Our corporate values revolve around respect for human rights, the environment, and the rule of law. Guided by these values, I am confident that we stand a good chance to perform well as a company. Our business activities should also be driven by the need to constantly create shareholder value while meeting the expectations of all other stakeholders, now and in the future. Our business environment experienced a number of challenges in the past year. But we also experienced some positive periods; we should remain optimistic because prospects for new projects look good. It is only a matter of time before we

start adding some exciting new projects to our order book.

The Medupi project has been progressing well over the past month and our team has shared with us some of the intricacies involved in executing a project of this magnitude.

“The Medupi Power Station uses bag filters to capture ash particles contained in the flue gas before the gas is exhausted into the atmosphere through the 200m high Medupi chimney. The bag filters are continuously cleansed by pulsing them with compressed air. As the ash particles fall off the filters it collects in hoppers situated underneath the bag filters. The ash particles inside the hoppers are then transported towards the ash silos through large bore pipes by using high volumes of compressed air. The ash particles are then mixed with water (dirty water that is recycled from other processes on the plan) and sent to the ash dump on a conveyor for final disposal.

The compressed air required for pulsing the bag filters and for transporting the ash particles to the ash silos are supplied by a 1400 kW three stage Atlas Copco centrifugal compressor. Lesedi (in partnership with Wetback) is responsible for the

design and installation of these compressors as well as the piping system up to the bag filters. There will be 10 of these compressors once all six Medupi units are completed. The compressor is required to provide compressed air to the bag filters before the Unit 5 boiler can be fired for the first time.

The compressors for Medupi’s Unit 5, as well as a standby compressor, were successfully commissioned during the end of February. Numerous challenges were faced by the commissioning team with regards to the 6.6 kV electrical switchgear (designed and supplied by another contractor) that supplies power to the compressors, however the compressors were started and commissioned successfully.” Congratulations to the team for completing yet another successful milestone!

On the lighter side of things, our engineers participated in the Consulting Engineers South Africa CESA Volley Ball tournament on the 04th February 2016. The tournament was good for teambuilding, and it also served as a useful networking opportunity for our engineers, who played against other firms in the industry.

On behalf of all the Lesedi employees, I would like to wish our cycling team all the best in the upcoming Cape Argus Cycle Tour!

Finally, the shareholders and Board of Directors would like to extend their gratitude to you all, Lesedi Nuclear Services employees, for all the hard work and positive results achieved in 2015. Your continued efforts do not go unnoticed, and we are confident that we will have a productive 2016.

Regards,

Francis CarruthersChief Executive Officer

LESEDI NEWS FEB 2016

Francis Carruthers

A word from the CEO

Lesedi Board Members and Management (Absent- Jayendra Naidoo)

The commissioning team shown in the attached photo is (from the left): Phuti Kobo (Atlas Copco), Gerard du Plessis (Lesedi), Willem Kirsten (Lesedi), Nantus le Roux (Atlas Copco) and Adam Healy (Lesedi - not shown in this photo).

As a department within an EPC Company, Procurement plays a pivotal

role in ensuring the successful execution of turnkey power projects.

Procurement is a strategic function working to improve Lesedi’s profitability.

Procurement amongst others includes the task of streamlining processes,

reducing costs, and identifying better sources of supply.

Many decisions taken within Lesedi have supply chain implications

that influence the overall cost. It is important to note the fact that “Cost”

includes the total cost of the goods or service and not simply the price

that is paid.

The 2016 Procurement Plan indicates that the Procurement Department

is responsible for managing an annual spend in excess of R100-million.

This spend incorporates all departments and projects within Lesedi.

www.lesedins.co.za

LESEDI NEWS FEB 2016

During 2015 the team contributed savings of nearly R3-million. This year

the target is considerably higher.

Procurement is a value-adding partner bringing meaningful market

intelligence in terms of bottom-line contributions and top-line growth for

stakeholders and the company as a whole. As stated by Renier van Coller

“We are more than negotiators and buyers.”

Corporate Strategic Procurement initiativesAt the end of 2015, Lesedi added Key Supply Chain Management to the

procurement team’s responsibilities. This initiative fosters closer working

relationships with key suppliers to develop innovative cooperation

practices to support Lesedi’s business.

Lesedi made the strategic decision to actively find, select and develop Key Suppliers. This program will be rolled out during 2016.

Ethical Purchasing PracticeOrganisations and professions often seek to address standards of

conduct through the adoption of codes of conduct.

The Lesedi procurement team, using their own initiative, have created and

signed a code of ethics that will govern the team’s behaviour and activities

and ensure full compliance with South African and international laws and

regulations.

The Procurement team adheres to the principles of fairness, impartiality,

transparency, stewardship, to avoid conflict of interest and any impropriety,

and to respect and apply the organisation’s relevant policies, rules and

procedures.

Procurement Department update

The Procurement Team

The Lesedi team that will be participating in the Cape Argus

Cycle Tour 2016.