Annual Report 20067 bridging the divide Briefing to

Annual Report 2006/7 bridging the divide Briefing to the NCOP SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS: Support of Black Economic Participation, Wealth Creation and Economic Growth by means of Access to Capital. 21 November 2007 1

Presenters § Ms Philisiwe Buthelezi § § Mr. Andrew Wright § § Chief Operating Officer (COO) Ms. Maria Luke § § Chief Executive Officer (CEO) Executive: Corporate Services Mr. Nathan Nadasan § Manager: Post Investment 2

Mission Statement “The National Empowerment Fund (NEF) is the catalyst of broad-based Black Economic Empowerment in South Africa. We enable, develop, promote and implement innovative investment and transformation solutions to advance sustainable Black economic participation. ” 3

NEF Mandate Main objective To be a catalyst in facilitating economic equality and transformation Current market needs § Broad-based empowerment charters § Government policy and sectoral charters (Industrial Policy) § Driven by Development focus § Addressing past failures of BEE structures § BB BEE Codes of Good Practice Maximise the empowerment dividend 4

Organisational Structure BOARD OF TRUSTEES COMPLIANCE & RISK CHAIRMAN INTERNAL AUDIT COMMITTEE RISK MANAGEMENT COMMITTEE HUMAN CAPITAL & REMUNERATION COMMITTEE CHIEF EXECUTIVE OFFICER SECRETARIAT BOARD INVESTMENT COMMITTEE EXECUTIVE COMMITTEE MANAGER: OFFICE OF THE CEO LEGAL COUNSEL CORE DIVISIONS CHIEF INVESTMENT OFFICER FUND MANAGEMENT IMBEWU FUND CORPORATE FUND PRE-INVESTMENT BUSINESS SUPPORT EXECUTIVE: ASSET MANAGEMENT BEE RETAIL INVESTMENTS MANAGEMENT OF SAIs RETAIL PRODUCT ISSUES CHIEF FINANCIAL OFFICER FINANCE PROCUREMENT TREASURY CHIEF OPERATING OFFICER EXECUTIVE: HUMAN RESOURCES STRATEGY & PLANNING HUMAN RESOURCES MARKETING & COMMUNICATION SUPPORT SERVICES SYSTEMS & IT POST-INVESTMENT BUSINESS SUPPORT Executive (member of Exco) Senior manager Manager LEGAL SERVICES 5

Strategic Initiatives NEF, IN 2006/7, reaches two significant and strategic milestones in its history since its establishment: On-going track record achieved in the Fund Management Division, with approvals to date now exceeding R 500 m; Asset Management Division was able to obtain the overall approval for the NEF’s first BEE Retail Product, Asonge, subsequently launched on 25 June 2007. 6

Launched the successful Asonge Share Scheme to promote a culture of saving & investment among Black people 7

What did we intend to achieve through Asonge? 8

Asset Management Division § Through its Asset Management Division, the NEF: § Promotes the understanding of equity ownership among black people § Provides black people with direct and indirect opportunities to acquire shares in State Owned and private business enterprises § Encourages and promote investments, savings and meaningful economic participation amongst black people It is specifically to address the above objectives that the NEF Asonge Share Scheme was conceived, designed, launched, implemented, subscribed for and now allocated to its beneficiaries. 9

To promote the understanding of equity ownership among black people Rollout, Education and Mobilisation § 64 mobilisers were educated around the country § Mobilisers touched 10 000 groups and 150 000 individuals by oneon-one education efforts § Collaboration with Stokvel associations § Ongoing monitoring of education process by NEF before closure on 16 August § Further education around investing and financial markets was done through TV and radio, features and drama § A dedicated Call Centre assisted with all queries in all languages § Mass groups were reached by 9 regional road-shows; TV, local radio and print advertising; commuter activity, and activity at Post Offices nationally 10

Provide black people with direct and indirect opportunities to acquire shares in State Owned and private business enterprises State Allocated Investments: Recap § In November 2000, the Government provided for State Allocated Investments to be housed under custody of the NEF § The intention was for these to be eventually transferred to Black people § As a result the NEF since held 1, 5% of the MTN Group’s shareholding § Asset Management Division developed a retail product known as the Asonge Share Scheme § Asonge was the NEF’s vehicle of fulfilling Government’s original intention of transferring State investments to Black people 11

