changescanoftendeliverapaybackin2–3years,althoughlargesustainabilityprojectswithheavyupfrontinvestmentsometimesappearchallengingintermsoftheirabilitytoachieveanacceptablereturnoninvestment(ROI)–andmayneedalongertimehorizon.

WeemphasisethatourEnvironmentalandSocialManagement System (ESMS) is a rigorous anddisciplined effort to identify, implement andtrack the results of development impacts, andit remains the responsibility of each portfoliocompany to implement the most appropriateframework for its particular type of business.We focusoncreatingsharedvaluethroughtheformationof partnershipsbetweenour variousportfolio companies and through strategiesdesignedtointegratesustainabilityintoday-to-dayoperations.Ourportfoliocentresonanumberofinvestmentsinprojectsandcompaniesofferinglow-carbongreenhousegasmitigationandresourceefficientsolutionstosociety’sgrowing climate change challenges. These solutions include clean andrenewableenergy,energy-efficiencyandresource-efficiencymeasuresacrossthesectorsandsubsectorsthatspanthefood-energy-waternexus.

In summary, Inspired Evolution clearly understands that the leadingcompaniesofthefuturewillbethosethatgrasptheclimatechange,energyand resource scarcity challenges the world is facing and that demonstrateleadership and commitment to integrating sustainability and responsibleinvestment strategies that enhance their competitive market position andshareholder value. These market leaders are increasing productivity whilereducing the intensity of the ecological footprint of their businesses. Theyare demonstrating measurable commitments to resource-efficiency targetsthroughtheongoingapplicationofnext-generationtechnologiescombinedwithpositivedisruptivebusinessmodelsandserviceinnovation.

Inthisreport,weoffersomecompellinginsightsintoavarietyofcleanenergyinfrastructure projects, energy-efficiency and resource-efficient growthcompanies that,each in theirownway, impart importantcontributionsandlessons learned. These lessons offer demonstrable investment examples ofsustainable value creation. As always, we remain committed to continuallyimproving our sustainable value creation investment approach andperformanceinthisregard.

[email protected].

Yourssincerely,

ChristopherClarke

Lead:SustainabilityStrategyandReporting,EvolutionOneFundManagingPartner,InspiredEvolutionInvestmentManagement


Glossary, Abbreviations and Currency

Glossary

Bankability Referstotheeligibilityofaninvestmentpropositiontomeetcustomarybankingstandardsandcriteriaforsuccessfulfunding.

Directemployment Totalnumberofdirectemployeesintheclientcompanyasoftheendoftheclientcompany’sfiscalyear.Theunitofaccountisapermanentfull-timeequivalentpaidjob.Tobetreatedaspermanent,thejobshouldhavealifeexpectancyofatleastoneyearatthetimeofforecast.Temporaryjobsareequivalentjobscalculatedasperson-monthsforthepurposesoftherenewableenergyprojectsundertheSouthAfricanRenewableEnergyIndependentPowerProducerProcurementProgramme(REIPPPP).Seasonaljobsareincidentaltotheoperation.However,iftheprojectreliesheavilyonseasonaljobs,asintheagribusinesssector,forexample,theyshouldbeincludedonaproratabasis,a3-monthjobbecoming0.25ofafull-timeequivalentjob(i.e.fourjobsforthreemonthsequalsonejobonanannualbasis).

Femaleemployment Totalnumberofdirectfemaleemployeesinclientcompany.Femaleemploymentshouldbecalculatedfromthetotaldirectemployees,notfromtheadditionofnewjobs.Definitionfordirectemployeesapplies.

Financialclose Referstotheeventwheninfrastructureprojectshavesecuredallrequiredpermits,authorisationsandlicences,andallconditionsprecedenttoalldebtand/orequityfinancingagreementsforthatprojecthavebecomeunconditional.

HistoricallyDisadvantagedPersons(HDP)

ThedefinitionusedtoevaluateblackempowermentinSouthAfrica–thegrouphavingbeenthemosteconomicallydisadvantagedbyapartheidpolicies.

Indirectemployment Employeeshiredbyathirdpartywithdirectcontractualrelationstotheclientcompany.Third-partyemploymentshouldonlybecountedwhereatleast50%ofaspecificcompany’ssalesaredependentontheFund’sclient,orwherespecificemployeesaredirectlyassociatedwiththeoperationsoftheFund’sclientcompany.Thedefinitionfordirectemploymentapplies,withthethird-partycompanybeingtheclientcompanyinthiscase.

Mezzaninefinance Ahybridofdebtandequityfinancingthatistypicallyusedtofinancetheexpansionofexistingcompaniesoraportionoftheprojectfinanceininfrastructure-typeprojects.Mezzaninefinancingisbasicallydebtcapitalthatgivesthelendertherightstoconverttoanownershiporequityinterestinthecompanyiftheloanisnotpaidbackintimeandinfull.Itisgenerallysubordinatedtodebtprovidedbyseniorlenderssuchasbanksandventurecapitalcompanies.

Offtake Referstotherelevantlegalcontractswiththirdpartiesforthepurchaseofgoodsand/orservicesfromaprojectorbusinessonagreedtermsandconditions,andusuallyforafixedterm(insomecases,renewable).

Seniordebt Seniordebt,frequentlyissuedintheformofseniornotesorreferredtoasseniorloans,isdebtthattakespriorityoverotherunsecuredorotherwisemore‘junior’debtowedbytheissuer.Seniordebthasgreaterseniorityintheissuer’scapitalstructurethansubordinateddebt.Iftheissuergoesbankrupt,seniordebttheoreticallymustberepaidbeforeothercreditorsreceiveanypayment.Seniordebtisoftensecuredbycollateralonwhichthelenderhasputinplaceafirstlien.Usuallythiscoversalltheassetsofacorporationorproject,thelattermostoftenonalimitedrecoursebasisagainstfuturecashflows.Itisthedebtthathaspriorityforrepaymentinaliquidation.


Abbreviations

a-Si AmorphousSiliconACED AfricanCleanEnergyDevelopmentsAET AdultEducationandTrainingAgriSETA AgriculturalSectorEducationTrainingAuthorityAMCU AssociationofMineWorkersandConstructionUnionBAR BasicAssesmentReportB-BBEE Broad-basedBlackEconomicEmpowerment,asdefinedinSouth

AfricanlegislationB-BBEESPV Broad-basedBlackEconomicEmpowermentSpecial-purpose

VehicleBEE BlackEconomicEmpowerment,asdefinedinSouthAfrican

legislationBCDA BlueCraneDevelopmentAgencyBOP BalanceofPlantDC DirectCurrentCDM CleanDevelopmentMechanismCER CertifiedEmissionReductionsCITES ConventiononInternationalTradeinEndangeredSpeciesofWild

FaunaandFloraCOD CommercialOperationsDateCPI ConsumerPriceIndexCSI CorporateSocialInvestmentCSR CorporateSocialResponsibilityDAFF DepartmentofAgriculture,ForestryandFisheries,SouthAfricaDCF DiscountedCashflowDEA DepartmentofEnvironmentalAffairs,SouthAfricaDFI DevelopmentFinanceInstitutionDI DevelopmentIndicatorDOE DepartmentofEnergy,SouthAfricaDRC DemocraticRepublicofCongoE&S EnvironmentalandSocialED EnterpriseDevelopmentEA EnvironmentalAuthorisationEBITDA EarningsBeforeInterest,Taxes,DepreciationandAmortizationEHS EnvironmentalHealth&SafetyEIA EnvironmentalImpactAssessmentEIR EnvironmentalImpactReportEME ExemptMicroEnterprise,asdefinedinSouthAfricanBEE

legislationEMB EnviroServMineralBeneficiationEMP EnvironmentalManagementPlanEMPEA EmergingMarketsPrivateEquityAssociationEPC Engineering,ProcurementandConstructionERPA EmissionReductionPurchaseAgreementESAP EnvironmentalandSocialActionPlanESG Environmental,SocialandGovernanceESIA EnvironmentalandSocialImpactAssessmentESMS EnvironmentalandSocialManagementSystemEW2E EnviroServWaste-2-EnergyFAO FoodandAgriculturalOrganisationFAT FrancoAfriqueTechnologiesFY FinancialYearGHG GreenhouseGasEmissionsGP GeneralPartnersHACCP HazardAnalysisandCriticalControlHDP HistoricallyDisadvantagedPersonHDSA HistoricallyDisadvantagedSouthAfricanIDC IndustrialDevelopmentCorporationIDZ IndustrialDevelopmentZoneIFC InternationalFinanceCorporation

IFDC InternationalFertiliserDevelopmentCenterIFI InternationalFinanceInstitutionILO InternationalLabourOrganisationIFRS InternationalFinancialReportingStandardsIP IntellectualPropertyIPO InitialPublicOfferingIPP IndependentPowerProducerIRR InternalRateofReturnISO InternationalOrganisationforStandardisationJSE JohannesburgStockExchangeKWF KougaWindFarmLBO LeveragedBuy-outLED LocalEconomicDevelopmentMSL MeanSeaLevelNDP NationalDevelopmentPlan,SouthAfricaNEMA NationalEnvironmentManagementAct,SouthAfricaNERSA NationalEnergyRegulatorofSouthAfricaNPK Nitrogen,PhosphorusandPotassiumNRCS NationalRegulatorforCompanySpecificationsNRD NjombeResourceDevelopmentCompanyLimitedOTC Over-the-CounterO&M OperationsandMaintenanceOECD OrganisationofEconomicCooperationandDevelopmentOMIGSA OldMutualInvestmentGroupofSouthAfricaPEF PrivateEquityFundPOA ProgrammeofApplicationPPA PowerPurchaseAgreementPR PerformanceRatioPV PhotovoltaicQSE QualifyingSmallEnterprise,asdefinedinSouthAfricanBEE

legislationRE RenewableEnergyREA RuralEnergyAgencyREIPPPP RenewableEnergyIndependentPowerProducerProcurement

Programme,SouthAfricaROI ReturnonInvestmentS&E SocialandEnvironmentalS&I SupplyandInstallationSABS SouthAfricanBureauofStandardsSADC SouthernAfricanDevelopmentCommunitySC SteeringCommitteeSCAF SeedCapitalAssistanceFacilitySCDA SolarCapitalDeAar(Pty)LtdSED Socio-EconomicDevelopmentSEDD SocialandEnvironmentalDueDiligenceSHEQ Safety,HealthandEnvironmentalQualitySME SmallandMediumEnterpriseSPPA StandardisedPowerPurchaseAgreementSPV Special-purposeVehicleSQAS SafetyandQualityAssessmentSystemTanesco TanzaniaElectricSupplyCompanyLimitedTZS TanzanianShillingUNEP UnitedNationsEnvironmentProgrammeUSD UnitedStatesDollarVER VoluntaryEmissionsReductionWEC WaveEnergyConverterWTG WindTurbineGeneratorWULA WaterUseLicenceApplicationWWF WorldWideFundforNatureZAR SouthAfricanRand

Currency

Tosimplifyforeigncurrencycomparisonsforthereader,aforeigncurrencyexchangerateof1USD=10ZARhasbeenusedastheaverageforallSouthAfricanrand(ZAR)amountsinvestedbytheFundintoportfoliocompaniesandprojects,asatthetimeofwritingthisreport.

PleasenotehoweverthatactualUSDamountsrecordedatthetimeofindividualinvestmentsweredifferentduetothevaryingforeignexchangeconversionratesatthosetimes.


Inspired Evolution: Investment Philosophy and ESG Management Approach

Inspired Evolution is a specialised investment management and advisory business. The authorisedfinancial services provider is located principally in CapeTown, South Africa and London, U.K. InspiredEvolutionmanagestheEvolutionOneFund(theFund),itsfirstcleanenergyandresource-efficiencyfundwithapproximatelyUSD100milliondedicatedtocleanenergyandresource-efficiencyinvestmentsacrosssouthernAfrica.

Inspired Evolution’s investment philosophy centres on long-term equity and equity-related investingbasedonrigoroussustainability research.Sustainabilityanalysis thereforerepresentsacoreprincipleofourpre-andpost-investmentcycle.Theperformanceenhancementorlong-runperformanceismeasuredaccording to a suite of sustainability indicators defining Inspired Evolution’s differentiated investmentstrategyandaddedvalue.InspiredEvolutionisalsoraisingaUSD2millionsuccessorfund,EvolutionII.

Rapidglobaleconomicexpansionandescalatingpopulationgrowthcombinedwithfinitenaturalresourcesareleadingtomountingenvironmentalchallengesandrisingpricesformaterialsandenergy,allofwhichcallsforinnovativetechnologicalsolutions,efficientproductionprocessesandbusinessmodelinnovation.This is the motivation for Inspired Evolution’s clean growth investment platform. The opportunity forgrowth and expansion lies in the sectors and industry focus areas that offer technologies and relatedbusinessmodelswhicharelow-carbonandimprovetheefficiencyandresponsibleuseofnaturalresourcestoreduceecologicalimpact.

Our key investment criteria are commercially driven and applied to prioritise clean and sustainableenergy infrastructure-type projects and growth equity opportunities. The investments require limiteddevelopmentcapitalforadvancedprojectdevelopment,predominantlyprojectequityandgrowthcapitalforenterprisedevelopmentandexpansion.ThesecriteriaforgethespecialisedcharacteristicsofEvolutionOneFund’sinvestmentmandate.ThenominalbalanceoftheFund’smandateincludesalimitedappetiteforchangeinownership,leveragedbuy-outopportunities.

The principles of sustainability are central to Inspired Evolution’s investment decision making. Ourapproachtosustainabilitycentresonthenotionof‘beyondcompliance’(i.e.exceedingcompliancecriteria)wherecomplianceisthesystematicapplicationofcriteriasuchasexclusion,relevantenvironmentalhealthandsafety(EHS) legislation,andadoptionofthe IFCPerformanceStandardsandtheEquatorPrinciples.However, 'beyond compliance' also embraces our more active investment management approach tounlocking value; building local businesseswhile offering a regional or global platformand technologyportalcompletewithspecialisedstructuringskills;valueenhancement,andriskmanagementthroughfullintegrationwiththerelevantenvironmental,socialandgovernance(ESG)issues.

TheEvolutionOneFundalsoprovidesfinancetobusinesssegmentsandfrontierregionsthathavebeeninsufficientlyservicedbyexistingfinancialinstitutionsbecausethecleanenergyandresource-efficiencyorenvironmentalmarketsegmenthasoftenbeencategorisedasunbankablewithoutsubsidiesandlong-term supply and product/service offtake agreements. State interventions to provide a credible, publicresults-basedincentiveschemesuchastheRenewableEnergyIndependentPowerProducerProcurementProgramme(REIPPPP)inSouthAfricahasprovidedabankablecaseforinvestmentadviserslikeInspiredEvolution.Similarly,thenascentcleanenergy,andenergyandresource-efficiencymarketsinmanyothersub-Saharan African countries are experiencing rapid growth. Enabling conditions are maturing andbankablepublicprocurementprogrammesandviableprivatedistributedenergygenerationmarketsareemerging.

TheportfolioofinvestmentsoutlinedinthisreportprovidestheEvolutionOneFundwithanopportunitytodeliversuperiorinvestmentreturnswithmeasurableimpactstomitigateclimatechangeandresourcescarcity, while simultaneously providing benefits to previously disadvantaged members of societyby empowering local community groups who often live in underdeveloped regions. To ensure this,investmentagreementsincorporatestringentcompliancecriteriaaswellasotherimpact-relatedaspectsof Inspired Evolution’s investment philosophy and strategy such as the principle of ‘limited economicleakage’.Inaddition,thedeploymentofcapitaltobest-in-classcleanenergyinfrastructuresimultaneouslygeneratesanetecologicalbenefitthroughenvironmentalremediationandtheabatementofgreenhousegases.

‘Our legacy is to demonstrate true value creation by generating superior returns for our investors from a portfolio of businesses and projects which continually improve their measured positive development outcomes and sustainable trajectories, beyond our medium-term investment horizon.’

ChristopherClarke,ManagingPartner,InspiredEvolutionInvestmentManagement


Integrated Investment Process: Environmental and Social Management System (ESMS)

Inspired Evolution aims to avoid, reduce and/or mitigate environmental and social riskswithintheoperationalprocesses,supplychainsandwastestreamsofportfoliocompanies.To achieve this, Inspired Evolution has developed a tailored Environmental and SocialManagementSystem(ESMS)forapplicationtoallinvestmentsatallstagesoftheinvestmentcycle,frompre-investmentduediligencethroughtoportfoliomanagementanddivestment.The objective of the ESMS is to ensure that the Fund’s investment focus remains thedevelopment anddeploymentof appropriate andproven clean technology,underpinnedbyinnovationandresponsiblepractices.TheESMSismanagedandoverseenbyadedicatedenvironmentalcoordinator,responsibleforensuringthatinvestmentdecisionsareinformedbyappropriateESMSduediligence,andongoingenvironmentalandsocialoversightoncethe deal is concluded. Legal counsel ensures that appropriate environmental warrantiesand covenants are incorporated into each investment agreement and, where necessary,correctiveactionplansareannexedwithdedicatedresourcecommitmentsandtiming.

TheFund’sinvestmentsarelocatedinSouthAfricaandtheSouthernAfricanDevelopmentCommunity(SADC).Socio-economicchallengesinherentwithinthisregionthereforeneedtobeconsidered,bothfromacorporateresponsibilityperspectiveandtosustaincommercialsuccess of the investments.Thepromotionof local socio-economicdevelopment (SED) isintegraltoInspiredEvolution’sinvestmentpractice,andtheFundactivelyassistsinidentifyingandrealisingsocialopportunitieswithinvesteecompanies.Thefocusisongeneratinglocalemployment opportunities and empowering communities, while addressing local needssuch as training, access to education and health, and economic diversification. InspiredEvolution helps to develop black economic empowerment shareholding structures withenhanceddevelopmentimpactmultipliers,andalsoassistswithenvironmentalaspectssuchasthereductionofgreenhousegasemissionsandobtainingassociatedcreditcertification.

ESMS Reporting System

The Fund reports to investment partners onsustainability aspects of investments bothquarterly and on an on-demand basis. Reportsare individually tailored according to theprescribed formats, indicators and priorities oftheFund’svariousinvestors.

Inspired Evolution ensures that systematic,annual sustainability reporting occurs aftereach year-end. This reporting includes a set ofdevelopment impact indicators. As a result, adatabase of development impact indicators ismaintained for the Fund’s entire portfolio ofinvestments. Lastly, investee companies supplyannual letters thatassurecompliancewiththeirsocialandenvironmentalcovenants.

STAGE 1STOP/GO

STAGE 2STOP/GO

STAGE 3STOP/GO

STAGE 4STOP/GO

EXIT

ESMS OUTPUTS

INVESTMENT OUTPUTS

Deal intro and assessment

Internal due diligence External due diligence Investment agreement Portfolio management and value-add

Exclusionofprojectswith

activitieslistedonEvolution

OneFund’sexclusionlist

Ensurecomplianceto

nationallegislationandIFC

PerformanceStandards

Categoriseprojects:

A –highimpact*

B–mediumimpact

C –lowimpact

Initialreportonvalue

proposition,investment

strategyandexit

Category A:

DetermineEIAScopeorAudit

Category B:

Verifylegalcompliance,resolve

issues,andengagewiththird

parties

Category C:

Verifylegalcompliance

PreliminaryInvestment

Memorandumwithpreliminary

TermSheet

ContractEIAorAudit

UndertakeinternalS&Edue

diligenceifrequired

Nospecificactions

Financialandlegaldue

diligenceandprobitychecks

onaspectssuchasmarketand

technology

IncludeS&Eclauses

EnsureS&Ecovenants,

agreementsandcorrective

actionplans(whereapplicable)

FinalInvestmentMemorandum

andTermSheets

Finalinvestment

committeedecision

EnsureS&Eisontheboard

agenda

MonitorannualS&Ereports

andcorrectiveactionplans

(whereapplicable)

Activepost-dealvaluecreation

*Higher-impactactivitiesareguidedbyanadditional screeningmechanism,wherebycertain technical thresholdsor additionalguidelinesmustbeadhered to (e.g.hydro-electricprojects shouldpreferablyberun-of-riverandlessthan30MW,andbiofuelprojectsshouldcomplywiththecriteriasetoutinArticle17ofDirective2009/08/EContheuseofenergyfromrenewablesources).


Introduction to Investment Themes: Clean Energy Infrastructure, Energy and Resource-efficiency

Clean and renewable energy

With a few notable exceptions like South Africa, most sub-Saharan Africancountries’low-carboncleanenergygenerationmarketsremainintheirinfancy,comingoffanearzerobaseinmostcases.Butgrowingevidenceofprogressivelow-carbonpolicies, least-costgeneration, rapidbuild timesandconditionallender funding have all contributed to accelerating the clean energy andenergy-efficiencyopportunitysetintheregion.

Most southern African countries suffer from unreliable distribution and anoverall shortageof electricity. In SouthAfrica thismanifested inpower cutsin 2008 when the South African government was forced to admit that thegrowingenergycrisiswasanationalemergency.Presently,theSouthAfricanenergyutilityEskom’sfleetofcoalplants,andtheKoebergnuclearplantnearCapeTown in theWesternCape, are experiencinghigh levels of unplannedoutages due to breakdowns or scheduledmaintenance. Also, delays in thecommissioning of the new Medupi and Kusile coal-fired power stations inLimpopo andMpumalanga provinces respectively, and the Ingula pumpedstorage scheme in KwaZulu-Natal, all three of which are currently underconstruction,mayresultinfurtherloadsheddingfrom2015throughto2019duetogenerationcapacitynotbeingavailableonthenationalgridtomeetsupply. South Africa is currently operatingwith a reservemargin as low as0.73%.Thissituationwillbeexacerbatedbyfutureeconomicandpopulationgrowth. By 2030, demand for energy in South Africa is expected to reachbetween341and454TWhwithpeaksbetween50and67.8GW.

The 2008 and 2014/15 shortages havehad a negative effect on emergencyservices, farming activities, businesses, domestic consumers, business andcitizenmorale. Itdirectlythreatenthecountry’seconomicgrowthprospects,withalossofanestimatedZAR50billion(USD5billion),bringingthepower-hungryminingandindustrialsectorstoahaltandscaringoffpotentialforeigninvestment. General increases in electricity costs have broad implications,includingalackofjobsecurityasbusinessesmaybeforcedtoretrenchworkerstomaintainprofits.Inaddition,thepredictedimplementationofcarbontaxesincountrieslikeSouthAfricafrom2016willhaveaneffectonelectricitycostsasEskomisexpectedtoinitiallypassonthecoststoconsumers.

By 2009 regulatoryguidelines in SouthAfricahad set thebasic structure inplace to accommodate renewable energy feed-in to the national grid. Theregulatory framework has taken several years to finalise as tariff proposalswererevisedfromonedeterminedbytheenergyregulatoronafeed-intariffbasistoacompetitivebiddingprocessorauctionbasedonpriceandeconomicdevelopment criteria.However, theobjectives of the regulatory frameworkshaveremainedconsistent:promotingtheestablishmentofrenewableenergyindependent power producers (IPPs) to develop 42% of the approved newcapacity tobebuilt totalling17.8GWof renewableenergycapacityover thenext20-yearperioduntil2030.

This,combinedwiththelow-carbonpolicycommitmentsadoptedbysouthernAfricanstates–inparticularSouthAfrica,whichcommittedtoa34%reductionofgreenhousegasemissionsby2020and42%by2025–provideacompellinginvestment case for the rapid roll-out of cleaner, lower-carbon renewableenergygenerationprojectsacrosssouthernAfrica.

In response, Inspired Evolution has advised and achieved the placement ofapproximatelyZAR300million (c.USD30million)ofequity investments fromtheEvolutionOneFunddirectlyandindirectlyinto918MWofpre-permitted,permitted and operational onshore wind and solar photovoltaic (PV)renewable energygenerationprojects, holding a combinationof significantminority and controlling equity stakes. The companies and projects are

predominantly located inSouthAfricaandheldviaspecialpurposevehicles(SPVs). Inone instance,severalSouthAfricanprojectsandthedeveloperareheld via an investment holding company domiciled in Mauritius. Anotherproject, comprisinga10MWpre-permittedhydropower facility, is located inTanzania but has become a prospective portfolio company for a successorfund due to delays. In reaching financial close on these renewable energyprojects,InspiredEvolutionactivelyassistedwithsecuringthetotalfinancingrequirement of c.ZAR12 billion (c. USD1.2 billion) from debt and equityproviders,contributingtoacleanerlow-carbonfuturethroughannualsavingsinaggregateof2.4milliontCO2eofgreenhousegasemissionsperannumovertheir20-yearprojectterms.

The South African Renewable Energy Independent Power Producer Procurement Programme (REIPPPP)

UndertheSouthAfricanDepartmentofEnergy’sflagshipRenewableEnergyIndependent Power Producer Procurement Programme (REIPPPP), 6 327MWcomprising 92 independent power producer projects have been approvedtodate.Theseprojectsareallpartofbidwindows1to4ofREIPPPPwithanadditionalallocationmadeinJune2015of1084MWspreadover13projects.REIPPPP targets the procurement of an initial 3 625MW of power to begenerated from renewable energy independent power producers (IPPs) by2015.Anadditionalallocationof6300MWunderREIPPPPhasbeenannouncedby theDepartmentofEnergy forongoingprocurement from2015onwards.REIPPPP has been designed to contribute towards low-carbon, cleanerpowerproductionwithmeasurable socio-and localeconomicdevelopmentobligationsembeddedintothe20-yearprojectagreements.

The role of private equity

Clean and renewable energypower generation infrastructureprojects are acentral fitwith Inspired Evolution’s investment advisory objectives. PortfolioinvestmentsunderthisthemeofferacompellingopportunityfortheFundtoearnattractivereturnsthroughsecuringearlypositions inrenewableenergyprojectdevelopments,whileenjoyingtherighttoplaceprojectequityfinanceintopermittedprojects at financial close. Each transaction is augmentedbythe skills and track record of the various pedigreed developers. The Fundprovides much sought-after greenfield infrastructure development capitalon a performance milestone basis to supplement development budgets,thusenablingprojectstoobtainallthenecessarypermitsandauthorisationsrequired for eligibility under REIPPPP and other procurement regimes asspecifiedincertainotherSADCmembercountries.

Through their association with Inspired Evolution, the renewable energycompanies are guided to follow a prescribed, transparent and competitiveprocurement standard that reflects international best practice. InspiredEvolution also ensures that baseline studies on social and environmentalissues are completed appropriately according to national legislation, theIFC Performance Standards and the Equator Principles. Comprehensiveenvironmentalimpactassessments(EIAs)areconductedwithrelevantexpertinputs and the necessary relevant authorisations are sought, municipalitiesareengaged,locallabourandlocalskillsareprocured,andlocalownershipisentrenchedattheprojectleveltoensureaflow-throughoftangiblebenefitstocommunitiesbasedinandaroundtheprojectareasoverthe20-yearcontractedproject life. Inspired Evolution is committed to this investment philosophy,which it has successfully implementedas theprincipleof‘limitedeconomicleakage’. The social and environmental benefits are therefore significant,tangibleandsustainable,and inaggregateover theFundrenewableenergygenerationportfolioamounttooverZAR7billion(c.USD700million)indirectcash flows from distributions earned and corporate social investment (CSI)commitments–allring-fencedforlocalcommunities.


In conclusion, the renewable energy portfolio case studies that followdemonstratethedeepcommitmentandthetangibledevelopmentandclimatechangemitigationoutcomesfacilitatedbyInspiredEvolutionanditsEvolutionOneFund.Asadedicatedproviderofinfrastructuredevelopmentcapitalandproject equity, Inspired Evolution is contributing to the accelerationof low-carbon clean energy infrastructure roll-out across its investment territory insub-SaharanAfrican.

Resource-efficiency¹

The spectre of resource insecurity has comebackwith a vengeance. Poorlydesignedandshort-sightedpoliciesarealsomakingthingsworse,notbetter.Whetherornotresourcesareactuallyrunningout,theoutlookisoneofsupplydisruptions,volatileprices,acceleratedenvironmentaldegradationandrisingpoliticaltensionsoverresourceaccess.

Fears of resource scarcity are not new. Onmany occasions, higher rates ofinvestmentandimprovedtechnologyhavetemporarilyresolvedtheproblemoftheday,thoughoftenwithadditionalenvironmentalandsocialcosts.Withthematurationoftechnologiestoaccessnon-conventionalgasandoil,aswellas the global economic downturn, some analysts suggest that the resourceboomof thepastdecade is coming toanend–especially in theextractiveindustries–andthatresource-relatedtensionswillease.

Thehard truth is thatmanyof the fundamentalconditions thatgave rise tothetightmarketsinthepasttenyearsremain.Inthecaseoffood,theworldremainsonlyoneortwobadharvestsawayfromanotherglobalcrisis.Lowerpricesinthemeantimemaysimplytriggeranotherresourcebinge,especiallyinthelargeandgrowingdevelopingcountries.

Thechangingglobalresourcelandscape:

• Mainstream projections suggest continued demand growth for majorresources–fromfossilfuelstofood,minerals,fertilisersandtimber–untilat least 2030, notwithstanding the peril of forecasting.The scope andsizeofresourceconsumption,andtheassociatedenvironmentalimpact,couldoverwhelmtheabilityofstates,marketsandtechnologytoadapt.

• Theemergingeconomies lie at theepicentreof thenewandevolvingpolitical economy of critical resources. The growth of Africa – as bothconsumers,andmorerecently,producers–hasaffectedmultipleresourcemarkets.Inthepastdecade,globaluseofcoal,palmoilandironorehasbeengrowingat5–10%ayear,whilethatofoil,copper,wheatandricehasbeengrowingat2%ayear.

• Resourcetradehasgrownnearly50%fromadecadeagoinweighttermsowingtoexpandingtradeinoil,ironandsteel,coal,oilseedsandcereals–allfeedstocksforChina,thefactoryoftheworld.Beyondthetraditionalpowersandemergingeconomies,awaveofdevelopingcountriesinsub-SaharanAfricawill become important resource consumers in the nextdecade.

• Large-scale resource extraction remains concentrated in a handful ofcountries.Across19resources(crops,timber,fishandmeat,metals,fossilfuelsandfertilisers)thethreelargestproducersonaverageaccountfor56% of global production. The eight dominant players are China, theUSA,Australia, theEuropeanUnion,Brazil, Russia, India and Indonesia.For resourceswith smaller production volumes inAfrica, such as palmoilormanyspecialtymetals,concentrationamongproducercountriesisevenhigher.

• A new wave of increasingly important producers has emerged inthe wake of the resource boom, often fuelled by large-scale foreigninvestment. Mozambique has become an important producer of coal

andgas,theDRCoftimber,Zambiaofcopper,ashasAngolaofoil.Theirfast-expandingresourcesectorsarebecomingaflashpointforsocialandpoliticaltensions.

• Historically, African countries havebeen conspicuousby their absencefrom lists ofmajor resource producers. However in the‘new scramblefor Africa’, many agricultural or resource-seeking investments haveacceleratedeventhoughthatmanyhaveyettocommenceproduction.

• Thedynamicsof resourceproductionandconsumptionare interlinkedthroughmarkets,tradeandtheglobalenvironment.Constraintsonthefutureproductionofparticularresourceslienotonlyintheiravailabilityandprice,butalsointheaccessibilityandcostoftheotherresourcesusedtoproducethem.

• Future availability of food, energy, timber and metal resources ataffordable costs will be determined by a combination of factors –including accessible reserves, transportation routes, environmentalconsiderations,technologyandinputcosts(suchaswaterandenergy).Reserve figures are often imperfect guides. Also significant will beinvestmentconditions,shapedbythesocio-politicalcontextinproducerandconsumercountries.

