IDFC PRESENTATION TO SMALL BUSINESS DEVELOPMENT PORTFOLIO COMMITTEE

IDFC LEGISLATIVE inance F t n e m p Develo l a i c n i v o ü Pr n; Institutio the KZN f o t c a n ough a r h t d e h s hala i ü Establ l Legislature, i. e. It tion rpora o C Provincia e c n a ent Fin m p o l e v e D 013; 2 f o 5. o Act, Act N vincial o r P N Z K d by the e n w o the y l o l t s t r o p e ü Who nt and r e m n r e v Go omic n o c E f o t en Departm m and s i r u o T , t en Developm al Affairs; ent Environm ü Been in existen ce for over 50 years having ass umed various names; ü Headquartered in Umlazi, a township located South of Durban next to th e old airport

MANDATE, MISSION & VISION Mandate: and t r o p p u s , “Promote al and i c o s e t a t i l faci n the i h t w o r g economic luu z a w K f o province Natal” Vision: t for s y l a t a c e h “To be t nomic o c e , h t w o gr ent and m p o l e v e d ent” empowerm Mission: mic o n o c e e v i “To dr ent and m p o l e v e d whilst , t n e m r e empow cially n a n i f g n i remain e” sustainabl

IDFC STRUCTURE IDFC SPECIALISED BUSINESS UNITS Business Finance Properties SUBSIDIARIES Ithala SOC Limited Ubuciko Twines & Fabrics

OBJECTIVE OF INSTITUTION Goal 1: Financial Sustainability and Viability Goal 2: Developmental Effectiveness Goal 3: Operational Excellence and Good Corporate Governance Goal 4: Forge Strategic Partnerships Goal 5: Knowledge Management

REPOSITIONING STRATEGY – THE BACKGROUND N TO O I T A S I N E ORGA H T D E N OSITIO WING: P O E L R L O C F F E D I TH ADDRESS ability n i a t s u s l a ü Financi tments s e v n i e v i ing to dr d n u f f o ü A lack nomic o c e d e t a i thala-init I f o r e b num ü Limited ent projects developm cted in e l f e r s e c rt servi o p p ’s and u E s M s s M e S n i s d u e ü Weak b ailure rates of fund the high f tives Co-opera ent m n r e v o g nomic ent with o c m e n l g i a l r a u f r ially on c ü Lack o e p s e lution , o s v e e r m l a m r a u r t prog agricul d n a t n e developm

REPOSITIONING STRATEGY – THE BACKGROUND THE F O S E V I T GY ARE OBJEC E T A R T S NING REPOSITIO ITHALA: T A H T E R TO ENSU ly and e v i t c e f f e in a e t üDelivers a d n a m s on it efficiently lenging l a h c d n a c dynami nt environme usiness b e r o c s t i üAligns incial v o r P e h t o activities t pment o l e v e D d n Growth a DS) G P ( y g e t a r St ü Rec laims it s histor relevan ical ce and po itself a s the pr sition em develop ment ag ier ency in Provinc the e üBecom es sustaina financially bl on gove e and less relia rn nt drive its ment funding to in program vestment mes

REPOSITIONING STRATEGY - PHASES • The overarching corporate strategy consists of 3 -phases over a 5 -year time horizon. • Phase 1 seeks to remediate the business; • Phase 2 builds on the revised business platform; • Phase 3 extends Ithala’s focus and widens its set of activities.

IDFC STRUCTURE tegic a r t S e e r h IDFC has t SBU’s) ( s t i n U s s Busine provides – e c n a n i F üBusiness ncial a n i f n o n nd financial a and Cos ’ E M M S support to operatives ovides r p – s e i t r üPrope cture to u r t s a r f n i l physica eavy h , l a i r t s u d in retail, light ME M S d n a l a i r indust businesses ü Ithala Lim fenced’ ited – is a ‘ring in owned stitution, whol by ly provide IDFC that sf to the r inancial servic es etail ma rket.

BUSINESS FINANCE – MODEL OF OPERATION Value Proposition Delivery Model • Financial support • Non-financial support • Business Centres located in 5 out of 11 districts in KZN Partners Core Activities • Provincial Government • Service providers • Origination • Technical evaluation • Post Investment Management • Business support Target Customers • SMME’s • Co-operatives Cost Structure 65% - 55 employees 15% - professional services 20% - other Funding • Interest Income • Service charges • Government Grants

BUSINESS FINANCE – KEY INFORMATION : ted in a ü Footprint c lo s e r t en burg, z Business c it r a m r e t ie ban, P Umlazi, Dur and Port le t s a c w e N y, Richards Ba Shepstone; ucts: d o r P g in c n ü Fina ance in F o r ic M • ance in F t n e m e r u • Proc nce • Agri-Fina ance • Asset Fin e Finance is h c n a r F ance • in F y t r e p o r P cial • Commer inance F t c je o r P / d • Structure ü Financial and Investm ent Performance • Profitabil ity: Turnarou nd from R 76 m loss in FY 2012/13 t o R 16 m profit in 2013/14. • Investme nt: Book size is +/R 900 m and N on-Performin g Loans have b een reduced from 61% in 2012/13 to 2 0% in 2013/14.