Encourage and promote investments, savings and meaningful economic participation amongst black people “The NEF ASONGE Share Scheme” § 50% of the offer was aimed at black individuals (half had to be women) § 50% of the offer was aimed at black savings and investment groups § Predetermined allocation to the target audiences across all provinces § Applications were facilitated by the SA Post Office, ensuring wide distribution through their infrastructure § Offer opened on 23 rd July and closed on 16 th August § The Offer Price was set at R 73, 84 based on the market closing price … and as at 19 November 2007, this translated into a 69% appreciation on investment for subscribers at current market value based on: - the upfront 20% discount offered plus - current market price of R 124. 50 per share 12

Who was Eligible? § Allocation planned to be 50% for individuals and 50% for savings and investment groupings across South Africa. § Black individuals: § At least 18 years of age § With a valid South African ID § Bank account § Half had to be women § Minimum subscription was R 2 000, maximum R 50 000 § Black savings and investment groups § E. g. Stokvels, burial services, trusts, co-ops, church savings groups § Minimum subscription was R 2 000, max R 100 000 13

Subscription & Allocation Results 14

“The NEF Asonge Share Scheme” Subscriptions by Province Allocation % Subscriptions % Over / Under Subs () Eastern Cape 13. 5% R 35, 283, 118 4. 0% -71% Free State 6. 3% R 22, 073, 204 2. 5% -60% Gauteng 21. 5% R 434, 221, 613 48. 8% 127% Kwa. Zulu-Natal 21. 4% R 191, 039, 774 21. 5% 1% Limpopo 10. 5% R 44, 372, 407 5. 0% -52% Mpumalanga 7. 3% R 33, 205, 804 3. 7% -49% Northern Cape 2. 2% R 7, 495, 183 0. 8% -62% North West 7. 5% R 29, 947, 841 3. 4% -55% Western Cape 9. 8% R 91, 594, 913 10. 3% 5% 100. 0% R 889, 233, 857 100. 0% Province § Allocations from undersubscribed provinces were transferred to oversubscribed provinces § Due to overwhelming interest shown in Asonge, the NEF has approved a further 1, 376, 058 shares for the share scheme worth R 103 million to match the 13% oversubscription level. 18

“The NEF Asonge Share Scheme” Subscriptions by Province 19

“The NEF Asonge Share Scheme” Subscriptions by Province 20

Consolidated Allocation Results § 10 640 000 MTN shares, worth R 1, 14 bn, were offered to qualifying investors plus one bonus share for every 10 held after 24 months § A further 1 376 058 shares, worth R 147 m, were allocated to accommodate oversubscriptions plus one bonus share for every 10 held after 24 months § Over 87 000 applications were received in total § Value of allocations = R 890 m vs. R 1, 3 bn market value at allocation date All valid applications within the allocation value thresholds will receive the full allocation. 21

Consolidated Allocation Results § Groups allocated 9% of total value vs. 50% target It appears that investors preferred to invest as individuals as opposed to within groups who may have a limited investment horizon. § Of individual subscription by value, Female = 43% and Male = 57% § Geographical spread § 6 Under-subscribing provinces at between 49% - 71% of initial allocation § KZN and WC allocated 101% and 105% of initial allocation respectively 22

Exceptions § As with all subscription processes, certain applications were not valid or were rejected § The subscription value of such rejections was R 2, 508, 463 § We also have many potential duplicate applications, potentially to the value of R 7, 216, 166 § Each will have to be further analyzed on merit and a decision made to include or exclude them from the offer § These have been EXCLUDED from the share allocation model together with the SAPO rejections of R 11, 7 million 23

An Overall Success! § Asonge oversubscribed by 13% – meets existing public demand sets an historic landmark for future share offers § Over 85 000 Black investors now own shares in a blue-chip company § Contributed to a growing culture of Savings and Investment amongst Black people § Women shareholders = 49% by number, 39% by value (overall), 51% by number and 43% by value (within individuals) In excess of targets set by BB BEE Codes of Good Practice § All provinces were allocated shares and involved in the marketing campaign to enable participation to their full capacity § Unencumbered economic benefit is fully vested in Black hands § Government fulfilling a critical national imperative through NEF 24