• Expanding the supply of many resourcesmeans a shift in productionto more challenging technical and operating environments: weakergovernance, poorer-quality soils, greater climate vulnerability, deeperwellsandloweroregrades.Eventhoughthespecificconsequenceswilldifferamongsectorsandgeographies,theoverallshifttomoremarginaland unconventional production will bring common challenges. Theseincludeecological impactsassociatedwith land-usechange; increasingproductioninclimate-sensitiveareas;risksoftechnologicalfailure;moreresource-intensiveproduction;andacceleratinginnovation.

Withinthechangingglobalresourcelandscapeillustratedabove,itisimperativethatdifferentiatedresourceefficientgrowthandbusinesspracticesneedtobesupported,scaledandmadecommonplaceinanattempttoturnthetidewithdueurgency.Equally,theresponsibledeploymentofcapitaltocompaniesandprojects that are‘doingmorewith less’ is a compellingprivate equity story.These are the companies that, through positive disruptive technological,businessmodel and serviceplatform innovation, are changing the tide thatmay lead to transformational resource-efficiency business practices acrosskeysectors(thefood-energy-waternexusinparticular,andalsotransportandsupplychainlogistics).

Inspired Evolution adopted this second investment theme of ‘resource-efficiency’ across growth equity opportunities evaluated during the 5-yearinvestment period of the Evolution One Fund. Select case studies in thisreport demonstrate specific outcomes where the Fund made investmentsinto companiesoffering technology improvements that arenew-generationindustrial processing andproductionmethods and/or related infrastructure,products, services andbusinessmodels thatmeasurably promote resource-efficientsolutions.

Thesectorswithinwhichtheseselectportfoliocasestudiesarelocatedtraverseagribusiness (mariculture and human waste sludge treatment conversion),industrialandcommercialwastemanagement,andhotwaterenergy-efficientheating solutions. The Fund has invested and committed ZAR130 million(c.USD13million)totheseresource-efficiencygrowthequityinvestments.

¹AdaptedfromResourcesFutures,AChathamHouseReport,December2012.


Locations of Portfolio Investments

South Africa

Cape Town

Bloemfontein

Pretoria

Johannesburg

SlimSun (p29)22MW solar photovoltaic farm (Fully invested)

Port Elizabeth

Abagold (p15)Abalone aquaculture(Fully invested)

Red Cap (p44)80MW Kouga Wind Farm(Fully invested)

EnviroServ (p22)Head OfficeIntegrated waste management(Exited in 2013)

East London

Durban

Demeter Organic Fertilisers (p24)Organic urea fertiliser plant(Pre-permitted, pre-feasibility stage)

AFPOC Limited (p35)138.6MW Renewables Cookhouse 1 Windfarm(Sold at fully-permitted preferred-bidder stage)

RustMo1 Solar Farm (p26)7MW solar photovoltaic farm(Fully invested)

AFPOC (p38-39) Nojoli: 88MW wind farmNxuba: 140MW onshore wind farm(Sold at fully-permitted preferred-bidder stage)

AFPOC (p40) Karusa: 140MW onshore wind farm (Sold at fully-permitted preferred-bidder stage)

Red Cap (p47)Gibson Bay: 111MW wind farm (Sold at fully-permitted preferred-bidder stage)

SIRAC (p19) Energy efficient water heating solutions(Fully invested)

SIRAC (p19) Energy efficient water

heating solutions(Fully invested)

Fifth Season (p32)Solar Capital De Aar:

85.26MW solar photovoltaic farm

(Fully invested)

AFPOC (p42) Soetwater Wind

Farm (RF) (Pty) Ltd(Sold at fully-permittedpreferred-bidder stage)


South Africa

Mauritius


Mobilisation of local capital

Mobilisation of capital/investments by local investors

AcrossmostoftheFund’sportfolio,equityandinmanyinstancesseniorandmezzaninedebtweremobilisedbyvirtueoftheFund’scapitalcommitments.The Fund was instrumental in early-stagemobilisation of counterparty riskcapital toacceleratedevelopmentanddeploymentofcleanenergy roll-out,predominantlytogreenfieldandearly-stageinfrastructureprojects.TheFundmandatetoring-fenceaZAR50million(c.USD5million)developmentcapitalenvelope for use in early-stage, proven technology infrastructure dealswastransformational and contributed significantly towards performance underthis indicator.The SADC region still suffers froma severe shortageof early-stageriskcapitalandthelackofaccesstothistypeofcapitalbyentrepreneursordevelopersinhibitstherateofnewenergygrowth.

Mobilisation/organisation of other local private capital (e.g. debt for an investee company)

On the renewable infrastructure investments such as the Red Cap KougaWindDevelopmentCompany (DEVCO)and its80MWKougaWindFarm, the5MW SlimSun Swartland Solar Park, the 7MW RustMo1 Solar Farm and thec.1000MWpipelinedevelopedbyAFPOCLimitedanditssubsidiaryAfricanClean Energy Developments (ACED), approximately 10–20x mobilisation orleveragehasbeenachievedontheFund’sequitycommitments.Thisleveragewasfromlocalandinternationalequityinvestorsandpredominantlylocaldebtinstitutions.Debt-to-equityratiosachievedfortheaboveportfolioinvestmentsare in the range70:30 to80:20.ZAR450million (c.USD45million)hasbeeninvested and committed to the Fund’s portfolio investments to date. ThiscapitalhasleveragedapproximatelyZAR15billion(c.USD1.5million)intotalinvestment(includingprojectdebt),confirminganapproximate36xleverageontheFund’scapitalcommittedtodate.

Diversification of the financial sector

TheFundcontributestothediversificationofthefinancialsectorinthecountryof investmentandtheSADCregion.Thisarises froman improvementoftheregulatoryframeworkandaccelerationofmarketdriversthatcollectivelygrowthecleanenergyandenvironmentalmarketsintheSADCregion.Whilesomecountriesarestillgettinguptospeedonpublic-privateprocurementregimesand subsidies such as feed-in tariffs, SouthAfrica has taken the lead in theregionongrid-connectedprojects.Theflowofprivate funds from theFundand similar counterparties that take equity risk in these specialised sectorsand subsectorshelps todeepennew typesof instruments in localmarkets.Forexample,theFundissouthernAfrica’sfirstdedicatedandspecialisedcleanenergyandresource-efficiency fundthatsupportspredominantlySmallandMedium Enterprises (SMEs) in these specialised investment areas. This hasbrought innovation and diversity to the financial sector in these emergingmarkets.Examplesofthisduringthepastyearare:

• blended capital approaches using grant and concessionary financefor specific deals, e.g. the use of the United Nations EnvironmentalProgramme(UNEPs)SeedCapitalAssistanceFacility(SCAF)

• sector/industry-specific public and private financing mechanismsinvolving cleaner-generation infrastructure funds, energy-efficiencyfunds and shared savingsmodelsoroperational lease revolving creditfacilities,technologyincubatorsandmezzaninefunds

• specialisedinsuranceproductslinkedtofinancialinstrumentsforenergysavingsorgreenertransport.

Novel/innovative type of institution/financing instrument for the country

Inmanyrespects,theFundisanovel,flexibletypeofinstitutionthat,throughitsearly-stageandspecialisedcleanenergyandresource-efficiencymandate,has been able to demonstrate investment advisory leadership in theseemergingmarketclasses.WhileprivateequityperseismatureinSouthAfrica,themajorityofprivatefundshavefocusedandcontinuetofocusonleveragedbuy-outs(LBOs)andgrowthcapitalinvestmentswithaneutralmandate.TheFund has pioneered expansion or development capital across the nascentclean energy and environmental markets, affording Inspired Evolution asmanagertheopportunitytotakefirst-moveradvantage.

Innovationhasalsobeendemonstrated in theFund’sability tosecuregrantcapital and other patient lower-cost capital to complement its early-stagemandate, allowing early access into deals at lower pricing and optimisingfollow-onrightstounderlyingprojectsastheymature.Thisblendedapproachhas provided the Fund with higher-than-usual modelled equity return,specifically in its clean energy infrastructure investmentswhere returns areoften in the rangeof 15–20%nominal inZAR.The Fundexpects aggregateblendedreturnsontheseprojectsofapproximately23–35%nominalinZAR.

The Fund has also partneredwith strategic investment institutions such asthe Industrial Development Corporation (IDC) to pioneer new financinginstrumentsofferedtoenergy-efficiencyindustries.OptionsexploredinvolvedpositioningtheFund’sequityasfirstdefaultonablendedstructurewiththeIDCorbyusingitsequityascollateralonalimitedrecoursebasistoprovidearevolvingcreditfacilitytoanenergy-efficiencyoperatingleasebusinessthatwillinturngeneratehealthyannuityincome.

Improvement of regulatory frameworks and/or other investment activities

Iterative engagements with government policy makers and regulators,relevant industry stakeholders, industry associations and active NGOs overthepastfewyearshaveresultedinarapidshiftintheregulatoryframeworkinSouthAfricaspecifically.Othercountriesinthesub-SaharanAfricanregionarealsofollowingsuit,suchasUganda,Kenya,Rwanda,NamibiaandMauritius(tomentionafew).ThiscoversbothregulatoryreformsintheinvestmentsectorsoftheFundandreformsinthepensionfundthresholdallocationstoalternateinvestmentcategories that includeventurecapitalandprivateequity funds.ExamplesofregulatoryreformsinSouthAfricaarethedecisionsbythecabinettoallowupto30%ofnewelectricitygenerationtocomefromindependentpowerproducers (IPPs) and the releaseof the IPPProcurement Programmefor renewable energy allocations with its various regulatory changes. Therelaxationofpension fund threshold allocations to alternate investments inSouthAfricanowenjoysasignificantupwardrevisiontopreviousthresholds.Pensionfundsarenowcappedat15%oftheirtotal investmentportfolioforalternateinvestments,witha10%caponprivateequityallocations.

Capital Market Development and Financial Sector Indicators at Fund Level


Diversification of equity allocation

The Fund provides finance to business segments and frontier regions that have beeninsufficiently serviced by the existing financial institutions because the clean energy andenvironmentalmarketsegmenthasoftenbeencategorisedasunbankablewithoutsubsidiesandlong-termsupplyandofftakes.Stateinterventionstoprovideacrediblepublicresults-based incentive scheme such as the Renewable Energy Independent Power ProducerProcurement Programme (REIPPPP) in South Africa, has provided a bankable case forinvestorsliketheFund.

The various portfolio investments have also provided an opportunity for the Fund tosimultaneouslyaddresstheempowermentofdisadvantagedlocalcommunitygroups,ofteninunderdevelopedregions(theprincipleof‘limitedeconomic leakage’).Thisresults inthebroadeningofthefinancialsectoranddemonstratestheFund’sinvestmentphilosophyandstrategytodelivertangiblebenefitstopreviouslydisadvantagedmembersofsociety.

In addition, diversity is also demonstrated in the abatement of greenhouse gases fromthevariousportfolio investmentstowhichtheFundhascommitted.This isanexampleofenvironmental value-addwhere the deployment of capital to cleaner technology roll-outsimultaneouslygeneratesanetecologicalbenefit.

Furtherdetailsoftheseexamplesofsocialandenvironmentaladdedvaluecanbereviewedinthecasestudiesinthisreport.

Institution building

InstitutionbuildinghappensinboththeinvesteecompanyandatInspiredEvolutionatfundmanagerlevel.Attheinvesteelevel,theFundhasaddedsignificantvaluebydevelopingandbuilding the structure of local companies (e.g.‘added-value function’ by consultancy andtechnicalsupportforinvesteecompanies)toadoptbest-practicegovernance,includingtheintegrationinbusinessactivitiesoftheIFCPerformanceStandards(socialandenvironmentalguidelines).The followingare someof the key areaswhere institutionbuildinghas takenplace:

• Consulting and technical support for company upgrading: Technical support forclean development mechanism (CDM) project registration and Emission ReductionPurchaseAgreement (ERPA)negotiations;guidanceonprocurementsystemstoensurecompetitive,transparentprocurementprocesses.

• Improvement of company development (corporate governance, strategic guidance): Board-level interventions to establish delegations of authority for senior executivemanagers; creation of board subcommittees to handle specific issues such as auditoversight; introductionofguidelinestoprocurement;andcorporategovernancepolicyalignment.

• Introduction of environmental, social and governance (ESG) standards, management systems and monitoring at companies: Adoption of the IFC Performance Standardsbyall investeecompanies;mandatorycompliancewiththeEquatorPrinciples for largeenergyinfrastructureprojects.

• Financing of expansion/modernisation investments (including technology transfer): OftentheFund’smostvalue-addedbenefitforunderlyingbusinessesisitsabilitytoactasacleantechnologyportal.ThisiswelldemonstratedinthejointcollaborationagreementwithEnviroServwheretheFund’srolewastoeffectandevaluateappropriatetechnologytransfersforapplicationviatheEnviroServwastemanagementbusinessplatform.

• Risk financing for start-up companies: Because a portion of the Fund’s investmentmandate isallocatedtoearly-stage infrastructure investments, ithastheuniqueabilitytoprovideriskfinanceaswellasassistcompaniestoleverageadditionalriskcapital.Thislowersthebarriertoaccessingearly-stagecapitalforstart-upSMEs.

• Improvement of accounting and reporting: The Fund has introduced financialadministration/accountingandcredit control systemsandnewfinancial controllers forearly-stagebusinessesinseveralofitsportfolioinvestments.


(Direct) employment creation at Inspired Evolution

Number of jobs existing and sustained in Inspired Evolution as fund management company,includingjobtype

Capital Market Development and Financial Sector Indicators at Fund Level (continued)

Level Comparative Position Titles Number of Investment Professional Employees

Non-executiveChairman(investmentcommittee)

1

S1 ManagingDirectorsandPartners 2

S3 SeniorDealPrincipal 1

S5 FinancialManager 1

5

The investment team, including managing partners, senior deal principals and the financial manager

Christopher ClarkeManaging Partner

Wayne KeastManaging Partner

Angela AntrobusFinancial Manager

Steven FaureSenior Deal Principal

Wade de JagerIndependent non- executive Chairman of the investment committee


Abagold: Afropulse 568 Proprietary Limited

About the company

This successful abalone (Haliotis midae) aquaculture productionfacility originated from research and experimentation by a localHermanusveterinarian,DrPierreHugo(nowanon-executivedirectorof the company) in the mid-1980s. A pilot project was initiatedto breed abalone in captivity at the Old Harbour in Hermanus.OperationsexpandedincrementallyandHermanusAbalone(Pty)LtdcommencedexportingliveabalonetotheFarEastin1999.

By2003, facilitieswere relocated to industrial landadjacent to theNewHarbourandthefirstof1000breedingtankswereconstructed.Withexpansionand rescaling, thecompanynamewaschanged toAbagold(Pty)Ltd.Aworld-classprocessingfacilitywascommissionedin 2006, producing canned and dried product for sale to the FarEast,inparticulardriedabalonetoChina.Farmingoperationsentailbreeding abalone larvae from selected brood stock, nursing themthrough infant development and rearing them, over a period ofaboutfiveyears,tothemarketablesizeof300g.

Investment impact highlights

• Abagold’sturnoverhasincreasedtoZAR119million(USD11.9million),anincreaseof67%from2013.• The Fund’s investment enabled the expansion of the Sulamanzi farm, which has resulted in an increase in

abaloneproductivecapacityfrom275tonnespriortotheinvestmentin2010to475tonnesin2016/17.• InspiredEvolutionprovidedcriticalcapitaltoexpeditetheexpansionofAbagold.Inadditiontotheactivities

atSulamanzifarm,thehatcheryexpandedincapacityfrom4.3millionspatsin2013to5.9millionspatsinthisfinancialyear.Thishasenabledthesaleofexcessspats,boostingthetotalrevenueofAbagoldbyanadditionalZAR1.5million(USD150000).

• Theinstallationoftheintegratedaquaculturefacilitythatusesnewhybridtankstogrowabaloneandseaweed(as feedstock for the abalone) back-to-back, alongwith upgrades to existing facilities resulted in improvedmanagementofinputssuchasenergy,seaweedfeedstockandseawater,aswellasimprovedeffluentqualityandanassociatedreductioninenvironmentalfootprintperproductionunit.

• Duetothecumulativeeffectsoftheseexpansions,AbagoldhasrecentlyenteredintoajointventureagreementtoundertakefeasibilitystudiesandapilotprojectforthedevelopmentofanabalonefarmingbusinessinOman.

• In2014Abagoldre-enteredthe liveabalonemarketforthefirsttimeintenyears,selling40tonnes intothismarket.

• TheFund’s investment facilitated theestablishmentof theAbagoldDevelopmentTrust and theuptakeof a10% equity ownership in Abagold for previously disadvantaged members from the local community. TheTrust’sobjectivesincludeactivitiesintheareasofeducation,developmentprogrammesandjobcreationinthegreaterHermanusareaandinadvancingcommunityupliftmentanddevelopmentofpoorandneedypersonsinsurroundingareas.

• TheexpansioncapitalfromtheFundhasresultedinthecreationof154additionaljobs(195targetjobs),resultinginatotalof388permanentjobsatpresent.ThismakesAbagoldoneofthelargestprivatesectoremployersinHermanus.

• Since the Fund’s investment, Abagold’s strong track record in social and environmental management hasbeen further strengthened by the formal adoption of a human capital strategy and a range of technologyimprovements.Recenthighlights includeattaining ISO22000accreditationat theprocessing facility in2014andtheacquisitionofa43%shareholding(asatJune2014)inMeanSeaLevel(Pty)Ltd(MSL)whichwillpursueAbagold’srenewableenergyinitiativesthroughtheconstructionofawaveenergyplantandaneffluentrecoveryturbine.

• In2013,AbagoldwontheinauguralSouthAfricanPremierBusinessAwardforExporteroftheyear,aswellastheCapeChamberofCommerceInnovationAwardandtheSADCAnnualQualityAward.AbagoldwasalsoawardedtheNationalInnovationAwardin2014.

• Since theFund’s investment, a formalboard charterhasbeenadopted, theaudit committeewasexpandedtoincludeariskcommitteeandanominationscommitteehasbeenelected.Inaddition,adirectorinductionprocessisnowinplace.ThelevelofdetailintheannualreportmeetsInternationalFinancialReportingStandards(IFRS)andtheKingIIICodeofCorporateGovernance.

Website: http://www.abagold.co.zaLocation of operations: Hermanus,WesternCape,SouthAfricaSector: Agribusiness:AquacultureBusiness focus: AbalonecultivationforsaletoEastAsian

markets,primarilyHongKongSize (2014): Revenue:ZAR119million(USD11.9millionJob creation: Employees:388Investment stage: ExpansionorgrowthcapitalEvolution One Fund investment: TheFundinvestedZAR52.5million(USD5.25

million)on29June2010,providingcriticalexpansioncapitaltothecompany.TheFundowns15%ofAbagoldLtdindirectlythroughitssharesinaspecial-purposevehicle(SPV)calledAfropulse496(Pty)Ltd.WayneKeastrepresentstheEvolutionOneFundontheAbagoldandAfropulse496boards

Status: Fullyinvested.Expansionprojectsmostlycomplete.

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Inspired Evolution Investment Management Proprietary Limited Profit with Purpose: Sustainable Value Creation Report 2015 16

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Abagold: Afropulse 568 Proprietary Limited(continued)

About the company (continued)

In2008Abagold listedasanover-the-counter (OTC)publiccompany.Bythis stage, the staff complement had grown from 120 (in 2004) to 240employees. To meet the growing demand in China, Abagold initiatedthe raising of capital in 2010 through the issue of new shares. Capitalwasutilisedtopurchaselandadjoiningtheexistingproperty,andfortheinstallationofadditionalhatcheries,growthtanksandproductionfacilities.Share issue and private equity investments placed in June 2010 by theFund (via an SPV named Afropulse 568 (Pty) Ltd) secured the venture.Construction of the new hatchery and integrated aquaculture facility(Sulamanzi farm) commenced in 2011. The first abalone were placedonthe farm in2012andbyMarch2013morethan11500basketswerehousing50tonnesofabalone,withliveweightsalesreaching207tonnesin2013.In2014salesincreasedto335tonnesliveweightequivalent.Withthe completionof a varietyof expansionary activities, turnovergrewby67%from2013to2014,withfurthergrowthprojectedforthe2014/15FY.Theseexpansionaryactivitiesincludedincreasedtonnageonallfourfarms(anaverageof 4%), an increase in the size andcapacityof thehatcheryandan increase in theaveragemonthlyproductionof formulated feeds.The latter has allowed Abagold to record its first third-party sales offeeds. In 2014 Specialised Aquatic Feeds (Pty) Ltd was positioned as awholly-ownedsubsidiaryofAbagold tohouse thegroup’sgrowing feedproductionbusiness.Abagoldhasrecently(late2014)enteredintoajointventureagreementtoundertakefeasibilitystudiesandapilotprojectforthedevelopmentofanabalonefarmingbusinessinOman.

Abagold acquired ISO22000 accreditation for the abalone processingfacilityin2014.Inaddition,11sectionmanagersandspecialistssuccessfullycompleted their Aquaculture Learnerships, a first in the aquacultureindustryinSouthAfrica.

The company as an investment opportunity

The business case

Abagoldisanestablishedpost-revenue,post-profitbusinesswithattractivegrossprofitmargins.Thecompany’sexpansiondecisionshavealwaysbeenunderpinned by strong marketing and development of commerciallyviablemarketinganddistributionchains.Theproductenjoysstrongbrandsupport andmarket recognition in China,wheremore than 65%of theproduct is distributed.Othermarkets include Singapore (15%),Malaysia(10%),Taiwan(5%)andJapan(5%).Abagold’scontainmentofcostofsalescontinuestoperformwellonthebackofactualgrowthandtonnageonfarms. Abagold is the largest abalone producer in South Africa and theonlyonetoexportitsabaloneunderitsownregisteredChinesetrademark.It had recorded sales of 335 tonnes in 2014, equating to revenue ofZAR119million(USD11.9million).TheexpansionprogrammeatAbagoldis ongoing and aims to ultimately double output (from 2010), with aproductiontargetof475tonnesperannumby2017.

A legal and sustainable source of Abalone

Abalone was once abundant on the Cape coastline, but this resourcehasbeen increasingly over-harvestedby recreational divers, commercialharvestersandpoachers.Inspiteofregulations,restrictedquotasandtheultimatebanningofitswildharvest,wildabalonestockscontinuetodeclinetoworrying levels. Poachinghas turned intoa full-scale industry,drivenby complex socio-economic issues, limited employment opportunities

intheWesternCapeanddemandfrommarkets intheFarEast. It isnowestimated,bytheSouthAfricanDepartmentofAgriculture,ForestryandFisheries (DAFF), Fisheries Management, Fisheries Research, that up to2.4tonnesofAbalonearepoachedillegallyfromWesternCapewaterseveryyear.ThiswasbasedonananalysisofinternationaltradedataforimportsofH.midaeintokeyimportingcountriesfromSouthAfrica.In2012,DAFFannouncedthatillegalpoachingbysyndicateshadbroughtthespeciestothebrinkofcommercialextinction(tothepointwherecommercialfisheryisnolongerviable)inthewatersoftheIndianandAtlanticoceansaroundtheCapecoast.Furthermore,despiteeffortsbyDAFF to reduceabalonepoachingby15%perannum(net55%),studiesconductedbytheSouthAfrican Abalone ScientificWorking Group (Sustainable Management ofAbaloneforthe2014/15Season)showthatpoachinghas‘roughlytrebled’since 2009, revealing that, far from abating, abalone poaching in SouthAfricanwatersisescalating.

Byfarminganddistributingabalonesustainably,Abagoldhelpstomeetthedemandforthisendangeredspeciesbysubstitutingtheillegallyharvestedwild supply. Also, Abagold produces and releases new abalone sporesbackintotheoceantopromotetheresurgenceinnaturalstocks.Throughaquaculture science and best-practice management standards Abagoldhasdemonstratedthatitisabletocontributepositivelytoprotectingandregeneratingthisincreasinglyfragileandendangeredmarinespecies.

Social impact

Thecompanyoperatesinanareawhereunemploymentandpovertyarerife,exacerbatedbypooreducationandthelackofaskilledlabourpool.TheFund’s investment inAbagoldcreatesadditionalemployment,helpsto develop the practical skills of employees and improves education inthe community.Abagold is oneof thebiggestprivate sector employersin Hermanus and, in recognition of it being an employer of choice inthe region,anadditional42 learnershave joinedAbagoldaspartof thegovernment’sWorkplaceSkillsProgramme.Ofthese26willbeindefinitelyplaced at Abagold at the end of their six-month contract. Due to thecontinueddevelopmentandtheliveexportrequirementsofthebusiness,Abagold has recorded a 12% year-on-year increase in employmentnumbers.


The role played by Inspired Evolution’s private equity

Helping to grow a company with sustainable development principles at its core

ThepurposeoftheFund’sinvestmentwastoenableAbagoldtoscaleupitsoperations,withconcomitantjobcreation,andallowthedevelopmentofimprovedefficienciesandsustainablepractices.

Promoting local ownership and development

The Fund’s investment facilitated the establishment of the AbagoldDevelopment Trust, an employee trust with a 10% shareholding inAbagold.TheTrustfocusesoneducation,developmentprogrammesandjob creation in the greater Hermanus areawith the aims of communityupliftmentandthedevelopmentofpoorandneedypersons in informalsettlementsinHermanus.Oncedebtfromitssharepurchaseisrepaid,theTrustwillenjoyannualdividendsfromAbagold.Inthemeantime,Abagoldis channelling its corporate social investment (CSI) spend through theTrusttofacilitatethecontinuedstrengtheningoftheTrust’sobjectivesinthetargetedcommunities.ThroughtheTrust,donationsweremadetotheWaldorfSchool for theestablishmentofavegetablegarden,a rainwaterretentionandreticulationsystemandthelaunchofthePositiveParentingProgramme,whichhassincebeenadoptedbyAbagoldaswellandrolledouttoanumberofotherschoolsinHermanus.DonationswerealsomadetoWhalecoastConservationinsupportoftheEcoSchoolsProgrammeinMountPleasantandZwelihle.

Sustainable energy

Over thepast few yearsAbagold has delivered strong energy-efficiencyachievements inanumberofareas suchaspower factorcorrectionandreplacinginefficientequipment.WithassistancefromtheFund’sin-houseexpertise and guidance on technology options, Abagold is currently inthe process of planning two separate renewable energy alternatives tosupplementits2.5MWpowercapacityrequirement.Oneistheinstallationofaturbinetoextractenergyfromthereturnflowofwatertothesea.Theother is the design, building and operation of awave energy converter(WEC) toharness theenergy in thewavesandconvert that toelectricalenergy. All approvals, including Environmental Impact Assessment (EIA)andleaseofseaspace,wereobtainedduring2013,andaseparatecompanycalledMeanSeaLevel (Pty) Ltd (MSL)wascreated topursue theenergyinterests of Abagold.With the recent acquisition of a 43% shareholdingin MSL as implementer of Abagold’s renewable energy initiatives, theconstructionof thewave energyplant and an effluent recovery turbineareplanned tocommence.The substitutionofpower supplied from theEskomgridwiththisalternativecleanerenergyimpliesgreatercontroloverfutureenergycosts,areducedriskofexposuretogridpoweroutagesandasignificantlyreducedcarbonfootprint.

Duringthepastyear,allbutonefarmhasbeentransferredtoanewwaterreticulation systemwhich was commissioned in 2013 and a substantialreduction on total energy consumption has been achieved.Morewaterisbeingdistributed to the farmsdue to increasedbiomass,withenergyconsumptionbeingsimilartothatof2013.

The business continues to look for new international and localopportunitiesintheformofdistribution,acquisitionornewdevelopmentandhas entered into a joint venture agreement to undertake feasibilitystudies and a pilot project for the development of an abalone farmingbusinessinOman.

Results of the partnership

Finance for expansion of operations and sustainable business practices and taking aquaculture beyond best practice

TheFund’sinvestmenthasfacilitatedtheinstallationofanintegratedaquaculturefacility,whichallowsthecompanytotakeresponsibilityfor the entire farming chain, including the cultivation of kelp inhybridtanks.Theseaweedtakesupnutrientsreleasedaseffluentbytheabalone,thusenablingrecirculationofseawaterwithinthetanks.Italsoreducestheseawaterextractedforproductionandimprovesthequalityofwaterthatisfinallyreturnedtothesea.Abagoldpumps8million litres of sea water per hour through its various growingfacilities.

To maintain the highest standards of animal managementtechniquesandworld-classfood-processingstandards,stafftrainingin occupational health and safety awareness is ongoing. TheprocessingfacilityadherestoaHazardAnalysisandCriticalControlPoints(HACCP)system.ProductsaremeasuredagainsttheFoodandAgriculturalOrganisation’s(FAO)guidelinesandtestedandapprovedbytheNationalRegulatorforCompanySpecifications(NRCS).

Sustainable feedstock

Abalone is fed a combinationofnatural seaweeds and formulatedfeeds. Since2011,Abagoldhasproduced itsown formulated feed.ThefishmealcomponentwasreducedandissourcedentirelyfromasupplierwhoconformstotheWorldWideFundforNature‘fish-in-fish-out’sustainablestandards.Bothcultivatedandwildkelpareusedasafeedstock.Wildkelpharvestingismonitoredusingsatelliteimageryand the total allowable catch is adjusted to ensure sustainableharvestingandthelong-termhealthofthewildkelpbeds.

Sustainable employee relationships

AtpresentAbagoldemploys388peopleanditwillalwaysbealabour-intensive operation. Employee relationships are therefore critical.Much of Abagold’s employee development exceeds complianceandaims to foster long-termsustainable relationships.Thesuccessofemployeeengagementisreflectedinthelowemployeeturnover,whichiswellbelowthenationalaverage.

Basicadulteducationformsacomponentofstaffdevelopment.Thisisacriticalfoundationforimprovedlifeskillsandraisedself-esteem,and also lays the foundation for more complex training involvingaquaculture,technicalandsupervisoryskills.Asof2014,atotalof278AdultEducationandTraining(AET)certificateshavebeenawarded.OneoftheAETlearnerswasshortlistedfortheBestPerformingAETLearner award in Agriculture by the AgriSETA Annual ExcellenceAwardsinSouthAfrica.

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Abagold: Afropulse 568 Proprietary Limited(continued)

We knew that expansion in the midst of a global recession would be challenging. It would take a unique investor to take exposure in a relatively new primary aquaculture industry like abalone farming. Inspired Evolution not only supplied the capital funding but actively contributed to decision making at board level. This resulted in a renewed awareness of our corporate responsibility towards sustainable and responsible development.

This focus fits elegantly with Abagold’s values of innovation and responsibility, not only in our business operations but in the interactions with the environment and society. Besides the envisaged additional 200 direct jobs, social upliftment will be achieved through the broad-based black economic empowerment structuring of their investment. Part of this structure includes the Abagold Development Trust, which owns 10% of Abagold and has the objective of social upliftment among the previously disadvantaged communities of Hermanus.

JohanHugo,FinancialManager,Abagold

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Sustainable employee relationships (continued)

In2012 thehuman resourceprogrammewasexpanded to includean effective leadership development programme. The Abagoldemployeeprogrammegoesbeyondotherprogramme,it isholistic,addresses individual development and offers coaching in areassuch as communication, stress management, relationship skills,positiveparenting,self-esteembuildingandresistingpeerpressure.The occupational health programme covers health education andtreatmentatthecompanyclinic.Inaddition,theexistingWorkplaceChallenge Programme (Kaizen), initiated in partnership withProductivitySA,hasnowbeen renamed‘TheAbagoldWay’, as it isnolongeraprogrammebutratherthewayAbagolddoesbusiness.DuringSeptember2014AbagoldwasannouncedthewinneroftheProductivitySARegionalAwards(WesternCape).