PROPERTIES – MODEL OF OPERATION Value Proposition • Premises • Implementing Agent Partners • Eskom • Municipalities • Provincial Government Delivery Model • Property development • Property portfolio (retail, industrial and SMME) Core Activities • Leasing • Bulk services • Project management Target Customers • • Retailers Industrialists SMME’s Government Departments Cost Structure 15% - 210 employees 40% - Bulk services, 20% - Rates & Taxes 10% - Maintenance Funding • Rental Income • Service recoveries • Management Fees

PROPERTIES – KEY INFORMATION ping centres ü Footprint: p o h s ) 1 (2 ne • Twenty o rban towns u ir e p d n a l a r located in ru located in s te ta s e l ia industr • Three (3) ysmith and d a L ), th r o -N N Mandeni (KZ Newcastle even (7) s s k r a p l ia tr s ght indu in Richards • Eight (8) li ) (1 e n o d n a ban located in Dur Bay; t (8) located h ig e , s k r a p E MM • Forty (40) S 3) located in (1 n e te ir th in Midlands, teen (19) e in n d n a ion Northern reg al region tr n e C d n a n r the located in Sou ): lio (Size – GLA fo t r o P y t r e p ü Pro 76, 279 GLA , 1 1 – o li o tf r o • Total p 8, 443 k GLA 3 1 – il ta e R • , 988 GLA 7 4 8 – s te ta s E • Industrial – 132, 930 GLA s k r a P l ia tr s u • Light Ind A ks – 56, 918 GL r a P E M M S • ü Financial: • Profitability: Profit of R 126 m in 2013/14. • Investment: The property portfolio is valued at approximately R 1. 8 billion and yields approximately 5% on average per annum

ITHALA SOC LIMITED – MODEL OF OPERATION Value Proposition • • Deposits Personal Loans Home Loans Insurance Partners • Service providers • Insurance Underwriters Delivery Model • Branch network Core Activities • Deposit taking • Lending • Insurance Target Customers • Retail market Cost Structure • 50% - 444 employees • 30% - 49 Branches • 20% - Other Funding • Interest Income • Service fees • Deposits

ITHALA SOC LIMITED – KEY INFORMATION oss nt: ü Footpri branches spread acr KZN and f Forty-nine o h t a e r and b perid n the length a l a r u r ntly in predomina ns; urban tow ducts: o r P g n i c n ü Fina ts • Deposi oans al L • Person ns Loa d Long • Home n a t r o h S ce – • Insuran term ance n i F i x a T d an • Vehicle • Finan cial and I nvestme Performa nt nce • Profi tability: L oss of R 6 million in 8 FY 2013/ • Inves 14 tment: B o o k size is + R 2. 15 bil /l i o n • Depo sits: Cust omer size R 1. 98 bil is +/lion

SMME & COOPERATIVES IMPACT ON SMME & COOPERATIVES

2013 -14 CLOSE-OUT SUMMARY Approvals Business Type R'000 Gender R'000 Age Sector SMME 795, 125 Male 587, 373 Adult 614, 251 Manufacturing 123, 659 Co-operatives 19, 525 Female 141, 926 Youth 200, 400 Agriculture 112, 867 Both 85, 261 Trade & Services 183, 712 Construction & Tourism 374, 887 Co-operatives Total Business Type Advances R'000 SMME Co-operatives 814, 650 R'000 814, 650 Gender 428, 734 Male 2, 781 Female Both R'000 Age Sector 258, 900 Adult 302, 061 Manufacturing 129, 455 Youth 129, 454 Agriculture 43, 152 Trade & Services Construction & Tourism Co-operative Total Districts: 19, 525 431, 515 Ethekwini, Ugu, Umgungundlovu, UThukela, UMzinyathi, Amajuba, Zululand, UMkhanyakude, UThungulu, ILembe, Sisonke R'000 46, 466 109, 328 95, 407 176, 095 4, 219 431, 515

No. of Business Financed 2013 -14 CLOSE-OUT SUMMARY Business Type Gender Sector SMME 209 Male 115 Adult 147 Manufacturing 12 Co-operatives 17 Female 80 Youth 79 Agriculture 31 Both 34 Trade & Services 21 Construction & Tourism 65 Total 226 Business Type No. of Jobs Facilitated Age 226 Gender 128 Age Sector SMME 4, 339 Male 2, 914 Adult 3, 530 Co-operatives 73 1, 262 Youth 882 Female Both 236 Manufacturing 144 Agriculture 991 Trade & Services 437 Construction & Tourism Total Districts: 4, 412 2 4, 41 Co-operatives Ethekwini, Ugu, Umgungundlovu, UThukela, UMzinyathi, Amajuba, Zululand, UMkhanyakude, UThungulu, ILembe, Sisonke 2, 767 73 4, 412