Fund Management Division On-going track record achieved in the Fund Management Division, with approvals to date now exceeding R 500 m. 25

Deal Pipeline: 31 March 2007 ENQUIRIES Approx. 24, 685 APPLICATIONS 4, 780 NEW DEALS ACCEPTED 38 worth R 471 m 26 DUE DILIGENCE 29 worth R 265 m APPROVED 16 worth R 196 m DISBURSED (INCLUDING UNDRAWN CAPITAL) 86 worth R 496 m

Fund Management Division NEF INVESTED PROCESS REPORT 31 ST MARCH 2007 NEW DEALS ACCEPTE 38 D worth R 471 m DUE DILIGENC E 29 worth R 265 m i. Mbewu Fund 24 worth R 126 m Corporate Fund 14 worth R 345 m Since Inception to 31 st March 2007 APPROVE DISBURSE TOTAL D 16 worth R 196 m D 86 worth R 496 m 169 worth R 1, 428 m 23 worth R 143 m 8 worth R 34 m 58 worth R 97 m 113 worth R 400 m 16 worth R 122 m 8 worth R 162 m 28 worth R 399 m 56 worth R 1, 028 m 27

Fund Management Division NEF INVESTED PORTFOLIO BY SIZE OF TRANSACTION 31 ST MARCH 2007 (R) VALUE % BY VALUE BY NUMBER Greater than R 5 m Less than R 5 m % BY R 372 m 75% 18 NUMBER 20. 9% R 124 m 25% 68 79. 1% R 496 m 100% 86 100% 28

Fund Management Division NEF INVESTED PORTFOLIO BY FUNDING PROJECT 31 ST MARCH 2007 % BY VALUE BY NUMBER % BY Acquisition Funding R 237 m 47. 7% 12 NUMBER 14. 0% Capital Market R 74 m 14. 9% 4 4. 7% Start-Up R 64 m 12. 9% 42 48. 8% Liquidity & Warehousing R 60 m 12. 1% 3 3. 5% R 40 m 8. 1% 18 20. 9% R 20 m 4. 0% 6 7. 0% R 1 m 0. 3% 1 1. 1% R 496 m 100% 86 100% Expansion Contracts Rural & Community 29

Fund Management Division NEF – Invested portfolio by funding product by value 31 st March 2007 Rural & Community 0. 3% Start-up 12. 9% Acquisition Funding 47. 7% Liquidity & Warehousing 12. 1% Expansion 8. 1% Contracts 4% Capital Market 14. 9% 30

Fund Management Division NEF – Invested portfolio by funding product by number 31 st March 2007 Expansion 20. 9% Rural & Community 1. 3% Contracts 7% Capital Market 4. 7% Acquisition Funding 14% 31 Liquidity & Warehousing 3. 5% Start-up 48. 8%

Rural & Community Development 32

A Sweet Deal! CCT CR IDC NEF R 14, 8 m R 19, 4 m AMAJUBA R 37 m ð ð ð ð 60 HA raspberry farm in Amajuba district, KZN Farm established on land secured through restitution process Community beneficiaries with CCT governed by 11 trustees Project taps into 482 000 ha worldwide market SA production only 100 ha currently Project will be leading local supplier at full capacity Supply local and export markets (70% of production) Tap into growing popularity of raspberries 33 TECHNICAL PARTNER

Compliance with R&CD product criteria § § § Broad based community ownership Sustainable projects with strong social benefits Strong technical partners Skills transfer Poverty alleviation Strong empowerment dividend Broad based economic ownership (1100 beneficiaries) § Job creation (795 jobs including 91 permanent) § Women empowerment ( 60% of workforce) § Project location – rural KZN area § Local Economic benefits Contribution of R 9. 8 m pa in salaries to local economy § Electrification of houses § Provision of land for new houses § Partnership with IDC Leveraging IDC sector knowledge Contributing NEF know-how in financing rural communities § § 34