During2014Abagoldinvested,onaverage,729hourspermonthintraininganddevelopmentacrossalllevelsofemploymentandspent3.5%ofremunerationcostsontraininganddevelopment.


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YSIRAC Southern Africa Proprietary Limited

About the company

SIRACwasthefirstcompanytoentertheresidentialheatpumpmarketin2008whenSouthAfricabeganexperiencingrollingblackoutsandloomingelectricitypricehikes.Today,SIRACisamarketleaderinbothcommercialandresidentialheatpumpapplicationswithanationalsalesfootprint.Theirheatpumpsaredesignedtoprovidemaximumefficiencyandreliabilityinextremeclimaticconditions.

SIRACproductshavebeendesigned tomeet the specific southernAfrican market. As the sole distributor of SIRAC products in thesouthern African region, SIRAC enjoys a close relationship withthe product manufacturer and participates in mutual productdevelopment. For this reason, the company has a differentiatedadvantage–itcannotonlysupportitsproductsbutalsocustomisesolutionsforitscustomers.

The management team has been at the forefront of productdevelopment with a number of technological innovations drivingcontinual product energy-efficiency gains. The company counts anumberofleadingindustrial,mining,leisure,propertyandparastatalorganisationsasrepeatclients.

SIRAC’sbusinesshasevolvedovertheyearsfromastrongandwell-established national air-conditioning and refrigeration company,to itscurrentposition.Today it suppliesproductsandservices thatinclude new generation integrated heat exchangers, industrialheating equipment, renewable energy solutions, swimming poolheat exchangers, hot water centralised heating and distribution,ventilationandcooling,consultinganddesignengineeringservices.These products and services are largely distributed through anetworkofsatellitebusinessaroundsouthernAfrica.


• InspiredEvolutionprovidedessentialinsightintothedevelopmentofanewstrategyforSIRACSouthernAfrica,whichhasresultedinanincreaseinsalessincetheFund’sinvestment.

• SIRACacquiredapprovalofthepatentfortheThermocube™tank,thankstothefundingandlegalassistanceprovidedbytheFund.

• The investment introduced the need to further increase the productrange,whichstimulatedadditionalgrowthforSIRACSouthernAfrica.

• Thedevelopmentof newproducts and the expansionof theofferingreinforces SIRAC’s position as a contributor to the energy-efficienteconomy.AllofSIRAC’sproductsleadtosavingofconventionalenergy.

• The product developments opened up new opportunities andmarkets includingdevelopers,hospitals,hotels, residences, retirementcommunitiesandadditionalcommercialandresidentialapplications.

• SincetheFund’sinvestment,theboardandtheexecutivefinancialandreporting functions have been strengthened. Cost-cutting and salesstrategymeasureshavebeenimplemented.

Website: http://www.sirac.co.zaLocation of operations: TheSIRACSouthernAfricanofficesare

locatedinJohannesburgandCapeTown,SouthAfrica

Sector: Energy-efficiencyservicesectorBusiness focus: Saleanddistributionofheatpumps,

integratedheatpumps,indirecthotwaterheatingtanksandtheprovisionofenergy-efficienthotwaterheatingsolutions

Size (2015): Revenueprojected:ZAR23million (USD2.3million)Job creation: Employees:14Investment stage: ExpansionorgrowthcapitalEvolution One Fund investment: TheFundinvestedZAR17million (USD1.7million)inexpansioncapitaland

madeavailableafurtherZAR3million(USD300000)tradefinancefacilitytosupporttheCompany’sgrowth.ThefundsweredeployedinOctober2013withatop-upinMarch2015,providingcriticalexpansioncapitaltothecompany.StevenFaureandWayneKeastrepresenttheFundontheSIRACboard.

Status: Fullyinvested.Expansionprojectsmostlycomplete.


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SIRAC Southern Africa Proprietary Limited(continued)


The leading company in a sector with strong growth opportunity

The investment into SIRAC was integrated with the Inspired Evolutionobjectiveof facilitatingexpansionandgrowthcapitaltoacompanythatalignswith their focus on energy and resource-efficiency. SIRAC soughtto explore new markets of customer groups and the Fund deployedexpansion capital to assist with growing operations, making SIRAC anattractiveopportunityforinvestment.

The business

SIRACisanestablishedpost-revenuecompanywithattractivegrossprofitmarginsandgrowthprospects.Thecompany’sexpansiondecisionshavealwaysbeenunderpinnedbythedevelopmentofstrongandcommerciallyviableproductsandservices.Theirproductsenjoystrongbrandsupportand market recognition in China, where SIRAC’s technology originatesfrom,andintheadditional20countrieswherethebrandhasapresence,including South Africa. The key to SIRAC’s continued growth is a totalcommitment to the highest standards of product quality and customersatisfaction. These standards are achieved through strict adherence torigorous quality controls at every step; from engineering, machining,manufacturingandassembly todeliveryandafter-salessupport.SIRAC’sparticipation in SABS certification programmes further demonstrates itsqualitycommitment.

SIRAC is projecting revenue of approximately ZAR23 million (USD2.3million)inthecurrentfinancialyearending30June2015,upfromZAR11.5million in the2014financialyear.ExpansionanddiversificationactivitiesareexpectedtoincreaserevenuetoapproximatelyZAR38million(USD3.8million)fortheyearahead.

A pioneering business

As mentioned, SIRAC was the first to enter the residential heat pumpmarket in2008whenSouthAfricabeganexperiencingrollingblackouts.The company identified a niche in the market and have subsequentlybecome the market leader in both commercial and residential heatpumpapplicationswithanationalsalesfootprint.Asapioneerinitsfield,it continues to service various markets successfully while maintainingcompliancewithindustryandenvironmentalregulations.

Inastrategicdecisiontomaintaingrowth,SIRACintroducedthepatentedThermocube™Tanktoitsproductoffering.TheThermocube™tankanditscomponents are an indirect energy-efficient hot water heating system.The tank retainswateratatmosphericpressure,which isheatedwithanexternalhigh-energyheatpumporsolarsystemapplication.Thisheatedwaternever leavesthetankandsanitisemainswateratregulatedmainspressure. It passes through purpose-made 316 litre stainless steel heatexchangers, which are suspended into the hot water within the tank,drawing heat therefrom. This heated sanitised water is then availablefordistribution.The tankposesanumberofbenefits, including reducedbacteria risk (legionella). As this is an indirect system, which has a lowvolumeoffreshwateratafastreplacementrate,onlysanitisedmunicipalwaterisfedintothehotwaterreticulationsystem.Thishasdemonstrablehygienicadvantagessuchasquickinsituassemblywherethetankretainswateratatmosphericpressure,suitabilityforoutsideinstallations,aswell

asexceptional insulationproperties. Inaddition,theThermocube™tanksruna low riskof scalingandsludgebuild-upascompared to traditionalbulk storage tanks, while allowing for connection to a drain back low-pressuresolarsystem.

Currently,approximately100unitsof theThermocube™tanksare locallymanufacturedeveryyearandsoldacrosssouthernAfrica.SIRACSouthernAfrica intends growing itsThermocube™ offering to include a domesticunit,aswellasexpandingdistributionbeyondlocalshores.Withthepatentapproved for the Thermocube™ tank offering, SIRAC is legally the soleowneroftheThermocube™tank.

The PHINX integrated heat pump incorporates a SANS 151-316 litrestainlesssteelgeysercoupledtoahigh-efficiencyR134aheatpumpandcanbefitted tomatchanydomestic installation. It isnearly three timesmoreenergy-efficientthanaregularelectricgeyserandisratedto600kPaworkingpressure.SIRAC’sPHINXintegratedheatpumpshavesmartaddedfeatureswheretheclientmaysetupawirelesslinkwiththeunitusingadownloadablesmartphoneapp,allowingonetoswitchthepumpgeyseronoroffandsetthetemperatureandtimersremotely.Inaddition,solarpanelconnectionportsareincludedforsupplementaryheating,ifrequired.

Social impact

Unemployment-related issues constitute a portion of SIRAC’s local ESGstrategyanddecisionmaking in lightofestablishingasocially impactfulorganisation. The company currently employs 14 people from thesurrounding communities with five of them being female. In order tocontribute to national skills development, 2% of the company’s totalpayrollcostsareutilisedforemployeedevelopmentandtraining.



Helping to grow a company with product development

ThepurposeoftheFund’sinvestmentwastoenableSIRACtoexpandthebusinessintoaleadingtechnologyandservicecompanywithintheenergyandresource-efficiency-drivenhotwaterindustry.Thiswillbeachievedbysupplyingthenecessaryfundingto increaseSIRAC’sproductandserviceoffering.TheFundhascontributedtothecompanybeingabletofurthertheirproductofferingintheenergy-efficiencyarena,particularlywiththeintroductionofitsintegratedheatpumpandThermocube™tank.

Business strategy and operations

InlinewiththeFund’sinvestmentguidelines,InspiredEvolutionplaysanactive role in refining SIRAC’s strategies and business systems. Thus farthe fund has participated in introducing necessary controls to SIRAC’sentrepreneurially managed business to speed up efficiency and ensurethatthebestpossibleprocessesareinplaceforthegrowthandsuccessofthebusiness.Thishasinturnsecuredadditionalworkforthebusinesswithoptimalcapacitytodealwiththeinflowoforders.


TheFund’sinvestmentcapitalhasfacilitatedthedevelopmentoftheThermocube™ tank forwhichSIRAChas sinceacquired thepatent.As the sole developer of the Thermocube™ tank, combined withexperience and their additional products, SIRAC can now profileitself as the leadingproviderofenergy-efficienthotwaterheatingsolutions. Furthermore, SIRAC has also been able to extend itsoffering to integrated heat pumps, an exciting newproposition inthenewhousingmarket.

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The capital investment into SIRAC provided by Inspired Evolution has afforded the company the opportunity to patent its Thermocube™ tank and approach new markets, including for the ‘smart’ integrated heat pump. Strategic support has resulted in increased sales and swift growth of the business. In addition, our executive functions in terms of board structure and oversight, as well as financial and non-financial reporting have been strengthened as a result of the Fund’s guidance and advice.

In line with our vision to be a leading provider of energy-efficient water heating solutions, Inspired Evolution’s funding has enabled business growth that will help us reach this goal quicker than previously envisioned, thereby allowing the company to contribute to South Africa’s energy-efficient economy and mitigate the current national energy crisis.

NeilHablutzel,ManagingDirector,SIRACSouthernAfrica


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About the company

EnviroServ is the premier private wastemanagement company inAfrica.The company currently offers a range of specialist services,including the analysis and classification of waste; collection,transportation and disposal of general and hazardous waste;emergency response services (i.e. clean-up of spillages); transferstationsand recycling facilities; theoperationandmanagementoflandfill sites; incineration of health-care waste, and on-site waste;managementat industrialandcommercialclientpremises. In1996thecompanylistedasthefirstwastemanagementcompanyontheJohannesburgStockExchange(JSE).InNovember2008aconsortiumof investors, ledbyABSACapitalPrivateEquity,acquiredtheentireissued share capital of EnviroServ, resulting in EnviroServ delistingfromtheJSE.Thisallowed20%ofEnviroServ’ssharestobeavailablefor a B-BBEE ownership transaction, which was facilitated by theFund.

EnviroServ Waste Management Proprietary Limited

Website: www.enviroserv.co.zaLocation of operations: Thecompanyhasfacilitiesthroughout

SouthAfrica,businessoperationsandserviceprovisioninvariousSADCcountriesincludingAngola,Botswana,DemocraticRepublicoftheCongo(DRC)andLesotho,amongstothers.TheEnviroServheadofficeislocatedinJohannesburg,SouthAfrica.

Sector: IntegratedwastemanagementBusiness focus: Environmentallyresponsiblewaste

managementacrosssouthernAfricaSize: Revenue:ZAR1.63billion(c.USD163million)

(2012)Job creation: Employees:3539(2010);3852(2012)Investment stage: ExpansionorGrowthCapitalEvolution One Fund investment: TheFundwasadebentureco-investor

withaninvestmentofZAR51.58million(c.USD5.158million)andheld500subordinatedsecuredADebentures.TheinvestmentdealwasconcludedinJune2010andtheFundexitedinApril2013

Status: Divested


• TheFund’s investmentwasagrowthequitycontribution thatassistedin the financial restructuringof EnviroServ to, amongother priorities,facilitate20%of EnviroServ’s shares tobeavailable for abroad-basedblackeconomicempowerment(B-BBEE)ownershiptransaction.

• TheFund’scapitalinjection,alongsideothers,repositionedthebusinessforsustainedgrowthof itswastemanagementservices intotheSADCregionandresultedinthecreationof313additionaljobsbetween2010and2012.

• EnviroServ’s strong track record in social and environmental riskmanagementhasbeenfurtherstrengthenedsincetheFund’sinvestmentbytheformaladoptionofaSocialandEnvironmental(S&E)CorrectiveActionPlanthatwasincludedinitsDebentureAgreement.ThisensuredthatEnviroServwasobligedtoimplementcorrectiveactions(identifiedasaresultofthecomprehensiveS&EduediligenceconductedbyMarshEnvironmental Services, as commissioned by Inspired Evolution) andthat these actions were adequately resourced and executed againstagreedtimelines.

• The simultaneous execution of a strategic Collaboration AgreementbetweentheFundandEnviroServoptimisedthepotentialfortheFundtoactasa‘portal’tobringbest-of-breedcleantechnologiestomarket,whereEnviroServprovidedtheplatform,clientbaseandlogisticstorolloutfavourablewastetechnologieswhenandwhereappropriate.

• TheadditionalS&EcomplianceandcorrectiveactionsdrivenbyInspiredEvolutionoffthebackoftheIFCPerformanceStandardsandguidelinescontributed to EnviroServ’s improved sustainability credentials andannualreportingcommitments.


EnviroServ Waste Management Proprietary Limited (continued)


The leading company in a sector with strong growth opportunity

This investment was integrated with the Inspired Evolutionphilosophyoffacilitatingexpansionandgrowthcapitaltoacompanythat isamarket leaderandoffersahigh-growthplatformforcleantechnology deployment into the integrated waste managementsector. The investment decision also allowed associated strategicobjectives to bemet through a collaboration agreement betweenEnviroServ and the Fund. The decision to invest in the companywas undertaken after extensive independent due diligenceinvestigations.Onthebasisofthese investigations,theFundmadeclearrecommendationsforimprovementstoandthestrengtheningof systems in the health and safety area. In April 2013, the FundconcludedasuccessfulexitfromEnviroServ,achieving1.76xmoneyattheendofitsthree-yearinvestmentterm.

EnviroServMineralBeneficiation(EMB)specialisesintherecoveryandbeneficiationofwastestreams,fromthemetallurgicalandsmeltingindustry.The EnviroServWaste-2-Energy (EW2E)division addressesthe growing demand for green energy and the significant rolewastecanplayasanenergysource.Changesinwastemanagementregulationslimitedthelandfillofcalorificwastestreams,henceEW2Ewasuniquelypoised to takeadvantageof this.During2013,EW2EcommissionedtheChloorkopLandfillGasproject intheEkurhuleniMetropolitanArea inGauteng,whichproduced3MWofelectricity.Thesaleoftheelectricityfromthisprojectwasoneofthefirstofitskindinthecountry.

EnviroServholdscertifications in several internationally recognisedmanagementsystems,includingISO14001,OHSAS18000,ISO9001,the Chemical and Allied Industries Association’s Responsible Caresystem and their Safety and Quality Assessment System (SQAS)Programme, as well as the International Solid Waste Associationsystems. The SHEQ Integrated Management System has beenimplementedforthemajoroperations.Thecompanyisauditedbothinternallyandexternallytoensurethatmanagementsystemsbringaboutcomplianceandeffectiveresults.


The investment contributed to holistic support for the entireEnviroServ platform. The Fund’s capital injection, alongsideothers, repositioned thebusiness for sustainedgrowthof itswastemanagement services into the SADC region. EnviroServ‘s strongtrack record in social and environmental risk management wasfurtherstrengthenedbytheFund’sinvestmentbywayoftheformaladoptionofanS&ECorrectiveActionPlan,whichwasincludedintheFund’s legal agreements.Thisensured thatEnviroServwasobligedtoimplementappropriatecorrectiveactions,whichwereadequatelyresourced and executed against agreed timelines. In addition,the Fund’s investmentwas a positive contribution to the financialrestructuring of EnviroServ in order to facilitate 20% of its sharesto be available for a broad-based black economic empowerment(B-BBEE)ownershiptransaction,whilegeneratingsubstantialindirectemployment through the company’s activities. The EnviroServcorporate social investment (CSI) programme equally benefitedthroughthecompany'sexcellenttrackrecordofworkingwithSMEs,

As a part of EnviroServ Waste Management’s strategy to provide holistic waste solutions, it was approached by a number of its customers about waste tyres. The disposal of waste tyres has historically been a challenge to South African companies.

EnviroServ investigated numerous solutions for the effective disposal of waste tyres and was considering the acquisition of a tyre pyrolysis business as a method of treatment. Inspired Evolution offered to analyse international research on the success of the tyre pyrolysis methodology and its suitability to the South African context. Within a short period of time Inspired Evolution was able to conclude and advise EnviroServ that tyre pyrolysis had a number of shortcomings. After considering the evidence, EnviroServ chose not to use the pyrolysis method of treating waste tyres but to pursue an alternative tyre treatment process as a solution to its customers’ needs. The timely advice received from Inspired Evolution helped EnviroServ to secure the correct waste tyre solution process.

DesGordon,CEO,EnviroServ

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facilitating training and employing unskilled people from local communitiesadjacenttooperations. Inaddition,EnviroServfacilitatedbusinessdevelopmentandtheemploymentof250peoplebyprovidingfacilitiesandcapacityforanSMErecyclingenterprise,MamaShe’s,atChloorkop.


Demeter Organic Fertilisers Proprietary Limited(previously ‘Acapulco Trade and Invest 162 Proprietary Limited’)

Demeter Organic Fertilisers

About the company

DemeterOrganicFertilisersinitiallyenteredintoatechnologytransferandexclusive licenceagreementwithUnityFertiliser (SouthAfrica)fortheconstructionofa330000tonnecapacityfertiliserplantintheRichards Bay Industrial Development Zone (IDZ). The technology,licensed by Unity Envirotech, uses human sludge to manufactureorganically enhanced nitrogen-based fertiliser. Demeter was toestablishthefirstUnityplantinAfrica,withtheintentiontorolloutfurtherplants in the SADC region.The technology agreementwasneverconcludedandDemetersubsequentlydevelopedaproprietarytechnology to convert municipal waste-water sludge (‘biosolids’)intoanutrient-enhancedorganicfertilisercalledDemeterOrganicsTM. DemeterOrganicsTM is safe to handle and safe for use in any crop.SouthAfricahasover900waste-watertreatmentfacilitiesaroundthecountry.Oneoftheirkeychallengesistosafelydisposeofprocessedbiosolids without harming humans or the environment. Demeterprovides a safe and sustainablemeansofdisposingofbiosolids inaway that benefits the environment and people, by reducing theimpactoftraditionalfertiliserongroundwaterandtheenvironment,andbycontributingtofoodsecurity.

SouthAfricanconsumesapproximately2milliontonnesofchemicalfertiliserperannum,butmorethanhalfofthisisimported.Inaddition,there is a substantial market for organic fertiliser (approximately150 000 tonnes of enhanced chicken and cow manure), but thisis limited by the available sources of organic material. Decadesof commercial farming with chemical nitrogen, phosphorus andpotassium(NPK)fertiliserswithoutreplenishingtheothersoilmicro-nutrients thatareusedbyplants,have leftsoilsdepleted. Organicfertilisers and inparticularDemeterOrganicsTM are able to replenishsoils by re-introducing organic material, fibre, carbon and micro-nutrients such as zinc, copper, boron, iron, and calcium that areknown to enhance soil quality andplant yields.DemeterOrganicsTMopens up a whole new source of nutrient-enhanced organicmaterial to agriculture and shows a significant yield increase overconventionalfertilisers.

TheDemeter technology has been successfully demonstrated in alaboratoryenvironmentandDemeterisintheprocessofbuildingapilotplantattheirtestingfacilitiesinBronkhorstspruit.Demeterhasalso secureda tenderwitheThewkiniMunicipality to remove theirbiosolidsover thenext15yearsandprocess theseata rateof150tonnesperday.ThisfacilitywillbebuiltateThekwiniSouthernworks.

Website: NoneLocation of operations: RichardsBay,KwaZulu-Natal,SouthAfricaSector: FertilisermanufacturingBusiness focus: Productionoffertiliserfromhuman

sewerage(solid-wasterecycling),forsaletointernationalmarkets

Size: Pre-revenue,start-upcompanyJob creation: Employees: Atpresent2employeesDevelopment stage: Phase1–Greenfieldfeasibility

development;Phase2–Infrastructureprojectfinance

Evolution One Fund investment: TheFundapprovedaZAR10million (c.USD1million)investmentforPhase1

tocovertheacquisitionofthetechnologylicencerightsinsouthernAfricaanddevelopmentofthepermittinganddesignofa300000tonneperannumurea-wasteorganicfertiliserplantinRichardsBay.TheFundonlydisbursedZAR3million

(c.USD300000)asmilestoneswerenotmetinordertoreleasethesecondtrancheforPhase1.TheFundholds15%ofthecompanyandMsBulelwaNtshingwasitsontheboardastheFund’srepresentative.TheFundhasrightstoinvestprojectequityatfinancialcloseofthefertiliserplant.

Status: Phase1–Earlystagegreenfieldfeasibilitydevelopmentcapitalpartiallyinvested.ProjectsiterelocatedtoeThekwiniSouthernworksinKwazulu-Nataltoprocessitswastesludgeeffluentthroughafeedstockagreementwitharevisedlocaltechnologythatisbeingpilotedforuseatasmallerscale.Pre-permitted,pre-feasibilitystage.


• TheFundhashadlimitedimpactastheprojectwasputonholdsoonafterinvestmentwhenmilestonesweremissed.Notwithstandingthis,the Fundprovided access to early-stage development capital that isfacilitating the potential roll-out of an improved resource efficienttechnologysolution foraurea-basedorganic fertiliserplant.This isasubstituteforconventionalindustrychemicalby-productfertilisersandwillreduceecologicalfootprint.

• A rigorous social and environmental (S&E) approach was taken tofacilitate the environmental impact assessment (EIA) scoping workthatwasconductedontheinitialRichardsBaysite.TheEIAscreeningreportwillbeusedforthenewsiteneartheDurbansolidwastefacility.Inspired Evolution facilitated this through the application of the IFCPerformanceStandardsandguidelines.

• InspiredEvolution’scommitmenttoits‘beyondcompliance’philosophywill ensure thatDemeterwill adhere tobest-practice ESGguidelinesandpolicies.

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InspiredEvolutionsoughttoidentifyinfrastructure-typeinvestmentswith select greenfield projects offering innovative technologysolutions that would contribute to resource-efficiency andovercoming environmental challenges. In Demeter’s case, thetechnology provides an environmentally friendly product and atthesametimemitigatestheproblemsassociatedwithhumanwastesludgebeingdumpedintolandfillsitesand/orpumpedouttosea.Thisalsosubsequently reduces localmunicipalityspendonthedisposalofhumansludge.Independentlaboratorytestshaveproventhattheproduct is not combustible and that its physical properties matchor exceed industry standards. Acapulco will look to secure offtakeagreements with Ameropa (a privately owned Swiss internationalgrainandfertilisertrader,foundedin1948)aswellaslocalofftakersforthepurchaseoftheirproductoncemanufacturingcommences.

The Fund provided ZAR10 million (c. USD1 million) developmentcapitaltosecurethetechnologyandcoverfeasibilityandpermittingcosts.Once theefficacyof the revised technology isprovenby thepilot project, Phase 2will commence and allow the Fund rights toinvest directly in the project asset company for an investment ofup toc.ZAR125million (c.USD12.5million) fora49%equitystake.TheconditionsforthismoneytoflowtothecompanywerenotmetinitiallyandInspiredEvolutionplanstoincludetheDemeterproject,oncefullypermitted,asaprospectiveinvestmentunderitssuccessorfund,EvolutionII.


Demeter will initiate a new EIA for the site at eThekwini Southernworks,andapplyforawastemanagementlicenceandawaterusagelicence.The S&Eeffortsmadeand lessons learned capturedduringthefirstscopingexercisefortheinitialRichardsBaysitewillbeusedtofasttrackthisprocess.Thedelaysindeliveryofagreedtargetsbythecompanyin2012haveresultedinarevisedtechnologyandbusinesscaseevaluation.InspiredEvolutiondeterminedthattherewereseveralweaknesses inDemeter’smanagementteamandapproach.Onthisbasis,futurefundingtrancheshavebeenhaltedundertheFund.TheFundisattemptingtorebuildvaluefromthenewtechnologyunderdevelopment.DemeterintendstoimplementtheKingIIIgovernanceprinciples and adhere to the IFRS for SMEs. Through the Fund’sguidance,acorporategovernancepolicyandcodeofbusinessethicshavebeenputinplace.

When we first began our journey to develop a full-scale organic enhanced fertiliser plant, based on the information provided by our technology partner, the Inspired Evolution team believed in our vision of transforming hazardous biological waste into a sustainable, high-performance fertiliser.

Inspired Evolution’s early-stage capital made it possible to develop a business model that was to attract funders willing to provide mezzanine and senior debt finance into the project. During this period, we appreciate Inspired Evolution’s assistance as we pursue King III governance principles. Inspired Evolution’s inputs at strategic level proved invaluable in crafting a successful business plan and financial model that is both robust and resilient.WilliamH.Butler,ManagingDirector,Demeter

Demeter Organic Fertilisers Proprietary Limited(previously ‘Acapulco Trade and Invest 162 Proprietary Limited’) (continued)

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RustMo1 Solar Farm (RF) Proprietary Limited

About the company

RustMo1SolarFarmisaspecial-purposeprivatecompanydedicatedtotherenewableenergysector.Thecompanyisfocusedondeveloping,constructingandowninga7MWsolarPVenergygenerationprojectbased near Rustenburg in the NorthWest Province, South Africa.RustMo1hasusedprojectequityfinance toconstruct, commissionandoperatethesolarPVassets.MomentousEnergyisthelocalSouthAfricansponsorinvolvedindevelopingthesolarPVplant.Theplanthasbeenconstructedona19hafarmadjacenttoMarikanaPlatinumMinenearRustenburg,abouttwohoursnorth-westofJohannesburg.Theplantisnowinits18thmonthofcommercialoperationandfeedselectricity into the national grid. A 150metre power line links theplanttothenearestEskomsubstation.

Prior to selection, the site was assessed for solar irradiation yield,grid proximity, local demand andplant feasibility. Benefits includeproximity to the substation, moderate temperatures, high localdemandforpower(mostminesintheareaoperateat90%capacitydue to a shortage of electricity supply from Eskom), a stabledistributiongrid,goodaccess(viatheN4highwayandtarredroads),and the land around the mine being of low agricultural value.Specialistassessments informedthefinalconfigurationofthesolarPVfarmtoensureanoptimalarrangementofarrayswithresponsetothesocialandbiophysicalattributesoftheenvironment.PositiveEnvironmental Authorisation (EA) for the project was receivedinApril 2011asa resultof theEIAundertaken.Awater licence fortheminimalamountofwater requiredwasalsoobtained fromtherelevantauthority.

The farmbecame operational on 9November 2013 and has beensupplyingpowerdirectlyintothenationalgrid,therebycontributingbothtoSouthAfrica’slow-carbongoalsandtoalleviatingthecurrentenergyshortagesinthecountry.RustMo1iscontractedviaa20-yearinflation-linkedpowerpurchaseagreement(PPA)withEskom,whichin turn is underwritten by a sovereign guarantee. The operationsphase of the project has so far been successful and the plant iscurrently outperforming its P50 energy production and revenuetargets.ThecompanyisfollowingastrictEnvironmentalandSocialAction Plan (ESAP) and currently employs 23 permanent workers,includingthreefemales.

Website: www.momentousenergy.comLocation of operations: Rustenburg,SouthAfricaSector: RenewableEnergy:SolarPhotovoltaicPower

GenerationBusiness focus: 7MWfixed-axis,ground-mounted,grid-

connectedrenewableenergygenerationfacility

Size: Revenue:ZAR42.4million(c.USD4.24million)Job creation: 23permanent;intotal83temporaryand

permanentjobsduringthe12-monthconstructionperiod

Development stage: Early-stage|GreenfieldsInfrastructureProjectFinance

Evolution One Fund investment: ZAR40.34million(c.USD4.034million)

investedbyMarch2013witha51%equityinterest.TheFund’ssubscriptionpremiumincludedafreecarryequatingto9%oftotalequityforMomentousTechnologies(theprojectsponsor).ChristopherClarkerepresentstheEvolutionOneFundontheboardofRustMo1SolarFarm.

Status: Fullyinvested,18monthspostcommercialoperationsdate(COD),whichwas

9November2013


• With the Fund’s technical, contractual and financial support,MomentousTechnologies,asmallindependentandlocalSouthAfricandeveloper, was able to ensure that the RustMo1 Solar Farm couldcompetesuccessfullyunderREIPPPP,asasmallemergingIPP.

• The RustMo1 Solar Farm generated approximately 12.4GWh of cleanenergy for the period March 2014 to February 2015, thus mitigatingapproximately12250tCO2eofgreenhousegaseseachyearbyreplacingdirtiercoal-poweredgenerationalternatives.

• Theprojectcomprises41%blackeconomicempowermentownership,of which 17% is owned by the local broad-based, previouslydisadvantaged communities. Revenues of more than ZAR114 million(c. USD11.4 million) will flow directly from the project to these localcommunitiesoverthe20-yearprojectlifecycle.

• RustMo1SolarFarmcomplieswiththeIFCPerformanceStandardsandthe Equator Principles. The project agreements include an EquatorPrinciple Action Plan that mitigates any potential negative socialand environmental (S&E) impacts. A full environmental and socialmanagement system (ESMS) has been implemented for the project’soperationsphase.

RustMo1Solar Farm

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RustMo1 Solar Farm (RF) Proprietary Limited(continued)


RustMo1 Solar Farm is an opportunity to earn an attractive returnthrough investing in a renewable energy generation facility thatis located in an area with favourable solar irradiation levels andsupportinginfrastructureandlogistics.A20-yearPPAwithEskomisinplace.

TheprojectissituatednexttolargeminingfacilitiesthatcouldprovideafutureexitopportunityfortheFundastheyarehigh-energyusersandthecleanenergyprojectmayprovideafuturecarbontaxoffsetoptionforthem.ThesolarPVceilingtariffannouncedunderREIPPPPRound1wasZAR2.85/kWh,therateatwhichtheRustmo1SolarFarmwas contracted. The engineering, procurement and construction(EPC) and operating and maintenance (O&M) contractor is JuwiRenewables,aworld-leadingGermansolarPVdeveloper.Thestatic-statetechnologycharacteristicofsolarPVprovidesforcommerciallyattractivelow-risk,long-termrobustcashflowstotheFund.

Aprocessisunderwaytoregistertheprojectasacleandevelopmentmechanism(CDM)projectthroughaprogrammeofapplication(POA)specificallyforsolarPVprojects.Thisincludesafullassessmentofthegreenhousegasemissionssavingsassociatedwiththegenerationofelectricity,estimatedtobeapproximately12250tCO2eperannum.

This project has so far directly generated 23 permanent jobs inthe operations phase and 83 temporary jobs in the constructionphase.The company committed to hire locally and has performedwell against this target. RustMo1 also made a commitment toskills development and training via its revenues of more thanZAR114million(USD11.4million),whichwillflowtolocalhouseholdsovertheproject’slifespan.