SMME PORTFOLIO – MIDLANDS REGION VACANCY %AGE TOTAL UNITS OCCUPIED UNITS VACANT Ezakheni Handicraft 240. 00 8 8 0 Ladysmith Handicraft 290. 00 8 8 0 Madadeni Handicraft 515. 01 475. 37 39. 64 7. 70 14 13 1 Mondlo Handicraft 1 & 2 749. 50 460. 25 289. 25 38. 59 21 14 7 Mpumelelo Handicraft 1 & 2 3, 099. 54 2, 689. 21 410. 33 13. 24 32 28 4 Nqutu Handicraft PH 1 & 2 656. 21 0. 00 10 10 0 Osizweni Factory Units A & B 576. 00 432. 00 144. 00 25. 00 14 10 4 Osizweni Handicraft A & B 727. 30 556. 50 170. 80 23. 48 18 14 4 TOTAL SMME MIDLANDS 6, 853. 56 15. 38 125 105 20 5, 799. 54 1, 054. 02

SMME PORTFOLIO – NORTHERN REGION VACANCY %AGE TOTAL UNITS OCCUPIED UNITS VACANT Esikhawini Factory Units 1 - 3 1, 163. 00 937. 00 226. 00 19. 43 28 23 5 Esikhawini Motor Trade 1, 000. 00 7 7 0 Hlabisa Factory Units A & B Kwa Msane F/Unit & Motor Trade 756. 00 732. 00 738. 00 732. 00 18. 00 0. 00 2. 38 0. 00 20 13 19 13 1 0 Mbazwana Factory Units PH 1&2 600. 00 500. 00 16. 67 10 9 1 1, 056. 85 458. 00 542. 00 324. 00 750. 85 333. 00 542. 00 324. 00 306. 00 125. 00 0. 00 28. 95 27. 29 0. 00 36 11 6 14 20 4 6 14 16 7 0 0 Nseleni Factory Units PH 1 294. 00 0. 00 6 6 0 Sundumbili Factory Units 1 & 2 Sundumbili Motor Trade 570. 00 600. 00 529. 00 600. 00 41. 00 0. 00 7. 19 0. 00 12 4 11 4 1 0 Ulundi Factory Units PH 1 & 2 2, 052. 00 1, 779. 50 272. 50 13. 28 29 26 3 TOTAL SMME NORTHERN 10, 147. 85 9, 059. 35 1, 088. 50 10. 73 196 162 34 Mkuze Factory Units Ncotshane Factory Units A & B Ngwelezane F/Units 2 & 3 Nkandla Factory Units

SMME PORTFOLIO – SOUTHERN & CENTRAL REGION Bhongweni Factory Units Impendle Factory Units Kokstad Factory Units Kwadabeka Factory Units Kwa. Mashu Motor Park PH 1 - 4 Magabeni Factory Units Mpophomeni Handicraft Mpumalanga Factory Units F 34 Mpumalanga Motor Centre Ndwendwe Factory Units Plessislaer Factory Units 1&2 Seaford Industrial Park Umlazi Industrial Park PH 1 Umlazi Industrial Park PH 2 Umlazi Industrial Park PH 3 Umnini Plaza North Umnini Plaza South Micro & Small Vacant Land 272. 00 324. 00 1, 695. 00 294. 00 4, 059. 00 268. 00 190. 00 75. 00 706. 00 292. 00 430. 00 2, 506. 00 216. 00 2, 685. 00 2, 010. 00 3, 048. 00 980. 00 262. 00 27. 00 814. 00 269. 00 3, 073. 00 48. 00 38. 00 75. 00 495. 00 292. 00 430. 00 2, 166. 00 27. 00 2, 520. 00 1, 775. 00 2, 520. 00 784. 00 0. 00 TOTAL SMME SOUTH & CENTRAL 21, 030. 00 16, 399. 00 REGION 10. 00 297. 00 881. 00 25. 00 986. 00 220. 00 152. 00 0. 00 211. 00 0. 00 340. 00 189. 00 165. 00 235. 00 528. 00 196. 00 0. 00 VACANCY %AGE 3. 68 91. 67 51. 98 8. 50 24. 29 82. 09 80. 00 29. 89 0. 00 13. 57 87. 50 6. 15 11. 69 17. 32 20. 00 TOTAL UNITS 10 7 9 10 53 7 5 1 13 4 1 21 5 20 38 66 1 1 2 UNITS OCCUPIED 9 1 4 9 43 2 1 1 7 4 1 15 1 18 33 54 1 1 1 UNITS VACANT 1 6 5 1 10 5 4 0 6 0 0 6 4 2 5 12 0 0 1 4, 631. 00 22. 02 274 206 68

SMME PORTFOLIO – SUMMARY TOTAL SMME PORTFOLIO 38, 031. 41 31, 257. 89 6, 773. 52 VACANCY %AGE TOTAL UNITS OCCUPIED UNITS VACANT 17. 81 595 473 122 473 of the 595 units were occupied as at the end of July 2014.

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