Fund Management Division JOB CREATION 31 ST MARCH 2007 RAND INVESTED NUMBER OF JOBS EXISTING JOBS NEW JOBS RAND PER JOB Start-Up R 64, 2 m 817 3 814 R 78, 5 k Expansion R 40, 1 m 784 279 505 R 51, 2 k Acquisition Funding R 236, 7 m 2, 519 1, 492 1, 027 R 93, 9 k R 19, 8 m 500 210 290 R 39, 6 k R 1, 4 m 12 0 12 R 120, 8 k R 73, 8 m 3, 930 3, 830 100 R 18, 8 k R 60 m 542 362 180 R 110, 7 k R 496 m 9, 104 6, 176 2928 R 54, 5 k 68% 32% Average Contracts Rural & Community Capital Market Liquidity & Warehousing TOTAL PORTFOLIO: 35

Fund Management Division NEF – Invested portfolio by sector by value 31 st March 2007 Wood & Paper Industry 2. 9% Transportation 1. 3% & Tourism Entertainment 9. 4% Textile Industry 2. 3% Printing Services 3. 1% Chemicals & Pharmaceuticals Other 0. 5%6. 7% Construction 23. 1% Engineering 2% Financial Services 1. 5% Motor Industry 2. 2% Mining Services 9. 2% Food & Agro Processing 11% Manufacturing 9. 1% ICT & Media 15. 2% 36 Financial Services 1. 5%

Fund Management Division NEF INVESTED PORTFOLIO BY REGION 31 ST MARCH 2007 (R) VALUE Gauteng R 227, 6 m Eastern Cape R 108, 2 m Western Cape R 95, 5 m Kwa-Zulu Natal R 34, 9 m Mpumalanga R 26, 7 m Limpopo R 2, 8 m Free State R 0, 3 m Northern Cape North West R 496 m % BY VALUE 54. 9% 21. 8% 19. 3% 7% 5. 4% 0. 6% 0. 1% 0% 0% 100% % VALUE PROVINCE BY % CONTRIBUTI NUMBER BY NUMBER ON TO GDP 50 58. 1% 33. 7% 8 9. 3% 7. 9% 14 16. 3% 14. 7% 8 9. 3% 16. 3% 2 2. 3% 6. 7% 3 3. 5% 6. 7% 1 1. 2% 5. 5% 0 0% 2. 2% 0 0% 6. 3% 86 37 100%

Provincial Roundtables With effect from October 2007, NEF to launch Provincial Roundtables with stakeholders in the following provinces: § Mpumalanga § KZN § Northern Cape § North West § Free State § Limpopo § Objective is to optimise regional invested portfolio through intensive local interaction and communication § § Stakeholders will include: § Premiers, MECs for Finance & Economic Affairs, as well as MECs for Agriculture, to encourage rural and community development § Constituency Members of Parliament § Local Development Finance Institutions (DFIs) § Local entrepreneurs and co-operatives § Mass Media 38

Annual Financial Statements 39

Consolidated Statement of Financial Position as at 31 st March 2007 R’ 000 s Consolidated 2006 R’ 000 s Non-current Assets 2, 669, 406 1, 615, 442 Property & Equipment Intangible Assets Investment in Joint Venture Investment in Associates Investments available-for-sale Originated Loans Investments held-to-maturity 2, 296 125 24, 317 2, 303, 924 338, 744 - 2, 777 194 5, 407 1, 444, 022 15, 042 10, 000 Capital & Reserves 3, 551, 018 2, 087, 339 Trust Capital Fair Value Reserves Accumulated Surplus 1, 233, 903 2, 219, 908 187, 207 740, 600 1, 270, 006 76, 732 40

Consolidated Statement of Financial Performance as at 31 st March 2007 Revenue Grants Received to fund Operations Grants Received for Retail Prod. Development Dividends from Investments Interest Received from Banks Interest Received from Original Loans Other Revenue Total Income Administration Expenses Impairment of Originated Loans Impairment – Held-to-maturity Investments Surplus for the Year 2006 R’ 000 s 170, 785 105, 370 66, . 24 1, 800 30, 411 43, 643 27, 152 1, 755 40, 000 38, 405 23, 197 3, 501 267 - 6 30, 666 12, 352 17, 714 16, 882 21, 476 (4, 594) 200, 851 122, 258 (62, 385) (26, 491) (14, 936) (11, 555) (40, 633) (38, 151) - 111, 975 43, 474 Other Income Fair Value Gains/Losses Held-for-trade Investments in Associates Consolidated 41

We thank you for your attention. www. nefcorp. co. za 42