Local black shareholders hold 41% of RustMo1 Solar Farm’sownership, which includes a local community broad-basedownershipcomponentviaabespoketrustentitledtheMomentousFoundationCommunityTrust.ThistrustwasfundedbytheIndustrialDevelopmentCorporation(IDC)throughpreferencesharesandowns17%oftheRustMo1SolarParkproject.TheTsakaneandLapologangcommunitieshaveelectedrepresentativesastrusteesintheTrust.

ThedirectorsofMomentousEnergyareexperiencedintherenewableindustry arena. GarethWarner and Pravin Semnarayan, who had apriorbusinessrelationship,setupMomentousEnergybasedonsolarPVdevelopmentexperiencegainedintheUnitedKingdom.

The equity shareholders collectively contributed 30% of the totalproject capital at financial close. The balance of 70% of the totalprojectcapitalwasprovidedintheformofseniordebtbythelenders,NedbankandtheIDC.TheFundplayedadisproportionatesubscriptionpricetoacquiretherightstofundafullypermittedproject.Atypicallimitedrecourseprojectfinancestructureforprojectsofthisnaturewasnegotiatedassetoutintheprojectdocuments,withsecurityforthelendersbywayofapledgeofsharesfromtheequitysubscribers.


TheFundprovidedearlyapprovalandanirrevocablefundingcommitmenttofinancetheequity‘fundinggap’fortheprojectatfinancialcloseunderthe REIPPPP auction process to ensure bid compliance. In addition, theInspiredEvolutionteamplayedacrucialsupportingroleinthenegotiationof detailed EPC and O&M contracts through to bankability. With thissupport,MomentousEnergy,asmallindependentandlocalSouthAfricandeveloper, was able to compete successfully under REIPPPP as a smallemergingIPPtosecureitsfirst7MWgrid-connectedsolarPVproject.

Based on a comprehensive EIA, all environmental authorisations werereceivedpriortotheprojectbeingbidunderREIPPPPinNovember2011.AnEquatorPrincipleActionPlanwascompiledand isbeingadheredto,aswell as anESAP, EHSpolicy, andHRand labourpolicies.Themajorityof employees are members of the Association of Mine Workers andConstructionUnion(AMCU).

28 Inspired Evolution Investment Management Proprietary Limited Profit with Purpose: Sustainable Value Creation Report 2015 28

Inspired Evolution provided equity funding to the project, which filled a critical component of the funding structure, thus taking an early position to underwrite the first bid round of the untested Renewable Energy IPP with Momentous Energy.

Inspired Evolution’s values, financial input and governance processes added to the structure and operating principles via direct and board inputs. Inspired Evolution also assisted with advice and input during the process of bringing the project to fruition.

GarethPWarner,CEO,MomentousEnergy


Together, Momentous Energy and Inspired Evolution weatheredthe delays and resulting increased development costs to pioneerone of South Africa’s first 7MW grid-connected solar PV energygenerationplantsunderthepublicprocurementprocessofREIPPPP.The construction phase ran to budget with marginal savings andcommercialoperationsbeganasscheduledinNovember2013.

The RustMo1 Solar Park will generate approximately 12.3GWh ofclean energy per annum, mitigating approximately 12 250 tCO2eperannumofgreenhousegases through thesubstitutionofdirtiercoal-poweredgenerationalternatives.Theprojectdemonstratestheuse of the Fund’s private equity mandate in leveraging optimiseddevelopment outcomes through securing 41% black economicempowerment ownership, of which 17% is owned by local broad-based, previously disadvantaged communities. In addition, theproject will generate revenues of more than ZAR114 million(c. USD11.4 million) that will flow directly to surrounding localcommunitiesovertheproject’s20-yearlifespan.

The Momentous Foundation Community Trust will use thesedividends to support poverty-alleviation, and for socio-economic,health and infrastructure programmes. Based on a socio-economicneedsassessment,RustMo1iscommittedtolocalSEDactivityaimedatimprovingthelivesofthesurroundingcommunity.Thecompanyhasprovidedfinancialdonationstoavarietyoflocalcauses,includingtwochildren’shomes,adaycarecentre,aquintile-oneprimaryschool(meaningthatitisillegaltochargeschoolfees),andalsoahomeforthe frail andelderly.RustMo1haspartneredwitha local college tosecure financial assistance for nine financially disadvantaged localyouthsstudyingelectricalengineering.

RustMo1 Solar Farm (RF) Proprietary Limited(continued)

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SlimSun (RF) Proprietary Limited: Swartland Solar Park

About the company

TheFundandFrancoAfriqueTechnologies(FAT)arejointlydevelopingup to 22MWof solar PV projects in theMalmesbury region in theWesternCape,SouthAfrica.Theseprojectsarebeing implementedinphases. SlimSun (RF)Proprietary Limited (‘SlimSun’), also knownas the Swartland Solar Park, is the bespoke project company thatdeveloped and constructed the first 5MW solar PV park. Financialclosewasreachedon14November2012.Thefacilityreachedactualcommercialoperationson4August2015.

SlimSun isa renewableenergy facility thatproducesdirectcurrent(DC)electricity from24000solarPVmodulesarranged ina typicalstaticgridformation.Electricitygeneratedinthiswayisinvertedtogrid-compatiblealternatingcurrent(AC)atthegridvoltageof11kVthroughaseriesof inverterandtransformerstations,positionedtoservicethecompletePVfacility.

Thefarmlandonwhichthesolarparkislocatediscurrentlysuppliedvia a 100 kVA supply point on the Malmesbury Farmers 1 feeder.Eenboom farmextendsover 700ha comprising relatively flat landandtheprojecthasatotalfootprintofapproximately7ha.Theareawhere the project is located has favourable solar irradiation levelsandthereforegoodpotentialforthegenerationofelectricityusingsolarPVpanels.ApilotplanthasbeenoperatingattheprojectsitesinceAugust2010foryieldvalidation.Noredflagshavearisenfromthisproject.

FollowinganEIA,apositiveEAfor theprojectwasgranted inApril2011.Theprojectiscompliantwiththemitigationmeasuressetoutin the Basic Assessment Report (BAR) and the EMP. Constructioncommencedwiththerequisiteenvironmentalcontrolofficeronsite.Awater licence for theminimalwater requiredwas also obtainedfrom the relevant authority. The project is mechanically completeandattheendofitsconstructionphase.

Website: NoneLocation of operations: Malmesburyregion,WesternCape,South

AfricaSector: RenewableEnergy:SolarPhotovoltaic

PowerGenerationBusiness focus: 5MWfixed-axis,ground-mounted,grid-

connectedrenewableenergygenerationfacility

Size: TotalprojectcostZAR209million (USD20.9million);Revenue:ZAR25.5million

(c.USD2.55million)forYE2015Job creation: 5permanentpositions;andatotalof80

temporaryjobsduringthe12-monthconstructionperiod,equatingto700person-months


Evolution One Fund investment: ZAR25.01million(c.USD2.5million)invested

inMarch2013witha40%equityinterest,includinganadditional20%calloptionatexitatnominalcost.ChristopherClarkerepresentstheEvolutionOneFundontheboardofSlimSun.

Status: Fullyinvested,projectconstructioncompletedandcommercialoperationsachievedon4August2015.


• With the Fund’s technical, contractual and financial support, FrancoAfrique Technologies (FAT), was able to ensure that Phase 1 of theSlimSun Swartland Solar Park could compete successfully underREIPPPPasasmallemergingIPP.

• SlimSunSwartlandSolarParkisgeneratingapproximately8.76GWhofcleanenergyperannum,thusmitigatingapproximately10050tCO2eofgreenhousegaseseachyearthroughreplacingdirtiercoal-poweredgenerationalternatives.

• Theprojectcomprises20%blackeconomicempowermentownership,allofwhich isownedbyabespoketrustwithtrustexpenditurering-fenced to local broad-based, previously disadvantaged communities.RevenuesofmorethanZAR47million(c.USD4.7million)willflowfromtheprojecttothesecommunitiesoverthe20-yearprojectlife.

• SlimSun Swartland Solar Park adopted a number of environmentallysustainable guidelines and policies, including the IFC PerformanceStandardsandtheEquatorPrinciples.Theprojectagreementsincludean Equator Principle Action Plan that will mitigate any potentialnegative S&E impacts. A formalised EMP is in place and an ESMS isbeingdevelopedforimplementationoverthefulloperationsperiod.

• SlimSunSwartlandSolarParkaimstobethelowestwateruserperunitofelectricitygenerated,amongallparticipantsinREIPPPP.

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SlimSun (RF) Proprietary Limited: Swartland Solar Park(continued)


Renewable energy at grid scale is a relativel y new but rapidlydeveloping market in South African. SlimSun was one of the 28successful bidders in Round 1 of REIPPPP awarded in November2012.Positivesocialandenvironmentalimpactsarekeytosuccessfulparticipation in this programme and SlimSun plans to exceed thethreshold social and environmental requirements. Its target is tobe the lowest water user per unit electricity generated among allIPPparticipants.Thisisachievable,astheMalmesburyareareceivesrelativelyhighrainfallincomparisontoothersolarPVIPPparticipants,thereby greatly reducing, if not entirely eliminating, the need touse alternative water sources to clean the panels. Furthermore,by supplying around 170GWh of solar PV-generated renewableenergyoverthe20-yeardurationofthepowerpurchaseagreementbetween SlimSun and Eskom, the project will contribute to thecriticalshortageofelectricitygenerationcapacityinthecountryandto South Africa’s low-carbon future. It is envisaged that emissionsof approximately200000 tCO2ewillbeavoidedover the20yearsofcommercialoperationof theproject.TheFundwill facilitate theregistrationoftheprojectasacleandevelopmentmechanism(CDM)throughaprogrammeofapplication (POA) specifically for solarPVprojects.ThePOAincludesafullassessmentofthegreenhousegasemissionsavoidedwiththegenerationofcleanerelectricity.

The EPC andO&M contractor is Juwi Renewables, aworld-leadingGermansolarPVdeveloper.Thestatic-statetechnologycharacteristicof solarPVprovides forcommerciallyattractive low-risk, long-termrobustcashflowstotheFund.

The Fund, Franco Afrique Technologies and the Swartland SolarCommunity Trust collectively as equity shareholders contributed20% of the total project capital at financial close, with the 70%balance being predominantly senior debt with a 10% nominalamount of mezzanine finance. A typical limited recourse projectfinancestructureforprojectsofthisnaturehasbeennegotiatedassetoutintheprojectdocuments,withsecurityforthelendersbywayofapledgeofsharesfromtheequitysubscribers.

SlimSun contributes to the local economy by adhering to theeconomicdevelopmentcommitmentsmadeaspartofREIPPPPbidanddetailedintheimplementationagreementwiththeDepartmentof Energy (DoE). The project’s social benefits include job creationandlocaleconomicdevelopment.Approximately80temporaryjobswerecreatedduring the12-monthconstructionperiod,equivalenttomore than700person-monthsof employment. Fivepermanentjobs have been created since the facility became operational andwillremainforthe20-yeardurationoftheproject.OngoingtrainingwillbeprovidedinthegeneralmaintenanceandoperationofthePVfacilitywith an annualdedicationof 5%of overheads reserved foremployeedevelopmentandtraining.

InaccordancewiththestipulationsandguidelinesofREIPPPP,a20%equity participation has been allocated to a bespoke communitytrust,which channels all dividend flows to local community socialupliftmentprojectsintheSwartlandarea.Activitieswillbeidentifiedthrough a process of ongoing community needs assessmentsthroughoutthedurationoftheproject.Asaresultofthispartnership,SlimSun’soperationsarebytheirverynaturefocusedonsustainabledevelopment.


SlimSun’sparticipationinREIPPPPwouldnothavebeenpossiblewithoutthe financial and resource investment made by Inspired Evolution.Inspired Evolution was integrally involved from project inception asadviserstodevelopthestrategy,systemsandproceduresrequiredtofullyinformSlimSun’sbusiness structure.TheFund,asanequitypartner, andInspiredEvolution,asadviser,playedacriticalroleinfacilitatingSlimSun’sdevelopmentof environmental, social andfinancial sustainability,whichmeets and inmost cases exceeds the extensive requirements set downwithintheREIPPPPauctioncriteria.

InspiredEvolution’strackrecord,credibilityintheindustryandprofessionalnegotiation capabilitywere key in structuring the full debt structure forSlimSun. Being integrally involved throughout the development stageand the path to financial close, and being linked to several local andinternational role players in this nascent, but growing, energy sector,InspiredEvolution facilitatednumerous introductions,engagementsandnegotiations between SlimSun and various stakeholders/suppliers inthesolarPVsector.Thismade itpossible forSlimSuntobenchmarkandevaluatetherobustnessofitsbusinessmodel.

Inspired Evolution stimulated the development of a bankable businessmodelbyimposingstandardsandproceduressuchasfinancialmodellingandcorporategovernance,andenforcingadherencetotheIFCPerformanceStandardsandtheEquatorPrinciples.ThesekeystandardsandguidelinesassistedSlimSunindevelopingacompliantandprogressivemanagementframeworkfortheimplementationandoperationoftheSlimSunSwartlandSolarPark.

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SlimSun (RF) Proprietary Limited: Swartland Solar Park(continued)


Construction of the plant was mechanically complete on 30 June2014.Thefacilityreachedcommercialoperationson4August2015.

Inspired Evolution entrenched the principle of ‘limited economicleakage’fromtheprojectarea,ensuringtheflowoftangiblebenefitsto local previously disadvantaged organisations and households.Approximately55%oftotalprojectspend(includinggridconnectioncosts)hasbeendeployedlocally.DuringtheconstructionperiodthisamountedtoZAR150million(c.USD15million).

Duringconstruction,80 temporary jobs (700person-months)werecreatedforunskilledandpoorlyskilledlabourers,wholivewithina50kmradiusoftheprojectsite.TechnologyandskillstransferformsakeypartoftheEPCprovider’sobligation.Theinvestmenthascreatedfivedirectpermanentjobssinceconstructionwascompleted.

InspiredEvolutionadvisedonthestructuringofabroad-basedblackeconomicempowermentspecial-purposevehicle(B-BBEESPV)andsecuredpreferencesharefundingfromtheIndustrialDevelopmentCorporation (IDC) to the value of approximately ZAR7.64 million(c.USD764000).Distributions fromtheprojectarepassedthroughtheB-BBEESPV to theSwartlandSolarCommunityTrust.TheTrustcomprisestrusteesfromthelocalcommunity,themajorityofwhomarefrompreviouslydisadvantagedcommunitiesand50%ofwhomarepreviouslydisadvantagedfemales.

A fixed percentage (1%) of all revenue received by SlimSun hasbeencommitted forcorporatesocial investment (CSI)programmeswithinthelocalcommunity,includingbutnotlimitedtonovelruralrenewableenergytechnologiesandothersocialupliftmentprojects.CSI initiatives commencedduring the constructionperiodandwillcontinuethroughtheoperationsperiod.

Inspired Evolution insisted on formal governance procedures. Assuch, board policies on conflicts of interest, procurement, betterfinancial governance and the delegation of authority for seniorexecutive management are in place. Additionally, the board hasadoptedtheKingIIIguidelinesoncorporategovernance.

The Equator Principles are incorporated into the Equator PrincipleAction Plan and HR, labour and EHS policies have also beenimplemented. Risks associated with operations are identified onan ongoing basis through the EMP. In addition, an ESMS is beingdevelopedforimplementationbytheprojectoverthefulloperationsperiod.

Evolution One as equity partner and Inspired Evolution Investment Management as managing partner have played a critical role in facilitating SlimSun’s development of environmental, social and sustainability programmes, which meet and in most cases exceed the extensive requirements of the REIPPP programme.

Key contributions made by the Evolution One Fund to date can be summarised as follows:

1. Further to the critical financial support required, Evolution One has raised the awareness of SlimSun on sustainability. This has enabled the company to develop a system framework and mentality compatible with the highest industry standards.

2. Through the Environmental and Social Action Plan (ESAP) and monitoring system, developed jointly by SlimSun and Evolution One, SlimSun has been able to create a management programme that will meet the various environmental, social and sustainability objectives, which form a key part of the SlimSun Swartland Solar Park project.

3. Working from the Equator Principle framework, which Evolution One adheres to throughout its investment portfolio, the Fund’s assistance and prioritisation of sustainability and socio-economic objectives have been invaluable in developing the SlimSun E&S plan.

4. Finally, Evolution One has assisted significantly in SlimSun’s development of communication and engagement skills with all relevant stakeholders. Evolution One and Inspired Evolution Investment Management’s support and value-creation capabilities have been invaluable to SlimSun and its other equity partners.

AnthonyCorin,CEO,SlimSun(RF)ProprietaryLimited

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Fifth Season Investments 134 (Pty) Ltd (RF): Solar Capital De Aar (Pty) Ltd

About the company and project

FifthSeasonInvestments134(Pty)Ltd(RF)(FifthSeason)SCDAisaring-fencedSPVsetupasablack-ownedinvestmentcompanyintheproject Special PurposeVehicle (SPV) Solar Capital De Aar (SCDA).SolarCapitalisaring-fencedSPVincorporatedinSouthAfricaforthesolepurposeofdeveloping,bidding,constructingandoperatinga67.7MWground-mounted,grid-connectedsolarPVpowergenerationfacility.FifthSeasonownsa6%equitystakeintheProject.EvolutionOnefundedFifthSeason’sequityparticipationintheprojectthroughacombinationofdebenturesandpreferenceshares.

The project was successfully bid under round 1 of REIPPPP. Itachieved preferred bidder status and then financial close on 5November2012,andLender’sfinancialcloseon16November2012.ConstructionbeganatthefacilityinNovember2012.Thecommercialoperationsdate(COD)wasreachedon15August2014.Theprojectcompany holds a 20-year renewable energy power purchaseagreement(PPA)andgridconnectionagreementwithEskomonanexclusivetake-or-paybasis,wherebyEskompaysanenergypaymentinrespectofallenergydelivered.ThetariffsecuredfortheprojectisZAR2.19/kWh(c.USD0.22/kWh)indexedtoinflationandescalatedatthepublishedCPIannuallyoverthefullPPAterm.ConnectiontotheEskomnationalgridisthroughanewswitchingsubstationbuiltonsite,feedingintotheEskom132kVAdistributionnetwork.

Website: deaarsolar.co.zaLocation of operations: DeAar,NorthernCape,SouthAfricaSector: RenewableEnergy:SolarPhotovoltaicPower

GenerationBusiness focus: 67.7MWground-mounted,grid-connected

renewableenergygenerationfacilitySize: RevenueZAR243.27million(USD24.3million)

perannum,escalatingatConsumerPriceIndex(CPI)perannum

Job creation: 49permanentjobsduringoperationsandmaintenancephase;8339person-months(174hours)duringthe21-monthconstructionperiod,includingthemainEPCandsubcontractors.

Development stage: Refinance/InfrastructureProjectFinanceEvolution One Fund investment: TheFundinvestedinFifthSeason

Investments134(theblackeconomicempowermentspecial-purposevehicle)throughadebentureandpreferencesharestructure,whichholdsa6%equitystakeintheSolarCapitalDeAar(‘SCDA’)PVproject.ThetotalprojectcostisZAR2.21billion

(c.USD221million).StevenFaurerepresentstheEvolutionOneFundontheboardofFifthSeasonInvestments134andisanobserverontheboardoftheSolarCapitalDeAarPVproject

Status: Fullyinvested,projectconstructioncomplete,reachedCODon15August2014


• WiththeFund’s investment, the localblackempowermentpartners intheprojectwereable to refinance their short-termequitybridge.TheSolarCapitalDeAarPVprojectwassuccessfullybidunderRound1ofREIPPPP,partneringwithSCDA(projectmanagement)andConstruczioniMoncada South Africa (Moncada). Moncada is the South AfricansubsidiaryofMoncadaEnergyGroup(MEG),thesolarPVpanelsupplier,EPCcontractor,andoperationsandmaintenance (O&M)provider.Thisconfluenceofcapacityhashadsignificantbenefitsfortheprojectroll-outandtheprojectisperformingaboveitsP50productionandrevenuetargets.

• Overthe20-yearlifeoftheproject,SCDAwillgenerate3.4GWhofclean,renewable energy, thus mitigating approximately 3.36 million tCO2eof greenhouse gases through the replacing of dirtier coal-poweredgenerationalternatives.

• The project is contributing significantly to the local economy, bothdirectly by creating employment (permanent employment duringthe O&M phase and temporary employment during the 21-monthconstruction period) and indirectly, by employing local contractorsand service providers (45% local content spend in construction cost).Theadditionalspendinthelocalareaiscontributingtolocaleconomicdevelopment,whichwillcontinueovertheprojectlifecycle.

• The project comprises 8% local black economic empowermentownership, owned by a bespoke local community trust with trustexpenditurering-fencedtolocalbroad-based,previouslydisadvantagedcommunities. Dividend income ofmore than ZAR490million (USD49million)will flowdirectly from theproject to these local communitiesoverthe20-yearprojectlife.

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Fifth Season Investments 134 (Pty) Ltd (RF): Solar Capital De Aar (Pty) Ltd(continued)


DeAarissituatedintheGreatKaroo,asemi-desertareaintheNorthernCapeofSouthAfrica.Theareahassomeoftheworld’shighestsolarirradiationandthereforehasvalidatedpotential for thegenerationofelectricityusing solarPVpanels.Asa result,DeAar isemergingasahubfortheinstallationofthegrid-connectedsolarPVpanels.Inaddition toprovidingadegreeof relief fromthecurrentelectricitysupplycrisis facingSouthAfrica, theproject isalsocontributing totheachievementofthecountry’slow-carbondevelopmentgoalsbyprovidingaclean,renewablesourceofelectricity.

Solar Capital is contracted as the project management servicescompanyandteammembershavetherequisiteexpertisetomanagea project of this nature. In addition, the project offers a blue-chipsecurity package as operating risk and performance are wrappedthroughcomprehensiveproject agreements (EPC,O&M, Insurance,PPAandgrid-connectionagreements).Revenue isunderpinnedbya 20-year, indexedPPAwith Eskom, escalating annually atCPI andwith sovereign underwrite's from the South African government.The project has consistently outperformed budgeted P50 andP90 revenue since operations began. On a P50 basis, the planthas generated ZAR243.27 million (c. USD24.3) in revenue sinceoperationsbegan.Thisis7%higherthanthebudgetedP50revenuefortheperiod.Inaddition,actualPR(performanceratio)forthefirstthreemonthsof2015is81.8%versusthecontractedPRof79.4%.

Theprojectusesbest-of-breed technology in the formof thin-filmamorphous silicon (a-Si) panels with a 25-year design life and anindustry standard warranty that ensures 90% output power for10yearsand80%outputpowerfor25years.

TheprojecthasanEAinplace,issuedandauditedbytheDepartmentofEnvironmentalAffairs(DEA).Inaddition,anumberofmanagementplans are in place, including an EMP, a storm-water managementplan,anintegratedwastemanagementplanandvariousotherplansrelatingtothepreservationoflocalheritageandlocalbiodiversity.


The Fund’s capital investment contributed towards the total fundingrequirement (debt and equity) at financial close to see the projectthrough the construction phase to Commercial Operations Date. SCDAwillcontributeelectricalpowertohelpmanagetheenergycrisisfacedbySouthAfrica.ItwillalsocontributetotheNationalDevelopmentPlan(NDP)goalofachievingalow-carbonfutureforSouthAfrica.

The Fund has facilitated the construction and operation of a successfulrenewable energy company, with revenues underpinned by a 20-year, indexed PPA, with sovereign underwrite's from the South Africangovernment over the entire project life. Further comprehensive securitypackages provide additional protection against revenue loss. Operatingrisk and performance are wrapped through a comprehensive O&Magreement.

Inspired Evolution and the lenders have ensured that the company anditsactivitiesaremanagedaccordingto theEquatorPrinciples.TheSCDAboard has adopted the King III guidelines on corporate governance,includingboardpoliciesonconflictsofinterest,procurementandfinancialgovernance.

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Fifth Season Investments 134 (Pty) Ltd (RF): Solar Capital De Aar (Pty) Ltd(continued)


Theconstructionphaseoftheprojectdelivereda45%localcontentspendthroughtheemploymentof local labourandbycontractingtolocalSMEs.Directemploymentduringthe21-monthconstructionphasetotalled8339person-monthsandduringtheoperationsandmaintenance (O&M) phase, 49 permanent jobs were created. Theemployees are receiving training relevant to their jobs, includingelectrician training and forklift operations training. Additionally,Moncada, the solar PV panel supplier, EPC and O&M provider,delivered training to approximately 1 000 persons during theconstructionphase,coveringareassuchascivilworks,administrationandenvironmentalmanagement.

Altogether,2.1%ofrevenuehasbeencommittedtolocalSEDandsofartheprojecthasalreadyhadtangibleimpactsonthelivesoflocalcommunitymembers.Currentprojectsinclude:

• The Solar Capital Community Development Workers Programme: SCDA has invested ZAR930 000 (c. USD93 000)todatetofundthedevelopmentofcoursecontenttotrain35community development workers (CDWs) in the EmthanjeniMunicipalarea.This includes thefirstyear fees (ofa two-yearcourse)forall35CDWs.

• Solar Capital Free Community Wi-Fi: To date SCDA hasinvestedZAR700000(c.USD7000)intheinstallationof20freeWi-Fihotspots instrategiccommunityareas,e.g.schoolsandpubliccentrestogivecommunitymembersfreeinternetaccess.Thiswillhavesignificantdevelopmentaloutcomes,particularlyforschoolchildrenandstudents.

• Solar Capital Community Training Centre: ZAR700 000(c. USD7 000) has been spent on the design and installationof a computer laboratory for a community training centrein De Aar. Training will be provided in basic computer skills,entrepreneurial development, Excel, basic web design, andproject management. Access to the laboratory will alsobe provided to local schools that do not have computerlaboratories.

• Healthy Mother Healthy Baby (HMHB) Programme:Astudyconducted by the Foundation for Alcohol Related Research(FARR)from2001-2003foundthat12.2%ofthebabiesborninDeAarwereaffectedbyFetalAlcoholSpectrumDisorder(FASD),makingDeAarthetownwiththehighestreportedFASDrateintheworld.TheHMHBprogrammeimplementedinDeAarhasresultedinadramatic30%dropintheincidenceofFASD,thistimemakingtheareafamousforbeingthefirstcommunityintheworld to report a reduction in the FASD prevalence rate.ThroughREIPPPP,SCDAhavebeenabletofundthiscampaign,totallingZAR2.1million(c.USD210000)overthepasttwoyears.

• Solar Capital Entrepreneurial Development Programme: SCDA has disbursed ZAR2 million (USD200 000) to fund agapstudythatwould identifycriticalskillsneeds forbuddingentrepreneursinthelocalarea.Inaddition,thismoneyhasbeenused to train 20 business plan proposal competitionwinnersthrough the six-month 2015 Solar Capital EntrepreneurialDevelopment Programme. This programme covers topicssuch as entrepreneurship, financial, strategic, project andtime management, and marketing and administrative skills.Candidates who successfully complete the programme will

Inspired Evolution provided much needed equity funding to refinance a bridging facility which in turn was used to acquire a 6% equity stake in the Solar Capital De Aar solar PV plant. This funding was critical not only to ensure that Fifth Season was able to maintain its equity participation in the project, but also that the project maintained its BEE participation rights. Inspired Evolution has provided valuable support and input in respect of governance, technical and financial processes as an active board member on the boards of Solar Capital De Aar and Fifth Season respectively, Inspired Evolution has provided valuable support and input in respect of governance, technical, and financial processes. Inspired Evolution further provides valuable financial oversight as a participating member of the audit and risk committee.

MakoleMupita,Director,FifthSeason

3434343434343434

receiveseedcapitalwithinastructuredformattodevelopnewbusinessesorexpandexistingones.Smallbusinessunitswillalsobemadeavailabletosuccessfulcandidates.

SCDA is committed to balancing the benefits of clean energy with potentialimpactsontheenvironment.TheDepartmentofEnvironmentalAffairs(DEA)hasprovidedallrelevantenvironmentalauthorisations(EA)andwillaudittheproject’senvironmentalperformancethroughoutthe20-yearprojectlife.InadditiontoaDEA-approved EMP, the environmental impacts of the solar farmaremanagedthrough comprehensive plans relating to storm-water management, avifauna,integratedwastemanagement,rehabilitation,trafficmanagementandalienandinvasivevegetationmanagement.Furthermore,theprojectinitsentiretyisaimedat reducinggreenhousegas emissionsby, for example, ensuring that site-levelemissionsarelimitedtoonlythoseproducedbyconstructionandmaintenancevehicles.

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AFPOC Limited: African Clean Energy Developments and Renewables Cookhouse 1 Wind Farm (RF) (Pty) LtdAbout the company

AFPOC Limited is a bespoke private investment holding companybasedinMauritius.Itwassetuptoholda50%equityinterestinoneofSouthAfrica’spremierrenewableenergydevelopmentcompanies,African Clean Energy Developments (ACED). AFPOC also owns50% of each project in ACED’s renewable energy project pipeline.The shareholding counterparty in ACED is African InfrastructureInvestment Management (AIIM), owned equally by Old MutualInvestment Group of South Africa (OMIGSA) and the MacquarieGroup. AIIM is the investment manager for the various Africaninfrastructure investment funds,with active investments in energyandbroaderinfrastructuresectorsacrossAfrica.

ACEDisattheforefrontofrenewableenergydevelopmentinSouthAfricaandcomprisesa local teamofcompetentprofessionalswitha successful track record under REIPPPP. It has one of the mostadvancedonshorewindandsolarPVportfoliosinSouthAfricawith1800MWinvariousstagesofdevelopmentintheWestern,EasternandNorthernCapeprovinces.

Renewables Cookhouse 1 Wind Farm (Cookhouse) is the mostadvanced of the assets developed by ACED and comprises a138.6MW onshore wind farm located in the Eastern Cape, whichreached financial close in December 2012. Cookhouse was thelargestof28IPPprojectsselectedinRound1ofREIPPPP,comprisingmorethan21%ofthecapacityofthe634MWtotalRound1procuredwind energy. It is also the largest operational wind farm in Africato date. Revenue in the last year (April 2014 to March 2015) wasZAR190million(c.USD19million)(excludingliquidateddamagesofZAR241million[c.USD24.1million]).


• TheFundacquireda30%stake inAFPOCviaaconvertibleloan, providing critical working capital and reducingpreference share and loan funding from other parties toprogresstheadvancedACEDrenewableenergypipeline.

• The Fund’s investment in AFPOC facilitated strategicpartnerships with key blue-chip renewable energy role-players in SouthAfrica, inparticularMacquarieGroupandOld Mutual Investment Group of South Africa (OMIGSA),to concentrate track record and know-how and improveprobability of project success under a very competitiveauctionregime.

• AFPOC’s flagship project, CookhouseWind Farm, inwhichitholdsa7.5%equity interest,willgenerateapproximately360GWh of clean energy per annum, thus mitigatingapproximately 354 000 tCO2e of greenhouse gases perannum through the substitution of dirtier coal-poweredgenerationalternatives.

• Cookhousecomprises25%blackeconomicempowermentownership, in the form of a bespoke trust with trustexpenditure ring-fenced to local broad-based, previouslydisadvantaged communities. Post-tax revenues of morethan ZAR240 million (c. USD24 million) will flow directlyfromtheprojecttotheselocalcommunitiesoverthe20-yearprojectlife.

Website: NoneLocation of operations: HeadOfficeofAFPOCislocatedinFloreal,

Mauritius.AllprojectoperationsownedbyAFPOCarelocatedinSouthAfrica

Sector: RenewableEnergy:OnshoreWindandSolarPhotovoltaicPowerGeneration

Business focus: Holdingcompanywitha50%equityinterestinAfricanCleanEnergyDevelopments(ACED)and50%equityinterestsinprojectSPVstotalling1.8GWofrenewableonshorewindandsolarPVgenerationinadvancedstages,predominantlylocatedinSouthAfrica

Size: Pre-revenue;1.8GWofrenewableenergypipeline


Evolution One Fund investment: ZAR70.64million(c.USD7.064million)

invested.ZAR16.36million(c.USD1.636million)reservedforfollow-oninvestments.ChristopherClarkerepresentstheEvolutionOneFundontheboardofACEDandisjoinedbyStevenFaureontheboardofAFPOCLimited

Status: AFPOCLimitedistheMauritianholdingcompanyofACEDandallunderlyingprojectspecial-purposevehicles(SPVs).AFPOC’skeyassetcalledCookhouseWindFarmwassuccessfullypermittedandconstructed,reachingitsCODon19November2014.Anadditionalthreeprojectstotalling508MWweresuccessfullybidunderRound3and4ofREIPPPPandsoldtoEnelGreenPower.Thesewerethe88MWNojoliWindFarm,whichiscurrentlyunderconstruction(Round3)andthethree140MWonshorewindfarms,Nxuba,KarusaandSoetwater.Thelatterprojectsarecurrentlypreferredbiddersandareexpectedtoachievefinancialclose(Round4)inlate2015.Theimpactoftheseinvestments,boththosestillheldandthosedisposedof,aresummarisedlaterinthisreport.Afurther500MWofadvancedprojectpipelineremainstobesuccessfullybidandsold.

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About the company (continued)

ConstructionatCookhouseiscompleteandtheprojectreacheditsscheduledcommercialoperationsdate(COD)on19November2014.Thewindfarmisprovidinganet138.6MWofcleanpowercapacityviaagridconnectatPoseidonsubstationat132kV,locatedimmediatelyadjacenttothesite.TheEPCandO&McontractorwasSuzlon,aworld-leadingIndianwindturbineprovider.Thewindprojectprovidesforcommercially attractive low-risk, long-term robust cash flows toAFPOCaswellasdevelopmentfeesfromassetsales,whichareinturndistributedtotheFund.

An energy generation licence application was applied for on 7December 2011 to the National Energy Regulator of South Africa(NERSA)andthelicencewasgrantedwithoutobjection.Theprojectadheres to a list of mitigation measures, including heritage andbird/bat-monitoring requirements as per the approved EIA for theproject implementation phase. Construction commenced with anenvironmentalcontrolofficeronsite toensurecompliancewithallconditionsofapproval.TheoperationsphasehashadnomajorS&Eincidents and Cookhouse is currently supplying electricity directlyintothenationalgrid.

ACED submitted three projects totalling 203MW into Round 3 ofREIPPPP. On 19 August 2013,. the 88MW Nojoli Wind Farm wassuccessfully permitted in Round 3 and sold to Enel Green Power.A further three 140MW renewablewind farmprojectswere bid inRound 4 of REIPPPP, namely Nxuba, Karusa and Soetwater whichareatthepreferredbidderassetstage(goingontofinancialclose).TheFundhassolditsstakesinthesethreewindfarmstoEnelGreenPower(EGP).

The companies as an investment opportunity

AFPOCLimitedbringssignificantexposurefortheFund,asabespokeinvestmentholdingentitytooneofSouthAfrica’spremierrenewableenergydevelopersandmostadvancedrenewableenergypipelines.This strategically places the Fund alongside blue-chip partners –OMIGSAandtheMacquarieGroup.TheACEDteamandshareholdergroup collectively offer global track record and local developmentexpertiseacrossthewindandsolarPVindustry.AFPOCmanagementcomprisesseasonedprofessionalsfromtherenewableenergysectorwho have developed and operated a total installed wind energycapacity of 508MW. Together, this translates into a compellingcommercial proposition with a strong probability of pipelineconversion.

ACED’spipelineofprojectsiswelladvancedintermsofkeyprojectdriversandfavourablesitecharacteristicssuchashighsolarandwindresourceavailability,proximity togrid connection substationswithavailable connection capacity, proximity tomajor transport routesandlowenvironmentalsensitivity.

TheCookhouseprojectrecentlycompletedallrequiredperformancetestsandgridcompliancetoreachcommercialoperationsandenableachievementofCOD.Thewindfarmhas66turbinesat80metreshubheight and holds a 20-year power purchase agreement (PPA)withEskomtoprovide138.6MWofclean,renewableenergy.Duringtheconstructionphase,management,inpartnershipwithEPCandO&Mcontractor Suzlon, successfully controlled all project costs withinbudgetandachievedallkeymilestoneswithasignificantlystronger

AFPOC Limited: African Clean Energy Developments and Renewables Cookhouse 1 Wind Farm (RF) (Pty) Ltd(continued)


TheFundprovidedgrowthequitytoallowAFPOCtofundfurtherworkingcapitalrequirementsfortheunderlyingportfolioofprojects,andrestructureits corporate finance requirements by repaying a key disproportionateshareholderloanandaccelerateapreferenceshareredemptionobligation.TheInspiredEvolutionteamnegotiatedanagreeablestructureandbasisfor these various requirements to be met within the prescripts of theREIPPPPrestrictions.

Inspired Evolution also formalised the governance structures in AFPOC,ACEDandallprojectSPVs,andfocusedontheintroductionofbest-practicegovernancepoliciesandproceduresinsituationswherepotentialconflictsmayhavearisen.Inaddition,theInspiredEvolutionteamplayedacrucialsupportingroleinnegotiatingnewequityentrantsanddetailedEPCandO&Mcontractsthroughtobankability.

The Fund provided critical early-stage infrastructure finance, typicallydifficult to secure, for the development of CookhouseWind Farm. Theimpactofthisfundingisandwillcontinuetobeexponentialthroughouttheprojectlife.

cashpositionatstartofoperationsphase.CookhousewillprovideinvestorsandtheFundwithsuperiorreturnsbasedonthehightariffand indexationsecuredovertheprojectterm.

South Africa is currently facingmajor energy supply issues and, as the largestsuccessfulRound1REIPPPPproject,CookhouseispositionedtoassistinalleviatingnationalgridsupplyproblemsandtosimultaneouslycontributetoSouthAfrica’slow-carbon development agenda. Cookhouse is also strongly supporting theSouthAfricangovernment’sobjectivetoachievesocio-economicdevelopment,particularly in rural areas in SouthAfrica. A 25% stake in Cookhouse is ownedby the local community through the CookhouseWind FarmCommunityTrust.Thisisfivetimesthegovernmenttargetforlocalcommunityownershipintheseprojects.Duringitsconstructionperiod,theprojecthasalreadysupportedlocalcharityorganisationsincludingsoupkitchens,specialdaycarecentresforchildrenwithdisabilities,oldagehomes,fostercarehomesandsportsfacilities.ACEDhasprioritised addressing the socio-economic conditions in the local communitiessurroundingtheproject.Asaresult,theCookhousemanagementaresupportedbyshareholdersandthedeveloperintheestablishmentofthecommunitytrusttoensurethatlocaleconomicdevelopmentprojectswillbenefitfromdividendsoverthe20-yearprojectlife.

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AFPOC Limited: African Clean Energy Developments and Renewables Cookhouse 1 Wind Farm (RF) (Pty) Ltd(continued)

Statement from AFPOC

Since investing in AFPOC Limited in early 2012, Inspired Evolution has been focused on value creation through active involvement at board and executive level. Inspired Evolution has contributed significant expertise from a commercial and sustainability perspective along with deep local knowledge, which has helped to refine AFPOC Limited’s investment strategy. Inspired Evolution’s detailed understanding of the asset class is evident through its contribution to technical and risk assessment of the projects being undertaken by AFPOC.

ThomasDonnelly,Director,AFPOCLimited


AFPOCandACEDhaveallowedtheFundproprietaryaccesstooneof themost advanced renewable energy pipelines in South Africawhich, together with pedigreed counterparties who are industryleaders, improvestheconversionsuccessrateofprojectsunderthepublicprocurementauctionregimeinSouthAfrica.

ACEDhasbeenworkingwiththeBlueCraneDevelopmentAgency(BCDA) forover threeyearsandwillbeakeypartner in facilitatingcommunity development through the projects’ socio-economicdevelopment contributions. ACED and its partners, the IndustrialDevelopmentCorporation(IDC)andtheBCDAhaveestablishedtheCookhouseWind Farm Community Trust, which holds 25% equityinCookhouse.Thelocalcommunitieslocatedwithina50kmradiusof the wind farm, including Cookhouse, Bedford and SomersetEast,arealreadybenefitingfromthefundsflowingintocommunitydevelopmentprogrammesviatheCommunityTrust.TheTrustaimstousethecommunitydevelopmentprogrammestodeliverrealchangethrough sustainable socio-economic development and economicupliftment in the community,with a specific focus onhealth care,education, conservation, job creation and skills development,particularlythroughsupportingthelocalagriculturesector.

Inthecurrentoperationsphase,theCookhouseprojectcompanyisdirectlyemploying14permanentemployees.TheCookhousesiteisfully staffedwith an additional 19 local SuzlonWindEnergySouthAfricastaff(15technicians),someofwhomarereceivingspecialisedtraininginthemaintenanceandoperationsofthewindturbinesfromtheEPCandO&Mcontractor,Suzlon.ThreeSouthAfricantechniciansunderwent training in India in March to May 2015. Two Indiansupervisorsarecurrentlyemployedonsite(1managingservicing;1managingresolutionofsnags).

As a resultof the injectionofZAR240million (c.USD24million)ofdevelopment funding, Cookhouse will contribute significantly tolocaleconomicdevelopmentthroughdirectandindirectjobcreationforcontractorsandsubcontractors.Cleandevelopmentmechanism(CDM) and voluntary emissions reduction (VER) programmes forCookhousehavebeendevelopedandtheagreementswithregardtotheseareintheprocessofbeingfinalised.

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38 Inspired Evolution Investment Management Proprietary Limited Profit with Purpose: Sustainable Value Creation Report 2015 383838383838383838383838

Red Cap Kouga Wind Development Company Proprietary Limited Kouga Wind Farm (RF) Proprietary Limited


KougaWind Development Company Proprietary Limited (DEVCO)isabespokewinddevelopmentcompanyfocusedondevelopingaportfolioofonshorewindenergyprojectsintheKougaregionintheEasternCapeProvinceofSouthAfrica,anareaofexceptionalwindresource. The Fund holds a 30% equity interest in DEVCO. DEVCOhas developed two onshore wind projects known as the KougaWindFarm(KWF)andGibsonBayWindFarm(GibsonBay),whicharepermitted for 80MWand111MWgeneration capacity respectively.KWFoperatesasanindependentpowerproducer(IPP)witha20-yearpowerpurchaseagreement (PPA)withEskom,supplyingelectricitydirectlyintothenationalgrid.TheFundalsoinvestedinGibsonBayasdevelopedbyDEVCO,butsoldtheassetuponachievingpreferredbidderstatusunderREIPPPPtoEnelGreenPower inOctober2013.Theactivitiesassociatedwith theFund’s investment inGibsonBay,andtheimpactoftheinvestmentaresummarisedonpage46.The Fund was initially joined by Africoast Engineers, EurocapeRenewables, Red Cap Investments, Standard Bank Equity, and theIDC-funded B-BBEE Trust, the latter representing the interests oflocal communities in the region, all as equity counterparties inKWF.Constructioncommenced in2013on the80MWKWFprojectinwhich theFundholdsa26.6%equity interest.TheKWFreachedcommercialoperationsdate(COD)on17March2015andisnowinfulloperationsphase.GridconnectionwasdelayedonEskom’ssidefromJune toOctober2014,delaying thepost-construction testingphase.This led toa systemevent resulting inEskomproviding fullcompensationpaymentstoKWFcoveringtheperiodfromscheduledCODon16December2014to17March2015.

TheKWFprojecthashadfullEIAapprovals,whichwereaccompaniedby comprehensive public participation and expert studies.The EIA confirmed that the project is not expected to have anysignificant effects on natural vegetation and terrestrial animal life.Comprehensivebird-andbat-monitoringprogrammeswillremainanobligationforthedurationoftheproject.

Website: www.red-cap.co.zaLocation of operations: OysterBay,KougaRegion,EasternCape,

SouthAfricaSector: RenewableEnergy:WindPowerGenerationBusiness focus: Development,constructionandoperation

ofonshoregrid-connectedwindenergygenerationfacility

Size: RevenueZAR115.2million(c.USD11.52million)(fromCODon16December2014–30April2015)

Job creation: 15permanent;morethan1000temporaryjobsduringthe26-monthconstructionperiod,throughEPCcontractorNordex


Evolution One Fund investment in DEVCO: ZAR15.37million(c.USD1.54million)

developmentriskcapitalinvestedbetweenJune2010andNovember2012witha30%equityinterestinKougaWindDevelopmentCompanyProprietaryLimited(DEVCO).ChristopherClarkerepresentstheEvolutionOneFundontheboardofDEVCO

Evolution One Fund investment in KWF: ZAR98.31million(c.USD9.83million)project

equityinvestedon12November2012fora26.6%equityinterestinKougaWindFarm.ZAR9.65million(c.USD965000)contingency(standbyequityinadedicatedprojectescrowaccount).ChristopherClarkerepresentstheEvolutionOneFundontheboardofKWF.

Status: Fullyinvested,KWFprojectconstructioncompletewithCODachievedon17March2015


• InspiredEvolutionsecuredanagreementwithUNEP’sSeedCapitalAssistanceFacility(SCAF)tohelpwithco-fundingearly-developmentexpensesforeligibleDEVCOactivities.TheFundprovidedcriticalearly-stagedevelopmentriskcapitaltofillthe‘fundinggap’andassisttheRedCapteamtoprogressthepre-permittedwindassettopermittedstatus.

• WiththeFund’stechnical,contractualandfinancialhands-onsupport,DEVCO–asmallindependentandlocalSouthAfricandeveloperwasabletoensurethatKWF,itsfirst80MWonshorewindfarm,couldcompetesuccessfullyunderREIPPPPasasmallemergingindependentpowerproducer.

• KWFwillgenerateapproximately268GWhofcleanenergyperannum,mitigatingapproximately263000tCO2eofgreenhousegasemissionseachyearthoughsubstitutingdirtiercoal-poweredgenerationalternatives.

• The project comprises 26% black economic empowerment ownership, all of which is owned by abespoke local community trust with expenditure ring-fenced for local previously disadvantagedcommunities.RevenuesofmorethanZAR1billion(c.USD100million)willflowdirectlyfromtheprojecttotheselocalcommunitiesoverthe20-yearprojectlife.

• DEVCOandKWFadoptedanumberofenvironmentallysustainableguidelinesandpolicies,includingtheIFCPerformanceStandardsandEquatorPrinciples.AcomprehensiveEIAwasconductedforKWFwithongoingbird-andbat-monitoringprogrammesandadetailedEMPwasissuedasablue-printtomanageallS&Easpectsduring the20-monthconstructionperiod.AcomprehensiveESMShasnowbeen implemented for the 20-year operations phase. The project agreements include an EquatorPrincipleActionPlanthatmitigatespotentialnegativeS&Eimpacts.

• AportionofKWFrevenuesisallocatedtoabroaderbiodiversityconservationinitiativeintheregion,co-fundedbyotherwindfarmstocreatescaleandimpact.

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39Inspired Evolution Investment Management Proprietary Limited Profit with Purpose: Sustainable Value Creation Report 2015 393939393939

Red Cap Kouga Wind Development Company Proprietary Limited Kouga Wind Farm (RF) Proprietary Limited (continued)

The companies as investment opportunities

TThe KWF project presents an opportunity for the Fund to earnattractivereturnsthroughhavingsecuredanearlyseat inthewindproject development company DEVCO with the right to provideproject equity finance into the permitted asset at financial close.The exceptionalwind resource in the Kouga region, plus the hightariff secured for KWF in Round 1 of REIPPPP, combine tomake acompellingblendedcommercial return for theFund.ThecompanyhasbeenfurtheraugmentedbytheskillsandtrackrecordoftheRedCap team, the pedigreed tier 1 German turbine suppliers, Nordex,and theelectrical andplant contractorson theproject.The80MWKWFprojectisfullypermittedandoperational.

Significant benefits have already flowed to the local economyduringtheconstructionphaseofKWFandsinceitstartedoperatingcommercially.TheprojectiscontributingnotonlytogreaterenergysecurityandpovertyalleviationbutalsotowardstheSouthAfricangovernment’s climate change and renewable energy, low-carbontargets. It is anticipated that 85% of the operational costs will bespentintheEasternCape,whichtranslatesintoaneconomicimpactofapproximatelyZAR90million(c.USD9million)peryear.

All EAs are in place for the project and an on-site environmentalcomplianceofficerensurescompliancewithconditionsofapproval.Theproject complieswithanEquatorPrincipleActionPlanaswellasHRandlabourpoliciesandanEHSpolicy.Inaddition,theKougaWindFarmisaregisteredCDMprojectwithanexecutedEmissionsReductionPurchaseAgreement(ERPA).However,duetothecollapseof theglobal capand tradeCERmarketwithcarbonpricingatall-time lows,adecisionwas takentocancel theERPAforpossible re-instatementatalaterstage.


TheFundprovided critical capital tofill the‘fundinggap’ throughearly-stagedevelopmentriskcapitaltoprogressthepre-permittedwindassettopermittedstatus,aswellasprojectequityfinancetoconstruct,commissionandoperatethewindassetatprojectfinancialclose.

InspiredEvolutionfacilitatedthedevelopmentofasuccessfulrenewableenergy start-up company that offers strong commercial returns andfocusesontheoptimisationofpositivesocialandenvironmentalimpacts.Assuch,InspiredEvolutionenabledthedevelopmentoftheKougaWindFarmCommunityDevelopmentTrust,abroad-basedownershipscheme,whichowns26%ofthewindfarm.Thetrustbenefitsdirectly frommorethan ZAR1 billion (c. USD100 million) of revenue streams earned fromthe project over its 20-year life, ring-fenced for local communities viaSEDandenterprisedevelopmentprojects.Theareas forwhichfinancingis ring-fencedwill be determined in collaborationwith the Kouga LocalMunicipalityandextensivecommunityconsultation.

InspiredEvolutionwasinstrumentalinsecuringpreferencesharefundingofapproximatelyZAR112million(c.USD11.2million)fromtheIDCforthelocal community ownership vehicle, Micawber 864 Proprietary Limited.Inspired Evolution advised on structuring Micawber 864, which holds26% equity in KWF and supports the Kouga Wind Farm CommunityDevelopmentTrust.

InspiredEvolutionandthelendershaveensuredthatthecompanyanditsactivitiesaremanagedaccordingtotheEquatorPrinciples.TheDEVCOandKWFboardshaveadoptedtheKingIIIguidelinesoncorporategovernance,including board policies on conflicts of interest, procurement, betterfinancial governance and delegation of authority for senior executivemanagement. After a software update and upgrade, a comprehensiveaccountingprogrammeandbusiness systems arenow inplace tomeetreporting standards.A financial controllerwas appointed andmaintainsmonthlymanagementaccountsandacashflowanalysis,andKPMGwasappointedastheauditingfirm.SeniorprojectmanagersandmorerecentlythepositionofCEOandafacilitymanagerwererecruitedtoimplementtheprojectandtake it fromconstructionthroughtoasuccessfuloperationsphase. These senior executive positions are incentivised on assetperformanceoverthe20-yearterm.

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The Inspired Evolution leadership and value system of good governance and disciplined execution through the board has seen Kouga Wind Farm successfully achieving COD on 17 March 2015, amidst all challenges. The same open and cooperative leadership continues to provide support and guidance to the KWF executive team by entrenching the behaviour of a learning organisation during the transition phase from construction to operations.

LukhanyoKNdube,CEOofKougaWindFarm


DEVCOisawareoftheneedtobalancethebenefitsofwindpowerwiththepossibleimpactsonthelocalcommunitiesandtheenvironment.As such, all of Red Cap’s wind energy projects are developed inpartnershipwith landowners, the local community, environmentalgroupsandpublicstakeholders,withtheaimofbenefitingallpartiesinvolved. Monthly environmental and health and safety auditsconductedduringconstructionresultedinasuccessfulconstructionphasewithnosafetyorenvironmentalincidents.

Inspired Evolution entrenched the principle of ‘limited economicleakage’ fromtheprojectarea,ensuringthattangiblebenefitsflowtolocalpreviouslydisadvantagedorganisationsandhouseholdsoverthe life of the project.The preferential procurementmodelmakesinitialprovisionfor0.5%oftotalprocurementduringtheoperationalphase of the project to be spent on local woman-owned vendorsand a further 1.35% on local SME vendors. This will be extendedduringthelifeoftheprojectwiththeultimatetargetbeing5%and10%respectively. Inlinewiththiscommitment,15localSMEswerecontractedassuppliersduringtheconstructionphase.

Over the life of the project, KWF is committed to spending 1.09%of revenue (an estimated ZAR135million [c. USD13. 5million]) onsocio-economic development (SED) projects. A community needsassessmentindicatesthatmorethan50%isearmarkedtobespenton education, with the bulk of this on primary and secondaryschoolingforchildreninthelocalcommunity.TodateKWFhasspentZAR960 000 (c. USD96 000) on CSI and SED projects during theconstruction period betweenMarch 2013 andMarch 2015. In thesecond quarter of 2015 KWF implemented the first group of SEDprojectsthatformpartoftheSEDprogrammecommittedforthelifeoftheproject.

During the construction period more than 1 000 temporary jobswerecreatedthroughtheEPCcontractwithNordex.Theprojectalsomadeuseof theservicesof15SMEswiththefocuspredominantlyon the local community. In preparation for the operations phase,KWFemployed15permanentemployeesofwhich10arehistoricallydisadvantaged persons (HDPs) comprising 10 females and sixlocals. Skillsdevelopmentand localprocurement requirementsareembedded in thedeliverables ofNordex, the turbine supplier andEPCandO&Mcontractor.KWFisalsocommittedtothecontinuousskillsdevelopmentofitsemployeesinlinewiththeskillsneededforoptimalperformance.

ThroughouttheconstructionperiodofKWF,environmentallysensitiveareaswere avoided.With the use of independent consultants, theimpactof thewind farmhasbeenandwill continue tobekept toaminimum.TheEIA confirmed that theproject isnotexpected tohaveasignificanteffectonnaturalvegetationandterrestrialanimallife.Riskstobatandbirdspecieshavebeenreducedbysettingtheturbinesbackfromthemajorwatersourcesandadoptingaphasedconstruction approach. KWF has also employed four bird and batmonitorstoworkcloselywithindependentconsultantsthroughoutthe operations period. The Endangered Wildlife Trust will alsocontinuetomonitorpotentialimpactsonkeybirdspecies.

Red Cap Kouga Wind Development Company Proprietary Limited Kouga Wind Farm (RF) Proprietary Limited (continued)

In addition, KWF is working with local conservation NGOs and other windfarmsintheareato identifyandimplementaconservationinitiativewithintheKouga region. KWFhasbegun to implement someof themitigationmeasuresrecommended in the EIA such as micro-siting, vegetation search and rescue,rehabilitation, and alien plant species and fire management, to reduce anynegative impact on vegetation and wetlands. The low-carbon nature of windenergyrepresentsasignificantenvironmentalandsocialbenefit.

Throughthesedevelopments,DEVCOisconsolidatingitspositionasasuccessful,localwinddeveloperandIPPintheSouthAfricanmarket.

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AFPOC Limited: Karusa Wind Farm (RF) (Pty) Ltd


TheKarusaWindFarmisagreenfieldgrid-connectedonshorewindpowergenerationfacility.TheprojectwasbidinRound4ofREIPPPPand achieved preferred bidder status on 11 April 2015. Vestas isthe chosen wind turbine technology supplier. The project has a30-month construction time and will reach commercial operationdate in mid-2018. Revenue is underpinned by a 20-year powerpurchase agreement (PPA) with Eskom escalating annually at CPI,with sovereign underwriting from the South African governmentovertheentireprojectlife.

All relevantenvironmentalconcernshavebeenaddressed throughthe EIA process and the project is fully compliant in respect oflicensing, regulations, approvals and governing legislation. Karusaiseligibleforcleandevelopmentmechanism(CDM)registrationandtheviabilityofthisiscurrentlybeingexplored.


Karusa is focusing heavily on the creation of new jobs to allowpreviously excluded South African citizens can start participating.Tothisend,theprojectiscontributingtowardsthecreationofnewjobs in the surrounding local communities, whilemaintaining theresponsiblefinancialmanagementoftheasset.Karusawillcreate7119person-monthsofemploymentduringtheconstructionperiodand 25 200 person-months of employment during the operationsand maintenance phase, giving the project a total of 17.65 jobsperMW.The project company is 40% BEE-owned, 30% owned byPeleGreenEnergyKarusaBEESPV(Pty)Ltdand10%bytheKarusaWindProjectLocalCommunityTrust.Theprojectcompany intendsto appoint only previously disadvantaged candidates to its topmanagementpositions.

Theproject is also committed toensuring local economicbenefitsfor SMEs andother local serviceproviders.The total valueof localcontentisZAR946.34million(USD94.63million),resultinginalocalcontent percentageof 40.83%of the total valueof theproject fortheconstructionperiod.KarusahascommittedtospendingZAR1.42billion (USD142 million) on preferential procurement during itsconstructionandoperationsperiod.Altogether75.98%ofthiswillbespentonB-BBEEprocurement;9.67%onqualifyingsmallenterprises(QSEs) and exempt micro enterprises (EMEs) as delineated in thenational B-BBEE code; and 4.47% on procurement from female-owned businesses. Three percent of revenue will be spent onimprovingmarket access anddeveloping the skills ofworkers andownersofexisting localbusinesses. Initiativeswill includebusinessfunding, start-up funding, entrepreneurship training and businessexpansionfunding.

Furthermore, in line with financial good governance, Karusa willincrease its socio-economic development (SED) and enterprisedevelopment(ED)contributionsovertime,givinganever-increasingnumberofpreviouslydisadvantagedSouthAfricansanopportunityto share in economic activity. SED contributions will be focusedon skills development and training initiatives for previouslydisadvantaged people. By gaining transferable skills, individualswill be able to use these while working on the project and, overtime,withotheremployerswhoarelookingforsuchskills.Detailedskillsdevelopmentandtrainingprogrammeswillbedevelopedand

Website: NoneLocation of operations: BetweenSutherlandandMatjiesfontein,

NorthernCape,SouthAfricaSector: RenewableEnergy:WindPowerGenerationBusiness focus: 140MWonshorewindfarmSize: Pre-revenue;totalKarusaprojectcapexcosts

notavailable(soldtoEnelGreenPower)Job creation: 25200person-monthsduringtheoperations

phase;7119person-monthsduringthe30-monthconstructionperiod,givingtheprojectatotalof17.65jobsperMW


Evolution One Fund investment in AFPOC: ZAR70.64million(c.USD7.06million)

investedthroughtheholdingcompanyAFPOCintothedevelopmentcompanyAfricanCleanEnergyDevelopments(ACED).ZAR16.36million(USD1.64million)reservedforfollow-oninvestments.ChristopherClarkerepresentstheEvolutionOneFundontheboardofACEDandisjoinedbyStevenFaureontheboardofAFPOCLimited

Evolution One Fund investment in Karusa: IndirectinvestmentthroughAFPOC.AFPOC

investedR538000(USD53800)intheunderlyingSPVandfurtherprovidedworkingcapitaltoACEDtodeveloptheprojecttobidsubmission

Status: Projectsoldatfullypermitted,preferred-bidderstagetoEnelGreenPower(financialcloseinearly2016)


• Inspired Evolution assisted with co-funding early-developmentexpensesforKarusaWindFarm.TheFundprovidedcritical,early-stagecapitaltofillthe‘fundinggap’andhelptheAFPOCInvestmentsteamtoprogressthepre-permittedwindassettopermittedstatus.

• Karusawillprovide140MWofcleanrenewableenergyintothenationalgrid,undera20-yearPPAwithEskom,resultingfromasuccessfulbidinRound4ofREIPPPP.Thisisequivalentto530.4GWhofcleanenergyperannum, thusmitigating approximately 519 845 tCO2e of greenhousegasemissionseachyearthroughthesubstitutionofdirtiercoal-poweredgenerationalternatives.

• Karusacomprises40%blackeconomicempowermentownership,30%ofwhichisheldbyPeleGreenEnergyKarusaBEESPV(Pty)Ltdand10%ofwhichisownedbytheKarusaWindProjectLocalCommunityTrust,abespokecommunity trustwith trustexpenditure ring-fenced for localbroad-based,previouslydisadvantagedcommunities.Dividendincomewillflowdirectlyfromtheprojecttotheselocalcommunitiesoverthe20-yearlifeoftheproject.

establishedpostpreferred-bidderappointmentoftheproject.ThedesiredimpactofKarusa’sEDstrategywillbethat,after20years,manypreviouslydisadvantagedindividuals will have an active opportunity to gain skills and participate in aninclusiveeconomicenvironment.Atotalof7%ofrevenuewillbespentonSEDcontributions,includingskillsdevelopmentprogrammesandbursaryschemes.

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AFPOC Limited: Nxuba Wind Farm (RF) (Pty) Ltd


Nxuba Wind Farm is a greenfield grid-connected onshore windpower generation facility. It was bid in Round 4 of REIPPPP andachieved preferred bidder status on 11 April 2015. Vestas is thechosen wind turbine technology supplier. The project has a20-month construction time and will reach commercial operationdate at the endofQ32017. Revenue is underpinnedby a 20-yearpowerpurchaseagreement(PPA)withEskom,escalatingannuallyatCPI,withsovereignunderwritingfromtheSouthAfricangovernmentovertheentireprojectlife.

All relevantenvironmentalconcernshavebeenaddressed throughthe EIA process and the project is fully compliant in respect oflicensing,regulations,approvalsandgoverninglegislation.NxubaiseligibleforCDMregistrationandtheviabilityofthesaleofCertificateEmissionReductions(CERs)iscurrentlybeingexplored.


Nxuba will create jobs totalling 8 339 person-months over theconstructionperiodand24240person-monthsovertheoperationsandmaintenance period, giving the project a total of 19 jobs perMW.Theprojectcompanyis40%BEE-owned,30%ofwhichisheldby Pele Green Energy and 10% of which is owned in communitytrust.BEEownershipintheconstructionandoperationscontractorsis 22% and 20% respectively. Nxuba has committed to employing100%previouslydisadvantagedpersons inmanagementpositions.TheseincludethepositionofCEO,headoffinance,headofhumanresourcesandheadofcompliance.

The total value of local content is ZAR912.15 million(c. USD91.2 million) resulting in a local content percentage of40.59%ofthetotalvalueoftheprojectfortheconstructionperiod.In addition, Nxuba has committed to spending ZAR885.35million(c. USD88.54 million) on preferential procurement during itsconstructionandoperationsperiod,79.12%ofwhichwillbespenton B-BBEE procurement with 4.96% spent on qualifying smallenterprises(QSEs)andexemptmicroenterprises(EMEs).Altogether3.16% will be spent on procurement of female-owned vendors,while 3.03%of revenuewill be spent on improvingmarket accessforSMEsanddevelopingtheskillsofworkersandownersofexistingbusinesses.Initiativeswillincludeentrepreneurshiptraining,fundingforbusinessstart-upsandbusinessexpansion funding. In linewiththe commitment to local economic development through skillsdevelopment,Nxubahascommittedanaboveaveragetargetspendof7.1%ofrevenueto,forexample,skillsdevelopmentprogrammesandbursaryschemesformembersofthelocalcommunity.

Website: NoneLocation of operations: BetweenCookhouseandBedford,Eastern

Cape,SouthAfricaSector: RenewableEnergy:WindPowerGenerationBusiness focus: 140MWonshorewindfarmSize: Pre-revenue;totalNxubaprojectcapexcosts

notavailable(soldtoEnelGreenPower)Job creation: 24240person-monthsduringtheoperations

phase;8339person-monthsduringthe20-monthconstructionperiod,givingtheprojectatotalof19jobsperMW


Evolution One Fund investment in AFPOC: ZAR70.64million(USD7.06million)invested

throughtheholdingcompanyAFPOCintothedevelopmentcompanyAfricanCleanEnergyDevelopments(ACED).

ZAR16.36million(USD1.63million)reservedforfollow-oninvestments.ChristopherClarkerepresentstheEvolutionOneFundontheboardofACEDandisjoinedbyStevenFaureontheboardofAFPOCLimited

Evolution One Fund investment in Nxuba: IndirectinvestmentthroughAFPOC.AFPOC

investedR2.62million(USD262000)intheunderlyingSPVandfurtherprovidedworkingcapitaltoACEDtodeveloptheprojecttobidsubmission

Status: Projectsoldatfullypermitted,preferred-bidderstagetoEnelGreenPower(financialcloseinearly2016)


• Inspired Evolution assisted with co-funding early-developmentexpensesforNxubaWindFarm.TheFundprovidedcritical,early-stagecapitaltofillthe‘fundinggap’andhelptheAFPOCInvestmentsteamtoprogressthepre-permittedwindassettopermittedstatus.

• Nxubawillprovide140MWofcleanrenewableenergyintothenationalgrid,undera20-yearPPAwithEskom,resultingfromasuccessfulbidinRound4ofREIPPPP.This isequivalentto469GWhofcleanenergyperannum, thusmitigating approximately 460 000 tCO2e of greenhousegasemissionseachyearthroughthesubstitutionofdirtiercoal-poweredgenerationalternatives.

• Nxubacomprises40%blackeconomicempowermentownership,30%ofwhichisheldbyPeleGreenEnergyand10%ofwhichisownedbyabespoke local community trustwith trustexpenditure ring-fenced forlocal broad-based, previously disadvantaged communities. Dividendincomewill flowdirectly from theproject to these local communitiesoverthe20-yearlifeoftheproject.

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43Inspired Evolution Investment Management Proprietary Limited Profit with Purpose: Sustainable Value Creation Report 2015 434343434343

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REAFPOC Limited: Nojoli Wind

Farm (RF) (Pty) Ltd


Nojoli Wind Farm is a greenfield grid-connected 88MW onshorewind power generation facility. Nojoli was bid in Round 3 of theSouthAfricanDoERenewableEnergyIndependentPowerProducerProcurement Programme (REIPPPP) and reached financial closein January 2015. Vestas is the chosen wind turbine technologysupplier. The project has a 20-month construction time and willreach commercial operation date on 31 December 2016. Revenueisunderpinnedbya20-yearpowerpurchaseagreement(PPA)withEskom,escalatingannuallyatCPI,withsovereignunderwritingfromtheSouthAfricangovernment.

The project has undergone full EIA studies and is complyingwiththemeasures included therein. Nojoli is fully compliant in respectoflicensing,regulations,approvalsandgoverninglegislationandiseligible for registration as a cleandevelopmentmechanism (CDM)project.Theviabilityofthisiscurrentlybeingexplored.


TheprojectsiteislocatedclosetoCookhouse,BedfordandSomersetEastintheEasternCapewitheachofthesetownsactingasareadysource of local labour during the 20-month construction phase.Duringconstructionapproximately238temporaryand14permanentjobswillbecreated.Benefitsalso includeon-sitetrainingandskillsdevelopment.Enterprisedevelopmentandpreferentialprocurementpoliciesfromlocalcommunitieswillgiverisetoafurther60jobsfromproject-related activities. These employees will be sourced fromlocalcommunities, therebyresulting inskillsdevelopmentfor localcommunitymembers.

Nojoli comprises 50% black economic empowerment (BEE)ownership of which 10% is owned by a local community trust,the Nojoli Wind Farm Community Trust. The Trust expenditure isring-fenced for local economic development (LED) exclusively forpreviously disadvantaged communities. A significant quantum offundswillflowtolocalcommunitiesasaresult.Inaddition,thelocalcontractorfortheconstructionphaseandoperationsphasesoftheproject is 20% black-owned. Nojoli has committed to preferentialprocurement policies favouring local broad-based BEE serviceproviders for security, catering, transport and accommodation,amongst others.Management positions for the project have beenreservedforpreviouslydisadvantagedSouthAfricans.

Supporting SMEs is an integral part of stimulating economicgrowth and job creation. For this reason the services of the BlueCrane Development Agency (BCDA) have been procured to helpthe project company to identify suitable SMEs and appropriateenterprisedevelopmentinitiatives.Nojolihasfurthercommitted1%of revenueto localenterprisedevelopment,75% in the immediatearea (Cookhouse, Bedford, Adelaide and Somerset East) and 25%in the Eastern Cape Province. A further 2.5% of revenue has beencommitted to broad activities that will contribute to local socio-economicdevelopmentinthevicinityoftheproject.

Website: NoneLocation of operations: NearCookhouse,EasternCape,SouthAfrica

(undertheBlueCraneRouteMunicipality)Sector: RenewableEnergy:WindPowerGenerationBusiness focus: 88MWonshorewindfarmSize: Pre-revenue;totalNojoliprojectcapexcosts

notavailable(soldtoEnelGreenPower)Job creation: 14permanentduringoperationsphase;

approximately238temporaryjobsduringthe20-monthconstructionphase


Evolution One Fund investment in AFPOC: ZAR70.64million(c.USD7.06million)invested

throughtheholdingcompanyAFPOCintothedevelopmentcompanyAfricanCleanEnergyDevelopments(ACED).

ZAR16.36million(c.USD1.64million)reservedforfollow-oninvestments.ChristopherClarkerepresentstheEvolutionOneFundontheboardofACEDandisjoinedbyStevenFaureontheboardofAFPOCLimited

Evolution One Fund investment in Nojoli: IndirectinvestmentthroughAFPOC.

AFPOCinvestedR85000(USD8500)intheunderlyingSPVandfurtherprovidedworkingcapitaltoACEDtodeveloptheprojecttobidsubmission.

Status: Projectsoldatfullypermitted,preferred-bidderstagetoEnelGreenPower(projectcurrentlyunderconstruction)


• Inspired Evolution assisted with co-funding early-developmentexpenses for NojoliWind Farm (Nojoli) via ACED. The Fund providedcritical,early-stagecapitalviaAFPOCtofillthe‘fundinggap’andassisttheACEDdevelopmentteamtoprogressthepre-permittedwindassettopermittedstatus.

• Nojoli will provide 88MW of clean renewable energy into the nationgridundera20-yearPPAwithEskom,resultingfromasuccessfulbidinRound3ofREIPPPP.This isequivalentto274GWhofcleanenergyperannum, mitigating approximately 268 000 tCO2e of greenhouse gasemissions each year through the substitution of dirtier coal-poweredgenerationalternatives.

• Nojoli comprises 50% black economic empowerment ownership,10% of which is owned by a bespoke trust, the Nojoli Wind FarmCommunityTrust,withtrustexpenditurering-fencedtolocalpreviouslydisadvantagedcommunities.Dividendincomewillflowdirectlyfromtheprojecttotheselocalcommunitiesoverthe20-yearlifeoftheproject.


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RE AFPOC Limited: Soetwater

Wind Farm (RF) (Pty) Ltd


The SoetwaterWind Farm is a greenfield grid-connected onshorewindpower generation facility.Theprojectwas bid in Round 4 ofREIPPPPandachievedpreferredbidderstatuson5June2015.Vestasis the chosenwind turbine technology supplier.The project has a20-month construction time and will reach commercial operationdate in mid-2018. Revenue is underpinned by a 20-year powerpurchase agreement (PPA) with Eskom escalating annually at CPI,with sovereign underwriting from the South African governmentovertheentireprojectlife.

All relevantenvironmentalconcernshavebeenaddressed throughthe EIA process and the project is fully compliant in respect oflicensing,regulations,approvalsandgoverninglegislation.Soetwateriseligibleforcleandevelopmentmechanism(CDM)registrationandtheviabilityofthisiscurrentlybeingexplored.


LikeKarusaandNxubawindfarms,SoetwaterisfocusingheavilyonthecreationofnewjobstoallowpreviouslyexcludedSouthAfricancitizens toparticipate in theeconomy. Soetwaterwill create6 802person-monthsofemploymentduringtheconstructionperiodand25 177 person-months of employment during the operations andmaintenancephase,givingtheprojectatotalof19jobsperMW.Theproject company is 40%BEE-owned, 30% is ownedby PeleGreenEnergySoetwaterBEESPV(Pty)Ltdand10%bytheSoetwaterWindProject Local Community Trust. The project company will appointonly previously disadvantaged candidates to its topmanagementpositions.

The turbine supplier and installation contractor, Vestas, hasalso committed to providing unskilled workers with an on-siteapprenticeship. Furthermore, the percentage BEE shareholding intheturbinesupplyandinstallationandelectricalandcivilbalanceofplant(BOP)contractorsis22%andintheoperationsandmaintenancecontractor,20%.

The total valueof local content is ZAR940million (USD94million),resultinginalocalcontentpercentageof40.84%ofthetotalvalueoftheprojectfortheconstructionperiod.SoetwaterhascommittedtospendingatotalofZAR831billion(USD83.1million)onpreferentialprocurement during its construction and operations period.Altogether 84.47% of this will be spent on B-BBEE procurement,9.07% on qualifying small enterprises (QSEs) and exempt microenterprises (EMEs), as delineated in the national B-BBEE code, and3.14% on procurement from female-owned businesses. Threepercent of revenue will be spent on improving market accessand developing the skills of workers and owners of existing localbusinesses.Initiativeswillincludebusinessfunding,start-upfunding,entrepreneurshiptrainingandbusinessexpansionfunding.

Furthermore, in line with financial good governance, Soetwaterwill increase its socio-economicdevelopment (SED)andenterprisedevelopment(ED)contributionsovertime,givinganever-increasingnumberofpreviouslydisadvantagedSouthAfricansanopportunityto share in economic activity. Detailed skills development andtraining programmes will be developed and established. TheprojectwillinvestitsEDcontributionsintothedevelopmentoflocalentrepreneurs, allowing them to grow and employ competentlyskilledlocalindividuals.ThedesiredimpactofSoetwater’sEDstrategy

Website: NoneLocation of operations: BetweenSutherlandandMatjiesfontein,

NorthernCape,SouthAfricaSector: RenewableEnergy:WindPowerGenerationBusiness focus: 140MWonshorewindfarmSize: Pre-revenue;totalSoetwaterprojectcapex

costsnotavailable(soldtoEnelGreenPower)Job creation: 25177person-monthsduringtheoperations

phase;6802person-monthsduringthe20-monthconstructionperiod,givingtheprojectatotalof19jobsperMW


Evolution One Fund investment in AFPOC: ZAR70.64million(USD7.06million)invested

throughtheholdingcompany,AFPOC,intothedevelopmentcompanyAfricanCleanEnergyDevelopments(ACED).ZAR16.36million(USD1.64million)reservedforfollow-oninvestments.ChristopherClarkerepresentstheEvolutionOneFundontheboardofACEDandisjoinedbyStevenFaureontheboardofAFPOCLimited

Evolution One Fund investment in Soetwater: IndirectinvestmentthroughAFPOC.AFPOC

investedR538000(USD53800)intheunderlyingSPVandfurtherprovidedworkingcapitaltoACEDtodeveloptheprojecttobidsubmission

Status: Soldatfullypermitted,preferred-bidderstagetoEnelGreenPower(financialcloseinearly2016)


• Inspired Evolution assisted with co-funding early-developmentexpenses for SoetwaterWind Farm.The Fund provided critical, early-stagecapital tofill the‘fundinggap’andhelp theAFPOC Investmentsteamtoprogressthepre-permittedwindassettopermittedstatus.

• Soetwater will provide 140MW of clean renewable energy into thenational grid, under a 20-year PPA with Eskom, resulting from asuccessfulbidinRound4ofREIPPPP.Thisisequivalentto530.4GWhofcleanenergyperannum,thusmitigatingapproximately519845tCO2eof greenhouse gas emissions each year through the substitution ofdirtiercoal-poweredgenerationalternatives.

• Soetwater comprises 40% black economic empowerment ownership,30%ofwhichisheldbyPeleGreenEnergySoetwaterBEESPV(Pty)Ltdand10%ofwhichisownedbytheSoetwaterWindProjectLocalCommunityTrust,abespokecommunitytrustwithtrustexpenditurering-fencedforlocal broad-based, previously disadvantaged communities. Dividendincomewill flowdirectly from theproject to these local communitiesoverthe20-yearlifeoftheproject.

willbethat,after20years,manypreviouslydisadvantagedindividualswillhaveanactiveopportunity toparticipate in an inclusiveeconomicenvironment,whichtheprojectwillbeabletofacilitate.Atotalof7%ofrevenuewillbespentonSEDcontributions,includingskillsdevelopmentprogrammesandbursaryschemes.


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REGibson Bay Wind Farm

Proprietary Limited


DEVCO is a bespoke wind development company focused ondeveloping a portfolio of onshore wind energy projects in theKougaregion intheEasternCapeProvinceofSouthAfrica,anareaofexceptionalwindresource.TheFundholdsa30%equityinterestinDEVCO.DEVCOhassuccessfullydevelopedthe111MWGibsonBayWindFarm.GibsonBaywasbidinRound3ofREIPPPPon19August2013withpreferredbiddersbeingannouncedon29October2013.Thescheduledcommercialoperationsdate(COD)forGibsonBayis28April2017.

The project as an investment opportunity

TheGibsonBayprojectwasseenbytheFundasanopportunitytoearnattractive returns throughhavingsecuredanearlyseat in thewindprojectdevelopmentcompanyDEVCOwiththerighttoprovideproject equity finance into the permitted asset at financial close.InspiredEvolution facilitated the successfuldisposalofGibsonBaytoEnelGreenPower.Theprojectwassoldatpermittingstageinlate2013underRound3ofREIPPPPandtheFundreceivedamultipleof11.24xonitscash-on-cashinvestedintoGibsonBay.

Given the relatively small amount of capital invested into thedevelopment phase only of Gibson Bay, this exit illustrates therecognition from the Inspired Evolution team of the necessityof a turnaround on strategy, favouring agility and strong returnfocusover thealternativeof focusingonsimplydeployinga largerquantum of capital to optimise assets under management. ThisinvestmentstrategyturnaroundwasmadeonthebackoftherapidyieldcompressionwhichwouldhaveresultedhadtheFundfollowedits rights to deploy a larger amount of project equity at financialclose.TheteamrapidlypreparedtheassetforasuccessfulsaletoEnelGreenPower.

Website: www.red-cap.co.zaLocation of operations: GibsonBay,KougaRegion,EasternCape,

SouthAfricaSector: RenewableEnergy:WindPowerGenerationBusiness focus: Development,constructionandoperation

ofonshoregrid-connectedwindenergygenerationfacility

Size: Pre-revenue;totalGibsonBayprojectcapexcostsR1.974billion(USD197million)

Job creation: 34476person-monthsduringtheoperationsphase;3577person-monthsduringthe28-monthconstructionperiod


Evolution One Fund investment: ZAR2million(USD200000).Christopher

ClarkerepresentedtheEvolutionOneFundontheboardofGibsonBayuntildisposal.

Status: Projectsoldatfullypermitted,preferred-bidderstagetoEnelGreenPower(projectisunderconstruction)


• Inspired Evolution secured an agreement with UNEP’s Seed CapitalAssistanceFacility (SCAF) toassistwithco-fundingearly-developmentexpensesforeligibleDEVCOactivities.TheFundprovidedcriticalearly-stage capital to fill the‘funding gap’ and assist the Red Cap team toprogressthepre-permittedwindassettopermittedstatus.

• Gibson Bay will provide 111MW of clean renewable energy into thenational grid, under a 20-year power purchase agreement (PPA)with Eskom, resulting from a successful bid in Round 3 of REIPPPP.This is equivalent to 372GWh of clean energy per annum,mitigatingapproximately364000tCO2eofgreenhousegasemissionseachyearthroughthesubstitutionofdirtiercoal-poweredgenerationalternatives.

• TheGibsonBayprojectcomprises40%blackeconomicempowermentownership, and includes a portion that is owned by a bespoke trustwith trust expenditure ring-fenced for local previously disadvantagedcommunities. Dividend incomewill flow directly from the project totheselocalcommunitiesoverthe20-yearlifeoftheproject.


AsaresultoftheFund’smandateandtheREIPPPPprovisionstoensuretheoptimisationofpositivesocialandenvironmentalimpacts, comprehensive EIAs have been conducted, withno major impacts anticipated. A community developmenttrust has also been set up to address issues relating to localeconomicdevelopment(LED).DuringtheconstructionphaseofGibsonBayZAR908million(USD90.8million)wasspentonlocalcontractorsandprovidersandanumberoftemporaryjobsweredirectlycreated.Thelocaltrustwillbenefitfromdividendincomethatwillflowtothelocalcommunitythroughoutthe20-yearprojectlife.

Inspired Evolution and the lenders have ensured that thecompany and its activities are managed according to theEquatorPrinciplesthroughouttheprojectlife.TheDEVCOandGibson Bay boards have adopted the King III guidelines oncorporate governance, including board policies on conflictsof interest, procurement, better financial governance anddelegationofauthorityforseniorexecutivemanagement.



Composite Portfolio Indicators

A wide variety of development impact indicators have been developed for use by internationalfinanceinstitutions(IFIs)tomoreeffectivelymeasuretheimpactsofprivateequityfundsinemergingmarketsanddevelopingcountries.The thesisbeing testedby IFIs iswhetherprivateequity fundsmake lifebetter forpeople inemergingmarketsand, if sohowmuchbetter? IFIsmoreandmoreoftenhearsuchquestionsfromtheirshareholders,boardmembersorstakeholders.Thequestionsare of obvious interest to IFIs who invest as limited partners, oftenwith specific socio-economicdevelopmentmandates.But thesequestionsarealso increasingly important foremergingmarketgeneral partners and fund managers. Media criticism and government opposition in manydevelopingcountriesillustratetherisksthatprivateequityfundmanagersfaceiftheiractivitiesarenotunderstood,measuredandshowntobenefitlocaleconomiesandpopulations.

Globally, there aremore than100 indicatorswith variousdefinitionsused to assessdevelopmentimpacts of private equity funds.Therefore, a global IFIworking group (Private Equity Funds)wastaskedwithagreeinguponasetofdevelopmentindicatorsthatbuildsalibraryofcoreandoptionaldevelopmentindicatorswithcommondefinitionsandconsistenttrackingmethodologies.Asthereisabroaddiversityofprivateequityfunds(e.g. infrastructurefunds,SMEfundsorgeneralventurecapitalfunds),focusona‘onesizefitsall’principlewasnotdeemedpractical.

Inresponse,InspiredEvolutioncompiledamodifiedanddistilledindicatorcategorylistcomprisingbothcoreandoptionaldevelopmentindicatorswasgleanedfromtheIFIlibraryandisabestattemptatamergedsetofdevelopmentindicatorsthathavebeenadoptedandusedbymostoftheFund’sinvestors.InspiredEvolution,asadvisertotheEvolutionOneFund,appliesthissetofdevelopmentindicatorstotheFund’sportfolioofinvestmentsonanannualreportingbasis.

This section details the development outcomes or impacts of the EvolutionOne Fund’s portfolioof investments, reflected in the tables that follow,which aremeasured against the following keyindicatorcategories:

• Financial• Governance• Societalandeconomicrelationships• Companysocialresponsibilityandbestpractice• Environmentalimpacts,policiesandcompliance

InadditiontotheFund’sbroaderclimate-changemitigationobjectivesoflow-carbonandresourceefficient technology development, use and related business-model innovation, the sustainabilityimpactof theportfolio is focusedonnetpositive societalbenefits.Whereverpossible, the Fund’scapital is deployed in a manner that empowers local communities and addresses local needs,promoteslocalownership,generateslocaljobs,facilitatesskillsdevelopmentandtraining,improvesaccesstoeducationandhealthandcreateseconomicdiversification.

TheinformationillustratestherangeofmeasuredoutcomesthatareintegraltoInspiredEvolution’senvironmental,socialandgovernanceprinciples.


COMPANY, COUNTRY AND SECTOR BUSINESS ACTIVITY

YEAR OF INVEST-MENT

EXPECT-ED YEAR OF EXIT

GREEN-FIELD/ EARLY STAGE

INVESTMENT TYPE TOTAL PROJECT(S) COST (ZAR)

FUND TOTAL (INVESTMENT APPROVED & COMMITTED)INVESTED TO DATE

INVESTMENT INSTRUMENT

FUND %STAKE

ANNUAL REVENUE AT TIME OF SHARE ACQUISITION

PROJECTED ANNUAL REVENUE DURING EXIT **

ANNUAL EBITDA AT TIME OF SHARE ACQUISI-TION

ANNUAL EBITDA DURING EXIT **

INVESTEE WAS SME AT TIME OF ACQUISITION ***

PRIOR YEAR REV-ENUE GROWTH GREATER THAN 20% (Y/N),

PRIOR YEAR EBITDA GROWTH GREATER THAN 20% (Y/N)

Growth Capital Businesses

Abagold:Afropulse,SouthAfrica,Agribusiness Mariculture:Abalonefarm

2010 2018 No AgribusinessTechnology&Infrastructure

R158000000(SulamanziProject)

R52500000 PreferenceShare 15% R54290000 R367 609 311 R14262000 R104 147 081 No No No

SIRACSouthernAfrica,SouthAfrica,Energy-efficiency

Heatpumps 2013 2018 Yes Energy-efficiencyTechnology

N/A R17 000 000 Ords,SHL,PreferenceShare 75% R13 761 247 R62 461 736 -R3349243 R11 713 891 Yes No No

SOLD EnviroServ,SouthAfrica,WasteManagement

Wastemanagement 2010 2013 No WasteManagement&Recovery

N/A R51584000 Debenture N/A R1037000000 R1695000000(actual)

R345000000 R482000000 No No No

Technology & Infrastructure: Other

Demeter,SouthAfrica,WasteManagement/Agribusiness

OrganicFertiliserproduction

2011 2016 Yes AgribusinessTechnology&Infrastructure

R500000000estimated

[R10000000]R3000000

ConvertibleLoan&Equity 15% R0 N/A R0 N/A Yes No No

Infrastructure: Renewable Energy

Rustmo1SolarFarm,SouthAfrica,RenewableEnergyGeneration

SolarPV[7MW] 2011 2018 Yes RenewableEnergyInfrastructure

R209 000 000 R24 835 000 Equity,projectfinance

51% R0 R44344637 R0 R34846453 Yes No No

SlimSunSwartlandSolarPark,SouthAfrica,RenewableEnergyGeneration


R209000000 R24835000 Equity,projectfinance

^60% R0 R37 866 573 R0 R33 142 474 Yes No No

SlimSunToo,SouthAfrica,RenewableEnergyGeneration


R100000000estimated

[R8000000]R1000000

Equity,projectfinance

50% R0 R77312000 R0 R67964000 Yes No No

FifthSeason****,SouthAfrica,RenewableEnergyGeneration

SolarPV68MW 2013 2018 Yes RenewableEnergyInfrastructure

R2 212 952 348 R39 787 550 Debenture&PreferenceShares

N/A R0 R502 795 394 R0 R462 445 993 Yes No No

RedCap

RedCapKougaWindFarm,SouthAfrica,RenewableEnergyGeneration

OnshoreWind80MW 2012 2018 Yes RenewableEnergyInfrastructure

R1850000000(KougaWindFarm)

[R107961000]R98311000

Equity,projectfinance 26.6% R0 R446 651 295 R0 R371 992 897 Yes No No

RedCapDEVCO,SouthAfrica,Renew-ableEnergyDeveloper

OnshoreWind200MW 2010 2015 Yes RenewableEnergyDeveloper

R4350000000(Kouga&GibsonBayWindFarms)

R14 072 290 Equity,developmentriskcapital

30% R0 R8 500 000 R0 R8 000 000 Yes No No

SOLD GibsonBayWindFarm,SouthAfrica,RenewableEnergyGeneration


N/A–permitedassetsold


30% R0 R0 R0 R0 Yes No No

AFPOC AFPOCLimited,Mauritius,RenewableEnergyGeneration

REHoldCo1000MWs 2012 2018 No RenewableEnergyDeveloper

N/A–multipleprojects

[R87000000]R70641000

Equity,developmentriskcapital

30% R0 N/A -R1682007 N/A Yes No No

CookhouseWindFarm OnshoreWind138.6MW

2012 2018 Yes RenewableEnergyInfrastructure

R2 280 492 444 InvestedviaAFPOC Equity,projectfinance *2.25% R0 R527 967 699 R0 R471 104 412 Yes No No

AfricanCleanEnergyDevelopments(ACED),SouthAfrica,RenewableEnergyDeveloper

OnhoreWind&SolarPV500MW

2012 2017 No RenewableEnergyDeveloper


InvestedviaAFPOC Equity,developmentriskcapital

30% R22 615 N/A R61 049 N/A Yes No No

SOLD NojoliWindFarm,SouthAfrica,RenewableEnergyGeneration


R1 619 972 180 InvestedviaAFPOC Equity,developmentriskcapital

*12% R0 R0 R0 R0 Yes No No

SOLD KarusaWindFarm,SouthAfrica,RenewableEnergyGeneration





SOLD NxubaWindFarm,SouthAfrica,RenewableEnergyGeneration





SOLD SoetwaterWindFarm,SouthAfrica,RenewableEnergyGeneration





Portfolio Investments, Financial Indicators

Notes: ^–reflecttheeconomicinterestofthefund

*–indirectequityinterestheldbytheFund

FifthSeason****–financialindicatorsarefortheunderlyingSolarPVasset–SolarCapitalDeAar


COMPANY, COUNTRY AND SECTOR BUSINESS ACTIVITY

YEAR OF INVEST-MENT

EXPECT-ED YEAR OF EXIT

GREEN-FIELD/ EARLY STAGE

INVESTMENT TYPE TOTAL PROJECT(S) COST (ZAR)

FUND TOTAL (INVESTMENT APPROVED & COMMITTED)INVESTED TO DATE

INVESTMENT INSTRUMENT

FUND %STAKE

ANNUAL REVENUE AT TIME OF SHARE ACQUISITION

PROJECTED ANNUAL REVENUE DURING EXIT **

ANNUAL EBITDA AT TIME OF SHARE ACQUISI-TION

ANNUAL EBITDA DURING EXIT **

INVESTEE WAS SME AT TIME OF ACQUISITION ***

PRIOR YEAR REV-ENUE GROWTH GREATER THAN 20% (Y/N),

PRIOR YEAR EBITDA GROWTH GREATER THAN 20% (Y/N)


Abagold:Afropulse,SouthAfrica,Agribusiness Mariculture:Abalonefarm

2010 2018 No AgribusinessTechnology&Infrastructure

R158000000(SulamanziProject)

R52500000 PreferenceShare 15% R54290000 R367 609 311 R14262000 R104 147 081 No No No


Heatpumps 2013 2018 Yes Energy-efficiencyTechnology

N/A R17 000 000 Ords,SHL,PreferenceShare 75% R13 761 247 R62 461 736 -R3349243 R11 713 891 Yes No No


Wastemanagement 2010 2013 No WasteManagement&Recovery

N/A R51584000 Debenture N/A R1037000000 R1695000000(actual)

R345000000 R482000000 No No No



OrganicFertiliserproduction

2011 2016 Yes AgribusinessTechnology&Infrastructure

R500000000estimated

[R10000000]R3000000

ConvertibleLoan&Equity 15% R0 N/A R0 N/A Yes No No




R209 000 000 R24 835 000 Equity,projectfinance

51% R0 R44344637 R0 R34846453 Yes No No



R209000000 R24835000 Equity,projectfinance

^60% R0 R37 866 573 R0 R33 142 474 Yes No No



R100000000estimated

[R8000000]R1000000

Equity,projectfinance

50% R0 R77312000 R0 R67964000 Yes No No


SolarPV68MW 2013 2018 Yes RenewableEnergyInfrastructure

R2 212 952 348 R39 787 550 Debenture&PreferenceShares

N/A R0 R502 795 394 R0 R462 445 993 Yes No No

RedCap



R1850000000(KougaWindFarm)

[R107961000]R98311000

Equity,projectfinance 26.6% R0 R446 651 295 R0 R371 992 897 Yes No No

RedCapDEVCO,SouthAfrica,Renew-ableEnergyDeveloper

OnshoreWind200MW 2010 2015 Yes RenewableEnergyDeveloper

R4350000000(Kouga&GibsonBayWindFarms)


30% R0 R8 500 000 R0 R8 000 000 Yes No No





30% R0 R0 R0 R0 Yes No No


REHoldCo1000MWs 2012 2018 No RenewableEnergyDeveloper


[R87000000]R70641000

Equity,developmentriskcapital

30% R0 N/A -R1682007 N/A Yes No No

CookhouseWindFarm OnshoreWind138.6MW

2012 2018 Yes RenewableEnergyInfrastructure

R2 280 492 444 InvestedviaAFPOC Equity,projectfinance *2.25% R0 R527 967 699 R0 R471 104 412 Yes No No


OnhoreWind&SolarPV500MW

2012 2017 No RenewableEnergyDeveloper



30% R22 615 N/A R61 049 N/A Yes No No



R1 619 972 180 InvestedviaAFPOC Equity,developmentriskcapital


















Portfolio Investments, Governance

COMPANY, COUNTRY AND SECTOR FUND BOARD SEAT

IMPROVEMENTS IN GOVERNANCE SINCE TIME OF INVESTMENT IMPROVEMENTS IN FINANCIAL REPORTING SINCE TIME OF INVESTMENT OTHER


Abagold:Afropulse,SouthAfrica,Agribusiness Yes DuringtheyeartheGroupfocuswasoncomplyingwiththeprovisionsofthenewCompaniesAct,thisinvolvedredraftingthememorandumofincorporationandpassingthenecessaryspecialresolutionstocomplywithsection45relatingtointer-companyloansandfinancialassistance.Newboardcommitteeswereformed:AuditandRisk;RemunerationandNomination.Adirectorinductionprocessisinplace,andaformalboardcharterwasadopted.

EnhanceddetailandlevelofreportingintheannualreporttoIFRSstandard,appointmentofassistantaccountant,upgradeofaccountingsoftware.

AimingtomeetallgovernancestandardssetinKingIIIandexpectedbyindustry.AstatementofESGcomplianceincludedinannualreport.


Yes BoardreconstitutedandcommittedtotheimplementationofsoundcorporategovernancepracticesandcompliedtoalargeextentwiththeKingIIIReportandtheCodeofCorporatePracticesandConduct.

Enhanceddetailandlevelofreportingformonthlymanagementaccounts.AnnualreporttoIFRSstandard.CEOdirectlyresponsibleforfinancialreportingtodirectors.Appointmentofindependentauditorsofgoodstanding,MooreStephens.

None.


No TheboardcommittedtotheimplementationofsoundcorporategovernancepracticesandcompliedtoalargeextentwiththeKingIIIReportandtheCodeofCorporatePracticesandConduct.Newboardcommitteeswereformed:Audit;Remuneration;Executive;Transformation,SocialandEthics;RiskMitigationandInternalControl.

EnhanceddetailandlevelofreportingintheannualreporttoIFRSstandard. EnviroServhasawrittencodeofconduct.Alldirectorsandemployeesmustcomplywiththecodethatincorporatesthegroup’svision,missionandvaluestatements.Thecodeisavailableonthecompany’sintranet.



Yes Limitedimprovementduetodelayedprogressonstart-upofbusinessandanchorproject.Financialoversightstrengthened.

ApplicationofIFRSforSMEs.Financialoversightstrengthenedthroughproactiveinterventionstoimprovereportingonmanagementacounts,turn-aroundspeedforauditedfinancialsandboardparticipation.

Policiesinplace:CorporateGovernancePolicy,CodeofBusinessEthics.AstatementofESGcomplianceincludedinannualreport.



Yes Adoptionofbest-practicegovernancestandardssetinKingIIIandexpectedbyindustry.boardpolicyonconflicts,procurement,betterfinancialgovernance,delegationofauthorityforseniorexecutivemanagementinplace.

IFRSadoptedandimplementedfor2015AnnualFinancialStatements.Appointmentoffinancialcontrollerandupgradeofaccountingsoftware.MonthlyManagementAccounts.Appointmentofindependentauditorsofgoodstanding,PWC.

AdetailedESMSdevelopedfortheoperationsphaseoftheproject.MomentousFoundationCommunityTrusttrusteesre-electedduetocapacityproblems.AstatementofESGcomplianceincludedinannualreport.


Yes Adoptionofbest-practicegovernancestandardssetinKingIIIandexpectedbyindustry.Boardpolicyonconflicts,procurement,betterfinancialgovernance,delegationofauthorityforseniorexecutivemanagementinplace.


AdetailedESMSunderdevelopmentfortheoperationsphaseoftheproject.AstatementofESGcomplianceincludedinannualreport.


Yes AimingforgovernancestandardssetinKingIIIandexpectedbyindustry.GreenfieldinfrastructureSPVwithlimitedgovernanceuntilbidsuccessisachieved.

IFRSadoptedandimplementedfor2015AnnualFinancialStatements. None.

FifthSeason****,SouthAfrica,RenewableEnergyGenerationInfrastructure

Yes AimingtomeetallgovernancestandardssetinKingIIIandexpectedbyindustry.Boardpolicyonconflicts,procure-ment,betterfinancialgovernance,delegationofauthorityforseniorexecutivemanagementinplace.Audit&risksub-committeeestablishedintermsofSection94oftheCompaniesAct(Act71of2008).

IFRSadoptedandimplementedfor2015AnnualFinancialStatements.AppointmentofFinancialController.MonthlyManagementAccounts.Appointmentofindependentauditorsofgoodstanding,Ernst&Young.AuditCommitteemandatedtoappointAuditorandreporttotheBoardonfinancialmatters.

AstatementofESGcomplianceincludedinannualreport.

RedCap RedCapKougaWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure

Yes Adoptionofbest-practisegovernancestandardssetinKingIIIandexpectedbyindustry.Boardpolicyonconflicts,procurement,betterfinancialgovernance,delegationofauthorityforseniorexecutivemanagementinplace.

IFRSadoptedandimplementedfor2015AnnualFinancialStatements.ChiefFinancialOfficerappointedtogetherwithbookkeeper/financialcontroller.MonthlyManagementAccountsandCashFlowAnalysis.ImprovedVATmanagement.Appointmentofindependentauditorsofgoodstanding,KPMG.Implementedsignificantadditionalfinancialcontrolsoverthepaymentsprocess.Allpaymentsarereviewedbythedirectors,thelendertechnicaladviserandthelenders.Ahighlevelofsegregationofdutiesisinplace.Amonthlydashboardhasbeenimplementedwherebymanagementreportonkeyconstructionmilestonesachieved;projectprogress;interfacemanagement;majorrisks;keyfinancialinformation;safetymanagement;topfiveopportunities.


RedCapDEVCO,SouthAfrica,RenewableEnergyDeveloper

Yes Adoptionofbest-practicegovernancestandardssetinKingIIIandexpectedbyindustry.BoardreducedtothreemembersduetolargelydormantnatureofbusinessuntilwounddowninQ22016.

IFRSadoptedandimplementedfor2015AnnualFinancialStatements.Appointmentofindependentauditorsofgoodstanding,MooreStephens.


SOLD GibsonBayWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure

No Adoptionofbest-practicegovernancestandardssetinKingIIIandexpectedbyindustry.Boardpolicyonconflicts,procurement,betterfinancialgovernance,delegationofauthorityforseniorexecutivemanagementinplace.


None.

AFPOC AFPOCLimited,Mauritius,RenewableEnergyGenerationInfrastructure


ConsecandBusinessFinancialSolutionsastheoutsourcedserviceproviderstoAFPOCinMauritiusweretaskedtoprovidemorefrequentmonthlymanagementaccounts.Appointmentofindependentauditorsofgoodstanding,KempChatteris.


CookhouseWindFarm,RenewableEnergyGenerationInfrastructure


IFRSadoptedandimplementedfor2015AnnualFinancialStatements.Appointmentoffinancialcontroller.MonthlyManagementAccounts.Appointmentofindependentauditorsofgoodstanding,PWC.






SOLD NojoliWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure


IFRSadoptedandimplementedfor2015AnnualFinancialStatements.Appointmentofindependentauditorsofgoodstanding.

None.

SOLD KarusaWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure



None.

SOLD NxubaWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure



None.

SOLD SoetwaterWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure



None.

Notes: FifthSeason****-financialindicatorsarefortheunderlyingSolarPVasset-SolarCapitalDeAar


COMPANY, COUNTRY AND SECTOR FUND BOARD SEAT

IMPROVEMENTS IN GOVERNANCE SINCE TIME OF INVESTMENT IMPROVEMENTS IN FINANCIAL REPORTING SINCE TIME OF INVESTMENT OTHER


Abagold:Afropulse,SouthAfrica,Agribusiness Yes DuringtheyeartheGroupfocuswasoncomplyingwiththeprovisionsofthenewCompaniesAct,thisinvolvedredraftingthememorandumofincorporationandpassingthenecessaryspecialresolutionstocomplywithsection45relatingtointer-companyloansandfinancialassistance.Newboardcommitteeswereformed:AuditandRisk;RemunerationandNomination.Adirectorinductionprocessisinplace,andaformalboardcharterwasadopted.

EnhanceddetailandlevelofreportingintheannualreporttoIFRSstandard,appointmentofassistantaccountant,upgradeofaccountingsoftware.

AimingtomeetallgovernancestandardssetinKingIIIandexpectedbyindustry.AstatementofESGcomplianceincludedinannualreport.


Yes BoardreconstitutedandcommittedtotheimplementationofsoundcorporategovernancepracticesandcompliedtoalargeextentwiththeKingIIIReportandtheCodeofCorporatePracticesandConduct.

Enhanceddetailandlevelofreportingformonthlymanagementaccounts.AnnualreporttoIFRSstandard.CEOdirectlyresponsibleforfinancialreportingtodirectors.Appointmentofindependentauditorsofgoodstanding,MooreStephens.

None.


No TheboardcommittedtotheimplementationofsoundcorporategovernancepracticesandcompliedtoalargeextentwiththeKingIIIReportandtheCodeofCorporatePracticesandConduct.Newboardcommitteeswereformed:Audit;Remuneration;Executive;Transformation,SocialandEthics;RiskMitigationandInternalControl.

EnhanceddetailandlevelofreportingintheannualreporttoIFRSstandard. EnviroServhasawrittencodeofconduct.Alldirectorsandemployeesmustcomplywiththecodethatincorporatesthegroup’svision,missionandvaluestatements.Thecodeisavailableonthecompany’sintranet.



Yes Limitedimprovementduetodelayedprogressonstart-upofbusinessandanchorproject.Financialoversightstrengthened.

ApplicationofIFRSforSMEs.Financialoversightstrengthenedthroughproactiveinterventionstoimprovereportingonmanagementacounts,turn-aroundspeedforauditedfinancialsandboardparticipation.

Policiesinplace:CorporateGovernancePolicy,CodeofBusinessEthics.AstatementofESGcomplianceincludedinannualreport.



Yes Adoptionofbest-practicegovernancestandardssetinKingIIIandexpectedbyindustry.boardpolicyonconflicts,procurement,betterfinancialgovernance,delegationofauthorityforseniorexecutivemanagementinplace.


AdetailedESMSdevelopedfortheoperationsphaseoftheproject.MomentousFoundationCommunityTrusttrusteesre-electedduetocapacityproblems.AstatementofESGcomplianceincludedinannualreport.




AdetailedESMSunderdevelopmentfortheoperationsphaseoftheproject.AstatementofESGcomplianceincludedinannualreport.


Yes AimingforgovernancestandardssetinKingIIIandexpectedbyindustry.GreenfieldinfrastructureSPVwithlimitedgovernanceuntilbidsuccessisachieved.

IFRSadoptedandimplementedfor2015AnnualFinancialStatements. None.

FifthSeason****,SouthAfrica,RenewableEnergyGenerationInfrastructure

Yes AimingtomeetallgovernancestandardssetinKingIIIandexpectedbyindustry.Boardpolicyonconflicts,procure-ment,betterfinancialgovernance,delegationofauthorityforseniorexecutivemanagementinplace.Audit&risksub-committeeestablishedintermsofSection94oftheCompaniesAct(Act71of2008).

IFRSadoptedandimplementedfor2015AnnualFinancialStatements.AppointmentofFinancialController.MonthlyManagementAccounts.Appointmentofindependentauditorsofgoodstanding,Ernst&Young.AuditCommitteemandatedtoappointAuditorandreporttotheBoardonfinancialmatters.


RedCap RedCapKougaWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure

Yes Adoptionofbest-practisegovernancestandardssetinKingIIIandexpectedbyindustry.Boardpolicyonconflicts,procurement,betterfinancialgovernance,delegationofauthorityforseniorexecutivemanagementinplace.

IFRSadoptedandimplementedfor2015AnnualFinancialStatements.ChiefFinancialOfficerappointedtogetherwithbookkeeper/financialcontroller.MonthlyManagementAccountsandCashFlowAnalysis.ImprovedVATmanagement.Appointmentofindependentauditorsofgoodstanding,KPMG.Implementedsignificantadditionalfinancialcontrolsoverthepaymentsprocess.Allpaymentsarereviewedbythedirectors,thelendertechnicaladviserandthelenders.Ahighlevelofsegregationofdutiesisinplace.Amonthlydashboardhasbeenimplementedwherebymanagementreportonkeyconstructionmilestonesachieved;projectprogress;interfacemanagement;majorrisks;keyfinancialinformation;safetymanagement;topfiveopportunities.



Yes Adoptionofbest-practicegovernancestandardssetinKingIIIandexpectedbyindustry.BoardreducedtothreemembersduetolargelydormantnatureofbusinessuntilwounddowninQ22016.



SOLD GibsonBayWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure



None.

AFPOC AFPOCLimited,Mauritius,RenewableEnergyGenerationInfrastructure


ConsecandBusinessFinancialSolutionsastheoutsourcedserviceproviderstoAFPOCinMauritiusweretaskedtoprovidemorefrequentmonthlymanagementaccounts.Appointmentofindependentauditorsofgoodstanding,KempChatteris.


CookhouseWindFarm,RenewableEnergyGenerationInfrastructure








SOLD NojoliWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure



None.

SOLD KarusaWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure



None.

SOLD NxubaWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure



None.

SOLD SoetwaterWindFarm,SouthAfrica,RenewableEnergyGenerationInfrastructure



None.


Portfolio Investments, Societal and Economic Relationships

DIRECT EMPLOYMENT AND EMPOWERMENT RESULTING FROM FUND INVESTMENT INDIRECT SOCIETAL AND ECONOMIC BENEFITS RESULTING FROM FUND INVESTMENT

INDIRECT SOCIETAL AND ECONOMIC BENEFITS RESULTING FROM FUND INVESTMENT REVENUE TO GOVERNMENT

COMPANY, COUNTRY AND SECTOR CUR-RENT EM-PLOY-MENT *

TOTAL ADDI-TIONAL (FORE-CAST)**

TOTAL ADDI-TIONAL (AC-TUAL)

ADD-TIONAL HDP (AC-TUAL)

ADD-TIONAL WOMEN (AC-TUAL)***

HDP SHARE (AC-TUAL)

TEMPO-RARY EMPLOY-MENT IN PERSON- MONTHS (AC-TUAL)****

Poverty-alleviation LOCAL ECONOMIC IMPACT INDIRECT EMPLOYMENT TAXES AND OTHER PAYMENTS TO GOVERN-MENT IN LAST FINANCIAL YEAR


Abagold:Afropulse,SouthAfrica,Agribusiness 388 195 154 123 41 80% 0 Supportinglocalbusinessthroughlocalprocurementwherecosteffectiveandpossible.LearninginterventionsincludeABET,learnerships,bursaryschemes,in-servicetraining,functionaltrainingandleadershipdevelopmentprogrammestoenableemployabilityofpeopleandpromotecareerdevelopment.Abagoldemployed42learnersaspartofthegovernment’sWorkplaceSkillsProgramme.

Supportinglocalbusinessthroughlocalprocurementwherecosteffectiveandpossible.LearninginterventionsincludeABET,learnerships,bursaryschemes,in-servicetraining,functionaltrainingandleadershipdevelopmentprogrammestoenableemployabilityofpeopleandpromotecareerdevelopment.

50jobsperannumduring4-yearexpansionphase. R8 971 000


14 1 1 0 0 0% 0 AlargeportionofemployeesareHDPs.Employeesgainpracticalskillsinplumbingandrefrigeration,whichareapplicabletomanysectors,providingincomesecurity.

SIRACbudgets1%ofearningsforsocio-economicdevelopment.Supportssmallindependentcontractors.Companyprovidesin-housetraininginplumbing,refrigerationandprojectdesign.

Theinstallationofhotwatersolutionsissubcontractedtoindependentcontractors,whichprovidesadditionalemploymentopportunitiesintheirregions.

R2 078 000

SOLD EnviroServ,SouthAfrica,WasteManagement*****

3852 313 313 257 47 82% 0 EnviroservisinvolvedinanumberofinitiativesthatsupportandnurtureSMEsassubcontractorsatmunicipalwastesitesundermanagement,e.g.Rietfontein,Potchefstroom.OngoingprogrammeatHolfonteintotrainanduselocalunemployedpeople.VariousCSIinvestmentsfocusonskillsdevelopmentandemployment.

EnviroServcontributesmostsignificantlytolocaleconomicdevelopmentbywayofdirectemploymentwheretangiblecashflowsreachpreviouslydisadvantagedhouseholds.ProcurementstrategieshaveimprovedprocurementfromSMEserviceproviders,wherepossible.

250peopleemployedatMamaShe’srecyclingprogrammeatElansdfontein.AnumberofemploymentbenefitsSMEinitiativesnotquantified.

R40332000taxatgroupconsolidatedlevel2012/3



2 50 0 0 0 0% 0 ApercentageofproductionwillgotoIFDCtouseinTrainTheTrainerprojectsinruralcommunities.

Severalhundredtemporaryjobstobecreatedduringconstructionphase.SMElogisticsopportunitiestotransportinputmaterial.

50–100jobsprojectedduringoperation. N/A–pre-financial

closeandconstruciton



23per-manent

(490person-months)

(O&M)

180 1296person-months

443(O&M);

455(Con-struc-tion)

69% 73% 806person-months

Equityownershipbybroad-basedBEE-ownedSPV,withpercentageofrevenuetoaddresspovertyandsocialdevelopment.Additionalongoingcontributionofrevenuefromprojectcompanytolocalsocio-economicinterventions.

57temporaryjobscreatedduringconstructionphase.EnterpriseDevelopmentPlanstrategytosupportandmentorlocalsmallentrepreneurs,e.g.establishacentralofficeserviceforlocalentrepreneurswithlogisticalsupportsuchasInternet,centraltelephones,faxfacilities,etc.

Notquantified.Linkedtolocalprocurement. R3 745 691


8 80 8per-manentand765person-monthsduring

con-struction

4duringO&M

and630person-monthsduring

con-struction

0duringO&M


con-struction

66% 765 EquityOwnershipbybroad-basedBEE-ownedSPV,withpercentagerevenuetoaddresspovertyandsocialdevelopment.AdditionalongoingCSIcontributionofrevenuefromprojectcompanypost-CODtolocalsocio-economicinterventions.

75temporaryjobstobecreatedduringconstructionphase.Approx.55%oftotalprojectspendwillbedeployedlocally=R106moverthe12monthperiodfromJuly2012.Locallabourtobetrainedduringconstructionphase.

Notquantified.Linkedtolocalprocurementandsocialandeconomicinterventions.

R2 087 000

FifthSeason,SouthAfrica,RenewableEnergyGeneration******

50 50 50 41 5 82% 8339person-months

8%equityownershipbybroad-basedBEECommunityTrust,withpercentageofdistributionstoaddresspovertyandsocialdevelopment.Additionalongoingcontributionofrevenueforsocio-economicdevelopment(1.5%)andEnterpriseDevelopment(0.6%).

Directandindirectjobcreation;HDPequityownership;corporatesocialinvestmentinitiatives;localcontentaspercentageofthetotalprojectvalue.


R22 520 047

Notes: ^includesRedCapInvestmentsstaffascontractedbyDEVCO *Currentemploymentincludesnumberofpersonsonprojectsiteaswellasofficeandallcontractors **Totaladditionalforecastattimeofinvestment ***Representsnumberofwomanemployedasat30June2015 ****Representsnumberoftempemployeesemployedasat30June2015andincludesconstructionemploymentnumbersforinfrastructureprojects *****NotethatforallsoldPC’snumbersarerecordedasattimeofdivestment ******FifthSeasonfinancialindicatorsarefortheunderlyingSolarPVasset-SolarCapitalDeAar *******Notethatattheholdingcompanylevelnonewjobshavebeencreated


DIRECT EMPLOYMENT AND EMPOWERMENT RESULTING FROM FUND INVESTMENT INDIRECT SOCIETAL AND ECONOMIC BENEFITS RESULTING FROM FUND INVESTMENT







HDP SHARE (AC-TUAL)

TEMPO-RARY EMPLOY-MENT IN PERSON- MONTHS (AC-TUAL)****

Poverty-alleviation LOCAL ECONOMIC IMPACT INDIRECT EMPLOYMENT TAXES AND OTHER PAYMENTS TO GOVERN-MENT IN LAST FINANCIAL YEAR


Abagold:Afropulse,SouthAfrica,Agribusiness 388 195 154 123 41 80% 0 Supportinglocalbusinessthroughlocalprocurementwherecosteffectiveandpossible.LearninginterventionsincludeABET,learnerships,bursaryschemes,in-servicetraining,functionaltrainingandleadershipdevelopmentprogrammestoenableemployabilityofpeopleandpromotecareerdevelopment.Abagoldemployed42learnersaspartofthegovernment’sWorkplaceSkillsProgramme.

Supportinglocalbusinessthroughlocalprocurementwherecosteffectiveandpossible.LearninginterventionsincludeABET,learnerships,bursaryschemes,in-servicetraining,functionaltrainingandleadershipdevelopmentprogrammestoenableemployabilityofpeopleandpromotecareerdevelopment.

50jobsperannumduring4-yearexpansionphase. R8 971 000


14 1 1 0 0 0% 0 AlargeportionofemployeesareHDPs.Employeesgainpracticalskillsinplumbingandrefrigeration,whichareapplicabletomanysectors,providingincomesecurity.

SIRACbudgets1%ofearningsforsocio-economicdevelopment.Supportssmallindependentcontractors.Companyprovidesin-housetraininginplumbing,refrigerationandprojectdesign.

Theinstallationofhotwatersolutionsissubcontractedtoindependentcontractors,whichprovidesadditionalemploymentopportunitiesintheirregions.

R2 078 000

SOLD EnviroServ,SouthAfrica,WasteManagement*****

3852 313 313 257 47 82% 0 EnviroservisinvolvedinanumberofinitiativesthatsupportandnurtureSMEsassubcontractorsatmunicipalwastesitesundermanagement,e.g.Rietfontein,Potchefstroom.OngoingprogrammeatHolfonteintotrainanduselocalunemployedpeople.VariousCSIinvestmentsfocusonskillsdevelopmentandemployment.

EnviroServcontributesmostsignificantlytolocaleconomicdevelopmentbywayofdirectemploymentwheretangiblecashflowsreachpreviouslydisadvantagedhouseholds.ProcurementstrategieshaveimprovedprocurementfromSMEserviceproviders,wherepossible.

250peopleemployedatMamaShe’srecyclingprogrammeatElansdfontein.AnumberofemploymentbenefitsSMEinitiativesnotquantified.

R40332000taxatgroupconsolidatedlevel2012/3



2 50 0 0 0 0% 0 ApercentageofproductionwillgotoIFDCtouseinTrainTheTrainerprojectsinruralcommunities.

Severalhundredtemporaryjobstobecreatedduringconstructionphase.SMElogisticsopportunitiestotransportinputmaterial.

50–100jobsprojectedduringoperation. N/A–pre-financial

closeandconstruciton



23per-manent

(490person-months)

(O&M)


443(O&M);

455(Con-struc-tion)

69% 73% 806person-months

Equityownershipbybroad-basedBEE-ownedSPV,withpercentageofrevenuetoaddresspovertyandsocialdevelopment.Additionalongoingcontributionofrevenuefromprojectcompanytolocalsocio-economicinterventions.

57temporaryjobscreatedduringconstructionphase.EnterpriseDevelopmentPlanstrategytosupportandmentorlocalsmallentrepreneurs,e.g.establishacentralofficeserviceforlocalentrepreneurswithlogisticalsupportsuchasInternet,centraltelephones,faxfacilities,etc.

Notquantified.Linkedtolocalprocurement. R3 745 691


8 80 8per-manentand765person-monthsduring

con-struction

4duringO&M


con-struction

0duringO&M


con-struction

66% 765 EquityOwnershipbybroad-basedBEE-ownedSPV,withpercentagerevenuetoaddresspovertyandsocialdevelopment.AdditionalongoingCSIcontributionofrevenuefromprojectcompanypost-CODtolocalsocio-economicinterventions.

75temporaryjobstobecreatedduringconstructionphase.Approx.55%oftotalprojectspendwillbedeployedlocally=R106moverthe12monthperiodfromJuly2012.Locallabourtobetrainedduringconstructionphase.


R2 087 000

FifthSeason,SouthAfrica,RenewableEnergyGeneration******

50 50 50 41 5 82% 8339person-months

8%equityownershipbybroad-basedBEECommunityTrust,withpercentageofdistributionstoaddresspovertyandsocialdevelopment.Additionalongoingcontributionofrevenueforsocio-economicdevelopment(1.5%)andEnterpriseDevelopment(0.6%).



R22 520 047



DIRECT EMPLOYMENT AND EMPOWERMENT RESULTING FROM FUND INVESTMENT INDIRECT SOCIETAL AND ECONOMIC BEN-EFITS RESULTING FROM FUND INVESTMENT







HDP SHARE (AC-TUAL)

TEMPO-RARY EMPLOY-MENT IN PERSON- MONTHS (ACTUAL)****

POVERTY-ALLEVIATION LOCAL ECONOMIC IMPACT INDIRECT EMPLOYMENT TAXES AND OTHER PAYMENTS TO GOVERN-MENT IN LAST FINANCIAL YEAR


RedCap


38 594 38per-manentduringO&Mand

1973total

person-monthsduring

con-struction

22dur-ingO&M

and1444

person-monthsduring

con-struction

18dur-ingO&M

and46total

person-monthsduring

con-struction

73% 1973person-months

TheKougaWindFarmCommunityDevelopmentTrustwillhaveavailabletoitanestimatedR90millionperyear,orR940moverthe20-yearprojectlife,forsocio-economicprojectsandenterprisesthatworkforpoverty-alleviationintheKougaregion.

Thelocaleconomicimpactisthreefold:directandindirectjobcreation;directownership;corporatesocialinvestmentLEDinitiatives.ProcurementmodelfactorsescalatingquotaforSMEandwomen-ownedbusiness.R141mdedicatedtosocialeconomicdevelopmentoverthe20-yearprojectterm.KougaWindFarmhasidentifiedfivekeyareasoffocusfortheSEDprogramme:educationandliteracy,skillsdevelopmentandtraining,healthcare,transport,informationtechnologyandcommunication,throughconsultationwithkeystakeholderssuchastheKougalocalmunicipality,wardcouncillors,communitymembersandcommunity-basedorganisations.Q32015onwardswillseetheimplementationphaseaccordingtotheplannedstrategy.

Indirectemploymentandbenefitsareextensive,especiallyintheconstructionphase.Theprojectiscurrentlyinvestigatingtheextentofindirectemploymentandspendalthoughcurrentareasofknownindirectemploymentinclude:• accommodationandhospitalityforsitestaff• localbasicservicessuchasschools,fuelsupply,retailservices,basichealth

careandentertainment• stakeholderengagementservices• socio-economicdevelopmentpractitioners(needsandassetmapping

withprojectdesignandimplementation)

R0


5 0 0 0 0 20% 0 Poverty-alleviationmeasuredoutcomesviathetwowindprojectSPVs:KougaWindFarmandGibsonBayWindFarm.

LEDmeasuredoutcomesviathetwowindprojectSPVs:KougaWindFarmandGibsonBayWindFarm.

MeasuredviathetwowindprojectSPVs:KougaWindFarmandGibsonBayWindFarm.

R1 561 349


3577person-months(during

con-struc-tion)

34476person-months(O&M)


con-struc-tion)

2632person-months

Un-known


Equityownershipbybroad-basedBEECommunityTrust,withpercentageofdistributionstoaddresspovertyandsocialdevelopment.Additionalongoingcontributionofrevenueforsocio-economicdevelopmentandenterprisedevelopment.



0%


0 0 0 0 0 0% 0 AFPOCisaholdingcompanyforrenewableenergyassetsinSouthAfrica.Allpoverty-alleviationbenefitsareattheSPVlevel.

LEDmeasuredoutcomesatSPVlevel. IndirectemploymentbenefitsatSPVlevel. R0

CookhouseWindFarm 237person-months

(TotalO&M)


(con-struc-tion)

and237person-months(O&M)

3283person-months

(con-struc-tion)




SeverelevelsofpovertyexistinthearealocaltotheProject.Thisstemsfromhighunemployment,lowlevelsofservicedeliveryandalackofeconomicandsocioeconomicsupportanddevelopmentinitiatives.TheProject’sabilitytoalleviatepovertyisdirectlylinkedwithit’scommitmentstolocalcommunityownershipandsocio-economicdevelopmentspend(seeadjacentcolumn).Togetherthesefundingstreamswillbeactivelymanagedtodeliverhighimpactresultswiththeultimatelongtermgoalbeinglongtermpoverty-alleviationthoughbroadbaseddevelopmentinitiativesandprogrammes.

Thelocaleconomicimpactisthreefold:1. Labourandserviceprovidersbenefitlocally.Theprojecthascommitted

to23.4%oftheconstructionperiodjobsbeinglocallysourcedand21%fortheoperationsperiod.Inrealitythisfigureisfarhigherfortheconstructionperiodjobnumbers,currentlysittingat67%local.

2. ThroughBBHoldcotheCookhouseWindFarmCommunityTrustholds25%intheprojectcompany(Cookhouse).TheTrustwillreceivebenefitsintheformofdividendslessdebtrepayments.TheseTrustfundswillbespentoneconomicandsocio-economicdevelopmentinitiativesasgovernedbytheTrustDeedandthedecision-makingmechanismsoftheTrustees.PostdebtrepaymentdividendsaremodelledtobeR203.7millionoverthe20-yearlifeoftheproject.

3. Theprojectcompanyhascommittedto1%ofrevenueonsocio-economicdevelopmentinitiatives.ThesefundswilleitherbespentthroughtheTrust,facilitatedbyexpertdevelopmentpractitionersorpartners,orthroughinitiativesdesigned,implementedandmanagedbytheprojectcompanyitself.ThesefundsaremodelledtobeR151millionoverthe2--yearlifeoftheproject.

Indirectemploymentandbenefitsareextensive,especiallyintheconstructionphase.Theprojectiscurrentlyinvestigatingtheextentofindirectemploymentandspendalthoughcurrentareasofknownindirectemploymentinclude:• accommodationandhospitalityforsitestaff• localbasicservicessuchasfuelsupply,retailservices,basichealthcare

andentertainment.• stakeholderengagementservices• socio-economicdevelopmentpractitioners(needsandassetmapping


R1 892 732


4 0 0 0 0 0% 0 ACEDisadeveloperofrenewableenergyprojectsinSouthAfrica.Allpoverty-alleviationbenefitsareattheSPVlevel.

LEDmeasuredoutcomesatSPVlevel. IndirectemploymentbenefitsatSPVlevel. R2 745 674


Un-known

238jobsduring

con-struc-

tionand14jobsduringopera-tions.

Un-known

Un-known

Un-known

Un-known

Unknown 40%BEEownershipofwhich10%CommunityTrustownership,withpercentageofdistributionstoaddresspovertyandsocialdevelopment.Additionalongoingcontributionofrevenueforsocio-economicdevelopment(2.5%)andenterprisedevelopment.

Directandindirectjobcreation;HDPequityownership;corporatesocialinvestmentinitiatives;localcontent41%ofthetotalprojectvalue.

Enterprisedevelopmentinitiativesandpreferentialprocurementfromlocalcommunitieswillcreatetheequivalentofafurther60jobs.

N/A

Notes: *Currentemploymentincludesnumberofpersonsonprojectsiteaswellasofficeandallcontractors **Totaladditionalforecastattimeofinvestment ***Representsnumberofwomanemployedasat30June2015 ****Representsnumberoftempemployeesemployedasat30June2015andincludesconstructionemploymentnumbersforinfrastructureprojects *****NotethatforallsoldPC’snumbersarerecordedasattimeofdivestment ******FifthSeasonfinancialindicatorsarefortheunderlyingSolarPVasset-SolarCapitalDeAar *******Notethatattheholdingcompanylevelnonewjobshavebeencreated









HDP SHARE (AC-TUAL)




RedCap


38 594 38per-manentduringO&Mand

1973total

person-monthsduring

con-struction

22dur-ingO&M

and1444

person-monthsduring

con-struction

18dur-ingO&M

and46total

person-monthsduring

con-struction


TheKougaWindFarmCommunityDevelopmentTrustwillhaveavailabletoitanestimatedR90millionperyear,orR940moverthe20-yearprojectlife,forsocio-economicprojectsandenterprisesthatworkforpoverty-alleviationintheKougaregion.

Thelocaleconomicimpactisthreefold:directandindirectjobcreation;directownership;corporatesocialinvestmentLEDinitiatives.ProcurementmodelfactorsescalatingquotaforSMEandwomen-ownedbusiness.R141mdedicatedtosocialeconomicdevelopmentoverthe20-yearprojectterm.KougaWindFarmhasidentifiedfivekeyareasoffocusfortheSEDprogramme:educationandliteracy,skillsdevelopmentandtraining,healthcare,transport,informationtechnologyandcommunication,throughconsultationwithkeystakeholderssuchastheKougalocalmunicipality,wardcouncillors,communitymembersandcommunity-basedorganisations.Q32015onwardswillseetheimplementationphaseaccordingtotheplannedstrategy.

Indirectemploymentandbenefitsareextensive,especiallyintheconstructionphase.Theprojectiscurrentlyinvestigatingtheextentofindirectemploymentandspendalthoughcurrentareasofknownindirectemploymentinclude:• accommodationandhospitalityforsitestaff• localbasicservicessuchasschools,fuelsupply,retailservices,basichealth

careandentertainment• stakeholderengagementservices• socio-economicdevelopmentpractitioners(needsandassetmapping


R0


5 0 0 0 0 20% 0 Poverty-alleviationmeasuredoutcomesviathetwowindprojectSPVs:KougaWindFarmandGibsonBayWindFarm.

LEDmeasuredoutcomesviathetwowindprojectSPVs:KougaWindFarmandGibsonBayWindFarm.

MeasuredviathetwowindprojectSPVs:KougaWindFarmandGibsonBayWindFarm.

R1 561 349



con-struc-tion)



con-struc-tion)

2632person-months

Un-known


Equityownershipbybroad-basedBEECommunityTrust,withpercentageofdistributionstoaddresspovertyandsocialdevelopment.Additionalongoingcontributionofrevenueforsocio-economicdevelopmentandenterprisedevelopment.



0%


0 0 0 0 0 0% 0 AFPOCisaholdingcompanyforrenewableenergyassetsinSouthAfrica.Allpoverty-alleviationbenefitsareattheSPVlevel.

LEDmeasuredoutcomesatSPVlevel. IndirectemploymentbenefitsatSPVlevel. R0

CookhouseWindFarm 237person-months

(TotalO&M)


(con-struc-tion)


3283person-months

(con-struc-tion)




SeverelevelsofpovertyexistinthearealocaltotheProject.Thisstemsfromhighunemployment,lowlevelsofservicedeliveryandalackofeconomicandsocioeconomicsupportanddevelopmentinitiatives.TheProject’sabilitytoalleviatepovertyisdirectlylinkedwithit’scommitmentstolocalcommunityownershipandsocio-economicdevelopmentspend(seeadjacentcolumn).Togetherthesefundingstreamswillbeactivelymanagedtodeliverhighimpactresultswiththeultimatelongtermgoalbeinglongtermpoverty-alleviationthoughbroadbaseddevelopmentinitiativesandprogrammes.

Thelocaleconomicimpactisthreefold:1. Labourandserviceprovidersbenefitlocally.Theprojecthascommitted

to23.4%oftheconstructionperiodjobsbeinglocallysourcedand21%fortheoperationsperiod.Inrealitythisfigureisfarhigherfortheconstructionperiodjobnumbers,currentlysittingat67%local.

2. ThroughBBHoldcotheCookhouseWindFarmCommunityTrustholds25%intheprojectcompany(Cookhouse).TheTrustwillreceivebenefitsintheformofdividendslessdebtrepayments.TheseTrustfundswillbespentoneconomicandsocio-economicdevelopmentinitiativesasgovernedbytheTrustDeedandthedecision-makingmechanismsoftheTrustees.PostdebtrepaymentdividendsaremodelledtobeR203.7millionoverthe20-yearlifeoftheproject.

3. Theprojectcompanyhascommittedto1%ofrevenueonsocio-economicdevelopmentinitiatives.ThesefundswilleitherbespentthroughtheTrust,facilitatedbyexpertdevelopmentpractitionersorpartners,orthroughinitiativesdesigned,implementedandmanagedbytheprojectcompanyitself.ThesefundsaremodelledtobeR151millionoverthe2--yearlifeoftheproject.

Indirectemploymentandbenefitsareextensive,especiallyintheconstructionphase.Theprojectiscurrentlyinvestigatingtheextentofindirectemploymentandspendalthoughcurrentareasofknownindirectemploymentinclude:• accommodationandhospitalityforsitestaff• localbasicservicessuchasfuelsupply,retailservices,basichealthcare

andentertainment.• stakeholderengagementservices• socio-economicdevelopmentpractitioners(needsandassetmapping


R1 892 732


4 0 0 0 0 0% 0 ACEDisadeveloperofrenewableenergyprojectsinSouthAfrica.Allpoverty-alleviationbenefitsareattheSPVlevel.

LEDmeasuredoutcomesatSPVlevel. IndirectemploymentbenefitsatSPVlevel. R2 745 674


Un-known

238jobsduring

con-struc-

tionand14jobsduringopera-tions.

Un-known

Un-known

Un-known

Un-known

Unknown 40%BEEownershipofwhich10%CommunityTrustownership,withpercentageofdistributionstoaddresspovertyandsocialdevelopment.Additionalongoingcontributionofrevenueforsocio-economicdevelopment(2.5%)andenterprisedevelopment.

Directandindirectjobcreation;HDPequityownership;corporatesocialinvestmentinitiatives;localcontent41%ofthetotalprojectvalue.

Enterprisedevelopmentinitiativesandpreferentialprocurementfromlocalcommunitieswillcreatetheequivalentofafurther60jobs.

N/A










HDP SHARE (AC-TUAL)




AFPOC SOLD NxubaWindFarm,SouthAfrica,RenewableEnergyGeneration

N/A–notyet

reachedfinancial

close

8,339person-monthsduring

con-struc-

tionand24240

person-monthsduringO&M

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A-notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

40%BEEownershipofwhich10%CommunityTrustownership,withpercentageofdistributionstoaddresspovertyandsocialdevelopment.Additionalongoingcontributionofrevenueforsocio-economicdevelopment(7%)andenterprisedevelopment(3%).

Directandindirectjobcreation;HDPequityownership;corporatesocialinvestmentinitiatives;localcontent41%ofthetotalprojectvalue;projectcompanywillappointtoitstopmanagement100%toHDP.TheprojectcommitstospendingatotalofR885353177onpreferentialprocurementduringitsconstructionandoperationsperiod.


N/A


N/A–notyet

reachedfinancial

close

6802person-monthsduring

con-struc-

tionand25177


N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close


Directandindirectjobcreation;HDPequityownership;corporatesocialinvestmentinitiatives;localcontent41%ofthetotalprojectvalue;projectcompanywillappointtoitstopmanagement100%toHDP.TheprojectcommitstospendingatotalofR830731182preferentialprocurementduringitsconstructionandoperationsperiod.


N/A


N/A–notyet

reachedfinancial

close


con-struc-

tionand25200


N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close


Directandindirectjobcreation;HDPequityownership;corporatesocialinvestmentinitiatives;localcontent41%ofthetotalprojectvalue;projectcompanywillappointtoitstopmanagement100%toHDP.TheProjectcommitstospendingatotalofR1.423billiononpreferentialprocurementduringitsconstructionandoperationsperiod.

ThepercentageshareholdingbyHDPintheTurbineS&I,ElectricalandCivilBOPcontractorsis22%and20%intheO&Mcontractor.

N/A









HDP SHARE (AC-TUAL)




AFPOC SOLD NxubaWindFarm,SouthAfrica,RenewableEnergyGeneration

N/A–notyet

reachedfinancial

close

8,339person-monthsduring

con-struc-

tionand24240


N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A-notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close


Directandindirectjobcreation;HDPequityownership;corporatesocialinvestmentinitiatives;localcontent41%ofthetotalprojectvalue;projectcompanywillappointtoitstopmanagement100%toHDP.TheprojectcommitstospendingatotalofR885353177onpreferentialprocurementduringitsconstructionandoperationsperiod.


N/A


N/A–notyet

reachedfinancial

close


con-struc-

tionand25177


N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close


Directandindirectjobcreation;HDPequityownership;corporatesocialinvestmentinitiatives;localcontent41%ofthetotalprojectvalue;projectcompanywillappointtoitstopmanagement100%toHDP.TheprojectcommitstospendingatotalofR830731182preferentialprocurementduringitsconstructionandoperationsperiod.


N/A


N/A–notyet

reachedfinancial

close


con-struc-

tionand25200


N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close

N/A–notyet

reachedfinancial

close


Directandindirectjobcreation;HDPequityownership;corporatesocialinvestmentinitiatives;localcontent41%ofthetotalprojectvalue;projectcompanywillappointtoitstopmanagement100%toHDP.TheProjectcommitstospendingatotalofR1.423billiononpreferentialprocurementduringitsconstructionandoperationsperiod.

ThepercentageshareholdingbyHDPintheTurbineS&I,ElectricalandCivilBOPcontractorsis22%and20%intheO&Mcontractor.

N/A


Portfolio Investments, Company Social Responsibility and Good Practice

EMPOWERMENT AND SOCIAL RESPONSIBILITY LABOUR PRACTICES AND DECENT WORK

COMPANY, COUNTRY AND SECTOR INITIATIVES TO EMPOWER MINORITIES, WOMEN HDP EMPLOYEE DEVELOPMENT AND UPLIFTMENT AND EXTERNAL OUTREACH

TRAINING HR POLICIES

CONTRACTS WITH EMPLOYEES

FREEDOM TO JOIN UNION

H&S POLICY


Abagold:Afropulse,SouthAfrica,Agribusiness Abagoldidentifiedtheneedforaquaculturetrainingthroughlearnerships.TheaccreditedlearningmaterialwaspresentedtoselectedAbagoldemployeesasskillscoursesoveraperiodofthreeyears.Thelearnersaccumulatedatotalof120creditswhichqualifiesasafulllearnershipinanimalproduction.ThisyeareightAbagoldemployeeswerethefirsttoobtainthisqualificationintheaquacultureindustryinSouthAfrica.Abagoldisalreadyintheprocessoftrainingthenextgroupof23employeestoobtainthisqualificationaswell.

AtafoundationlevelbothAdultEducationandTraining(AET)andlife-skillstrainingcontinuestoberolledouttointerestedemployees.Atotalof278AETcertificateshavebeenawardedtodate.ThelifeskillsprogrammenotonlyfocusesonHIV/AIDSandTB,butalsoonbuildingeffectiverelationships,substanceabuse,personalhygiene,financialmanagementanddecisionmaking.Abagoldalsoincludedpositiveparentingskillsaspartofitslife-skillstraining.

During2014Abagoldinvested,onaverage,729hourspermonthintraininganddevelopmentacrossalllevelsofemploymentandspent3.5%ofremunerationcostsontraininganddevelopment.Full-timetrainingmanagerandtrainingassistantsemployed.

Yes Yes Yes Yes


ThecompanyisanSMEstart-upbusinesswithasmallstaffcomplement.Therearenodefinitiveinitiativesatthisstage.


Trainingforemployeesisdonein-house.Noexternaltrainingatthisstage. Yes Yes Yes Yes

SOLD EnviroServ,SouthAfrica,WasteManagement FrameworkdevelopedtoaddresskeyprinciplesofILOCodeofPracticeonHIV/AIDS.SocialManagementSystemunderdevelopmenttoincorporateILOlabourcovenantsandIFCLabourRequirementsforcontractors.PilotHIVAidsprogrammetoraiseawarenessinGauteng,withintentiontorolloutcountrywide.

StrategytoaddresshighunemploymentatHolfonteinsite:developedbysitemanagement,communityrepresentativesandemergingcontractors.Objectiveistoimpartskills,uselocalcommunitylabourwhereverpossible,presenttrainingseminarsandbuildcapacitywithemergingcontractors.

SHEQtrainingprogrammeanddocumentsinplace.CurrentlyaddressingtranslationintolocallanguagesandPortugueseforAngolanoperations.AdditionaltrainingonH&SandFirstAidunderway.

Yes Yes Yes Yes



BEEcodeguidelinestobeappliedtoguideinternalpolicy,supportingIFDCtraining,whichmakesaspecialefforttoreachwomenintraininginagriculturaltechnologies.

Theprojectplanprovidesforskillstransferprogrammesthatwillbenefitschoolandcollegeleavers.Trainingwillbeprovidedvia20to30learnershipsinjobssuchasmechanics,fittersandturners,labanalysts,electricians.

Theprojectplanprovidesforskillstransferprogrammesthatwillbenefitschoolandcollegeleavers.Trainingwillbeprovidedvia20to30learnershipsinjobssuchasmechanics,fittersandturners,labanalyst,electricians.

N/Aasyet.Start-uppre-feasibilitystage.






TheMomentousFoundationCommunityTrust,owning17%oftheRustMo1project,willusethedividendsfromtheprojectover20yearstosupportpoverty-alleviationmeasuresincludingbursaries,socialdevelopmentandinfrastructure.CommunitiesofTsakaneandLapologanghaveelectedrepresentativesastrusteesontotheTrust.

TheboardhasagreedtoinitiatethepurchaseoflandadjacenttoRustMo1toengageincommunity-relatedfarmingactivities.PartnershipsareinplacewithlocalcollegestoofferbursariestolocalcommunitymembersasfundedbytheRustmo1CSIbudget.

Trainingandskillsdevelopmentareintegralcomponentsoftheoperationandmaintenancephase.StrategytodeveloplocalcompetenceforallsupportservicesandopportunitiesintheSolarPVindustryingeneral.

Yes Yes Yes Yes,EquatorPrinciplesactionplan.


TheSwartlandSolarParkCommunityTrustowns20%oftheproject,andwillusethedividendsfromtheprojectover20yearstosupportpoverty-alleviationmeasuresincludingeducation,HIV/AIDS,socialdevelopmentandinfrastructure.

Firstthreeemployeestrainedinternally.CommunityneedsassessmentundertakentoidentifyprioritiesforfutureCSIspend(SME,socialdevelopment).SwartlandSolarParkCommunityTrustwillcoordinateexternaloutreach.




TheCommunityTrust,owning8%oftheproject,willusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.

CommunityneedsassessmentundertakentoidentifyprioritiesforcurrentCSIspend(education,health,SME).Onthejobtrainingtakingplaceforemployeedevelopment.

Trainingandskillsdevelopmentisanintegralcomponentoftheoperation&maintenancephase.StrategytodeveloplocalcompetenceforallsupportserviceandopportunitiesintheSolarPVindustryingeneral.


RedCap


0.5%oftheCompany’stotalprocurementduringtheoperationalphasetobespentonwomen-ownedvendorsand1.3%onQSEsandEMEs.


SkillstransferandtrainingforinstallationascontractagreementwithNordex,theturbinesupplierandtrainingforstaffinGermanyontheoperationoftheWTGs.Astafftrainingbudgetlineispartoftheannualoperationalbudget.



InitiativesimplementedattheSPVlevel. InitiativesimplementedattheSPVlevel. Traininganddevelopmentareintegraltobuildingthecompany’sintellectualpropertybase. Yes Yes Yes Yes


TheGibsonBayCommunityTrust,ownsasignificantminorityoftheproject,andwillusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.

Unknown EnelGreenPower(purchaser)launchedatrainingprogrammeinJune2014aimedatdevelopingtechnicalexpertiseinsolarresidentialPVinstallation.TheEnelretailtrainingprogrammeinSouthAfricaiscurrentlyaimedatprovidinginstructiontoapproximately1000learnersperyear.

Yes Yes Yes Yes







H&S POLICY


Abagold:Afropulse,SouthAfrica,Agribusiness Abagoldidentifiedtheneedforaquaculturetrainingthroughlearnerships.TheaccreditedlearningmaterialwaspresentedtoselectedAbagoldemployeesasskillscoursesoveraperiodofthreeyears.Thelearnersaccumulatedatotalof120creditswhichqualifiesasafulllearnershipinanimalproduction.ThisyeareightAbagoldemployeeswerethefirsttoobtainthisqualificationintheaquacultureindustryinSouthAfrica.Abagoldisalreadyintheprocessoftrainingthenextgroupof23employeestoobtainthisqualificationaswell.

AtafoundationlevelbothAdultEducationandTraining(AET)andlife-skillstrainingcontinuestoberolledouttointerestedemployees.Atotalof278AETcertificateshavebeenawardedtodate.ThelifeskillsprogrammenotonlyfocusesonHIV/AIDSandTB,butalsoonbuildingeffectiverelationships,substanceabuse,personalhygiene,financialmanagementanddecisionmaking.Abagoldalsoincludedpositiveparentingskillsaspartofitslife-skillstraining.

During2014Abagoldinvested,onaverage,729hourspermonthintraininganddevelopmentacrossalllevelsofemploymentandspent3.5%ofremunerationcostsontraininganddevelopment.Full-timetrainingmanagerandtrainingassistantsemployed.

Yes Yes Yes Yes




Trainingforemployeesisdonein-house.Noexternaltrainingatthisstage. Yes Yes Yes Yes

SOLD EnviroServ,SouthAfrica,WasteManagement FrameworkdevelopedtoaddresskeyprinciplesofILOCodeofPracticeonHIV/AIDS.SocialManagementSystemunderdevelopmenttoincorporateILOlabourcovenantsandIFCLabourRequirementsforcontractors.PilotHIVAidsprogrammetoraiseawarenessinGauteng,withintentiontorolloutcountrywide.

StrategytoaddresshighunemploymentatHolfonteinsite:developedbysitemanagement,communityrepresentativesandemergingcontractors.Objectiveistoimpartskills,uselocalcommunitylabourwhereverpossible,presenttrainingseminarsandbuildcapacitywithemergingcontractors.

SHEQtrainingprogrammeanddocumentsinplace.CurrentlyaddressingtranslationintolocallanguagesandPortugueseforAngolanoperations.AdditionaltrainingonH&SandFirstAidunderway.

Yes Yes Yes Yes



BEEcodeguidelinestobeappliedtoguideinternalpolicy,supportingIFDCtraining,whichmakesaspecialefforttoreachwomenintraininginagriculturaltechnologies.

Theprojectplanprovidesforskillstransferprogrammesthatwillbenefitschoolandcollegeleavers.Trainingwillbeprovidedvia20to30learnershipsinjobssuchasmechanics,fittersandturners,labanalysts,electricians.

Theprojectplanprovidesforskillstransferprogrammesthatwillbenefitschoolandcollegeleavers.Trainingwillbeprovidedvia20to30learnershipsinjobssuchasmechanics,fittersandturners,labanalyst,electricians.







TheMomentousFoundationCommunityTrust,owning17%oftheRustMo1project,willusethedividendsfromtheprojectover20yearstosupportpoverty-alleviationmeasuresincludingbursaries,socialdevelopmentandinfrastructure.CommunitiesofTsakaneandLapologanghaveelectedrepresentativesastrusteesontotheTrust.

TheboardhasagreedtoinitiatethepurchaseoflandadjacenttoRustMo1toengageincommunity-relatedfarmingactivities.PartnershipsareinplacewithlocalcollegestoofferbursariestolocalcommunitymembersasfundedbytheRustmo1CSIbudget.




TheSwartlandSolarParkCommunityTrustowns20%oftheproject,andwillusethedividendsfromtheprojectover20yearstosupportpoverty-alleviationmeasuresincludingeducation,HIV/AIDS,socialdevelopmentandinfrastructure.

Firstthreeemployeestrainedinternally.CommunityneedsassessmentundertakentoidentifyprioritiesforfutureCSIspend(SME,socialdevelopment).SwartlandSolarParkCommunityTrustwillcoordinateexternaloutreach.




TheCommunityTrust,owning8%oftheproject,willusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.


Trainingandskillsdevelopmentisanintegralcomponentoftheoperation&maintenancephase.StrategytodeveloplocalcompetenceforallsupportserviceandopportunitiesintheSolarPVindustryingeneral.


RedCap


0.5%oftheCompany’stotalprocurementduringtheoperationalphasetobespentonwomen-ownedvendorsand1.3%onQSEsandEMEs.


SkillstransferandtrainingforinstallationascontractagreementwithNordex,theturbinesupplierandtrainingforstaffinGermanyontheoperationoftheWTGs.Astafftrainingbudgetlineispartoftheannualoperationalbudget.



InitiativesimplementedattheSPVlevel. InitiativesimplementedattheSPVlevel. Traininganddevelopmentareintegraltobuildingthecompany’sintellectualpropertybase. Yes Yes Yes Yes


TheGibsonBayCommunityTrust,ownsasignificantminorityoftheproject,andwillusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.

Unknown EnelGreenPower(purchaser)launchedatrainingprogrammeinJune2014aimedatdevelopingtechnicalexpertiseinsolarresidentialPVinstallation.TheEnelretailtrainingprogrammeinSouthAfricaiscurrentlyaimedatprovidinginstructiontoapproximately1000learnersperyear.

Yes Yes Yes Yes


Portfolio Investments, Company Social Responsibility and Good Practice






H&S POLICY



InitiativesimplementedattheSPVlevel. InitiativesimplementedattheSPVlevel. InitiativesimplementedattheSPVlevel. N/A,atprojectSPVlevelonly.

N/A,atprojectSPVlevelonly.



CookhouseWindFarm Socio-economicdevelopmentspendisontrackfor2014/15.Theset-upofthecommunitytrustiscomplete.Relationshipswithallkeystakeholders,includingthelocalcommunity,areonagoodfooting.Definitiveinitiativesareinprogress.

ThreeearlychildhooddevelopmentcentresinCookhouseandSomersetEast(Msobomvu,WielieWalieandMiniMarvels)willreceivesupportforhealthandsafetycompliance,kitchenupgradesandfirepreventiondevices.AdelaidePrimarySchoolcomputerlaboratoryandtrainingfor2computerteachers.ACVVSomersetEast–After-schooltherapeuticandlearningprogrammesandremedialteaching.BedfordChildWelfare–learnerprogrammesandinterventions,remedialteachingandfostercare.BursarieshavebeenawardedtothreestudentsreadingAudioTechnology,AccountingScienceandB.CommerceinLaw.

H&SandskillsdevelopmenttrainingisunderwayvianumeroustrainingprogrammesimplementedbytheCookhouseexecutiveteam.

Yes Yes Yes Yes


InitiativesimplementedattheSPVlevel. InitiativesimplementedattheSPVlevel. TraininganddevelopmentareintegraltobuildingtheCompany’sintellectualpropertybase. Yes Yes Yes Yes


TheNojoliCommunityTrust,owning10%oftheproject,willusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.

Unknown. EnelGreenPower(purchaser)launchedatrainingprogrammeinJune2014aimedatdevelopingtechnicalexpertiseinsolarresidentialPVinstallation.TheEnelretailtrainingprogrammeinSouthAfricaiscurrentlyaimedatprovidinginstructiontoapproximately1000learnersperyear.

Yes Yes Yes Yes


TheKarusaCommunityTrust,owning10%oftheproject,willusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.

N/A-projectpre-financialclosestill. EnelGreenPower(purchaser)launchedatrainingprogrammeinJune2014aimedatdevelopingtechnicalexpertiseinsolarresidentialPVinstallation.TheEnelretailtrainingprogrammeinSouthAfricaiscurrentlyaimedatprovidinginstructiontoapproximately1000learnersperyear.

Yes WIP–projectpre-financialclosestill.



TheNxubaCommunityTrust,owning10%oftheproject,willusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.


Yes WIP-projectpre-financialclosestill.



TheSoetwaterCommunityTrust,owning10%oftheproject,willusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.




Note: AllprojectfinanceSPVsaregoverenedbytheEquatorPrinciples/IFCperformancestandards,andtheyhaveundertakentocomplywithandmanageactivitiesintermsofthese

Environment,HealthandSafety(EHS)requirementandInternationalLabourOrganisation(ILO)standards








H&S POLICY



InitiativesimplementedattheSPVlevel. InitiativesimplementedattheSPVlevel. InitiativesimplementedattheSPVlevel. N/A,atprojectSPVlevelonly.




CookhouseWindFarm Socio-economicdevelopmentspendisontrackfor2014/15.Theset-upofthecommunitytrustiscomplete.Relationshipswithallkeystakeholders,includingthelocalcommunity,areonagoodfooting.Definitiveinitiativesareinprogress.

ThreeearlychildhooddevelopmentcentresinCookhouseandSomersetEast(Msobomvu,WielieWalieandMiniMarvels)willreceivesupportforhealthandsafetycompliance,kitchenupgradesandfirepreventiondevices.AdelaidePrimarySchoolcomputerlaboratoryandtrainingfor2computerteachers.ACVVSomersetEast–After-schooltherapeuticandlearningprogrammesandremedialteaching.BedfordChildWelfare–learnerprogrammesandinterventions,remedialteachingandfostercare.BursarieshavebeenawardedtothreestudentsreadingAudioTechnology,AccountingScienceandB.CommerceinLaw.

H&SandskillsdevelopmenttrainingisunderwayvianumeroustrainingprogrammesimplementedbytheCookhouseexecutiveteam.

Yes Yes Yes Yes


InitiativesimplementedattheSPVlevel. InitiativesimplementedattheSPVlevel. TraininganddevelopmentareintegraltobuildingtheCompany’sintellectualpropertybase. Yes Yes Yes Yes


TheNojoliCommunityTrust,owning10%oftheproject,willusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.

Unknown. EnelGreenPower(purchaser)launchedatrainingprogrammeinJune2014aimedatdevelopingtechnicalexpertiseinsolarresidentialPVinstallation.TheEnelretailtrainingprogrammeinSouthAfricaiscurrentlyaimedatprovidinginstructiontoapproximately1000learnersperyear.

Yes Yes Yes Yes


TheKarusaCommunityTrust,owning10%oftheproject,willusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.





TheNxubaCommunityTrust,owning10%oftheproject,willusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.


Yes WIP-projectpre-financialclosestill.



TheSoetwaterCommunityTrust,owning10%oftheproject,willusethedividendsfromtheprojecttosupportpoverty-alleviationmeasuresincludingsocialdevelopmentandinfrastructure.WomenandHDPsarethedirectbeneficiariesofdirectandindirectemployment,localcontentandpreferentialprocurementactivities.




Note: AllprojectfinanceSPVsaregoverenedbytheEquatorPrinciples/IFCperformancestandards,andtheyhaveundertakentocomplywithandmanageactivitiesintermsofthese

Environment,HealthandSafety(EHS)requirementandInternationalLabourOrganisation(ILO)standards



Portfolio Investments, Environmental impacts, policies and practices

Notes: FifthSeason****–financialindicatorsarefortheunderlyingSolarPVasset–SolarCapitalDeAar

BENEFITS AND ISSUES COMPLIANCE CLIMATE CHANGE BENEFIT

COMPANY, COUNTRY AND SECTOR HIGH-LEVEL DIRECT OR INDIRECT ENVIRONMENTAL BENEFIT

CATEGORY / ISSUES TO MITIGATE EIA COMPLIANCE

LEGISLATION COMPLIANCE

ESMS / EMP CDM OR VER GHG BENEFIT OR CDM / VER STATUS TONNES CO2e SAVING PER ANNUM

START DATE FOR CDM

Abagold:Afropulse,SouthAfrica,Agribusiness Farmingofabalonehelpsmeetdemandforthisendangeredspecies,whichisotherwisepoachedillegally.

Waterqualityatoutlet.Abalonefeedsustainability. Yes Yes EMPforSulamanziproject.ESMSisbeingupdatedandwillbeimplementedby31Dec2015.

N/A GHGmitigationthroughMeanSeaLevel2MWwaveenergyconverter–underdevelopment.

8 586 2016


Energy-efficientwaterheatingsolutionsreducedemandforpredominantlycoal-basedpowerinSouthAfrica.

None N/A Yes ESMSimplementedby31Dec2015.

N/A GHGmitigationthroughenergysavingsandreducedcoal-basedpowerdemand.

5 100 2014

SOLD EnviroServ,SouthAfrica,WasteManagement Wastemanagementservicewithhighenvironmnetalandsocialmanagementstandards.Activelypromotingwasteminimisation.

Ongoingprogrammetoimprovesystemstohigheststandard,asperMarshEnvironmentalServicesduediligence

Yes Yes EMS Yes CDMapprovedin2008,basedonextractionoflandfillgasandburnoffbyflaringanddestructionofmethane(50%ofgasmakeup)

188390 2008


GHGbenefit,reductionofwastetolandfill. Airemissionsqualityandhazardoussubstancehandling. N/A–newstillEIAfornewsite.

N/A–newstillEIAfornewsite.


t.b.d. PotentialreductioninGHGreplacingunityproductforUrea(where1tonneofNox=300tonnesCO2)

t.b.d. t.b.d.


GHGbenefitrelatingtocleanenergysubstitutionforEskomgrid.

Negligible. Yes Yes EMPforconstructionphase.NowinoperationsphasesofullESMS.

CDM(POA)pending

Brokersengagedforproposals. 12 258 2014




CDM(POA)pending





CDM Brokersengagedforproposals. 167 956 2015

RedCap



Birds&bats-ongoingmonitoring. Yes Yes EMPforconstructionphase.NowinoperationsphasesofullESMS.

CDM ERPAcancelledduetofallinCERprice. 262 962 2015


BenefitatSPVlevel. N/A N/A Yes N/A N/A N/A 0 N/A



Birdsandbats–ongoingmonitoring. Yes Yes EMPforconstructionphase. CDM(POA)pending

Unknown. 364 550 2017

AF-POC

AFPOCLimited,Mauritius,RenewableEnergyGeneration

BenefitatSPVlevel. N/A N/A Yes N/A N/A N/A N/A N/A

CookhouseWindFarm GHGbenefitrelatingtocleanenergysubstitutionforEskomgrid.

Birdsandbats–ongoingmonitoring. Yes Yes EMPforconstructionphase.NowinoperationsphasesofullESMS.

CDM RevisedERPAbeingexecutedinQ32015. 353 660 2015






Unknown. 268 217 2017




Unknown. 519 845 2018




Unknown. 459 792 2018




Unknown. 519 845 2018

Notes: FifthSeason****–financialindicatorsarefortheunderlyingSolarPVasset–SolarCapitalDeAar

BENEFITS AND ISSUES COMPLIANCE CLIMATE CHANGE BENEFIT

COMPANY, COUNTRY AND SECTOR HIGH-LEVEL DIRECT OR INDIRECT ENVIRONMENTAL BENEFIT

CATEGORY / ISSUES TO MITIGATE EIA COMPLIANCE

LEGISLATION COMPLIANCE

ESMS / EMP CDM OR VER GHG BENEFIT OR CDM / VER STATUS TONNES CO2e SAVING PER ANNUM

START DATE FOR CDM

Abagold:Afropulse,SouthAfrica,Agribusiness Farmingofabalonehelpsmeetdemandforthisendangeredspecies,whichisotherwisepoachedillegally.

Waterqualityatoutlet.Abalonefeedsustainability. Yes Yes EMPforSulamanziproject.ESMSisbeingupdatedandwillbeimplementedby31Dec2015.

N/A GHGmitigationthroughMeanSeaLevel2MWwaveenergyconverter–underdevelopment.

8 586 2016


Energy-efficientwaterheatingsolutionsreducedemandforpredominantlycoal-basedpowerinSouthAfrica.

None N/A Yes ESMSimplementedby31Dec2015.

N/A GHGmitigationthroughenergysavingsandreducedcoal-basedpowerdemand.

5 100 2014

SOLD EnviroServ,SouthAfrica,WasteManagement Wastemanagementservicewithhighenvironmnetalandsocialmanagementstandards.Activelypromotingwasteminimisation.

Ongoingprogrammetoimprovesystemstohigheststandard,asperMarshEnvironmentalServicesduediligence

Yes Yes EMS Yes CDMapprovedin2008,basedonextractionoflandfillgasandburnoffbyflaringanddestructionofmethane(50%ofgasmakeup)

188390 2008


GHGbenefit,reductionofwastetolandfill. Airemissionsqualityandhazardoussubstancehandling. N/A–newstillEIAfornewsite.



t.b.d. PotentialreductioninGHGreplacingunityproductforUrea(where1tonneofNox=300tonnesCO2)

t.b.d. t.b.d.




CDM(POA)pending





CDM(POA)pending





CDM Brokersengagedforproposals. 167 956 2015

RedCap



Birds&bats-ongoingmonitoring. Yes Yes EMPforconstructionphase.NowinoperationsphasesofullESMS.

CDM ERPAcancelledduetofallinCERprice. 262 962 2015


BenefitatSPVlevel. N/A N/A Yes N/A N/A N/A 0 N/A




Unknown. 364 550 2017

AF-POC

AFPOCLimited,Mauritius,RenewableEnergyGeneration


CookhouseWindFarm GHGbenefitrelatingtocleanenergysubstitutionforEskomgrid.

Birdsandbats–ongoingmonitoring. Yes Yes EMPforconstructionphase.NowinoperationsphasesofullESMS.

CDM RevisedERPAbeingexecutedinQ32015. 353 660 2015






Unknown. 268 217 2017




Unknown. 519 845 2018




Unknown. 459 792 2018




Unknown. 519 845 2018

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