Land Bank 2006/7 Annual Report

Presentation to the Portfolio Committee 7 November 2007

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PRESENTATION OUTLINE

Introduction – Mr Lungile Mazwai: Chairperson

Strategic Overview – Dr Phil Mohlahlane: Acting CEO

Financial Review – Mr. Xolile Ncame: CFO

Treasury Review – Mr Makgale Gwangwa: Treasurer

Questions and Answers

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STRATEGIC OVERVIEW

Dr. Phil Mohlahlane

Acting Chief Executive Officer

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Vision and Mission

Vision:

We aspire to utilise the Bank’s financial resources towards the development of farmers and the rural economy.

Mission:

Land Bank supports economic growth in South Africa through the development of farmers and rural economies by way of prudent investments that support the agricultural sector.

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The agricultural sector

• Negative contribution of 13% by agriculture

• Fluctuation of the Rand has had a severe impact on the agricultural exports market

• Net farm income has declined by 48% over a three tear period ended 30 June 2007

• Maize industry experienced set backs in the past three years• Low price on 2005• Reduced maize planting in 2006• Drought in 2007

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Operationalising – New Business Model

The Bank plans to disburse R300 million to developing farmers in the 2007/2008 financial year, R1 billion and R2 billion in the 2008/2009 and 2009/2010 financial years respectively.

The rehabilitation of struggling projects – there are a number of projects in the Bank’s book that lack support, have poor funding structures and have no access to markets;

The existing entrepreneurial projects in the agriculture value chain, in particular those that need funding to create more jobs and for BEE;

New projects as identified by ASGISA; Bio fuels.

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Operationalising – New Business Model

Special emphasis to be placed on growing the Bank’s business

concentrating on economic activities that will launch both subsistence and emerging farmers into commercial streams.

Achieved through the utilization of Co-ops, Provincial DFI’s and other support structures.

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Empowering developing farmers

Over the past five years, the Bank has given direct assistance to black businesses.

This can be translated into an impact on a number of households within rural and farming communities as well as individual black farmers.

At R793 million with 15 000 accounts, retail loans alone are estimated to have benefited 9 600 individual farmers.

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Joint Initiative on Priority Skills Acquisition (JIPSA)

The demographic breakdown of bursaries is as follows:Eastern Cape - 5KwaZulu-Natal- 7Free State - 4Gauteng - 22Limpopo - 6North West - 4

In the year 2006, R3.2 million was spent on bursaries.

Financial review

Xolile NcameChief Financial Officer

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Income Statement - Company

2007%

Change2006

% Change

2005

R’m R’m R’m

Net Interest Income 465 12 417 25 557

Non Interest Income 105 64 288 4 301

Operating expenses (462) 5 (439) 6 (416)

Net non-operating income 162 100+ (71) 100+ (12)

Bad Debt Provision normal (172)

(198)

46 (320)

-

50 (637)

-Bad Debt Provision Land Claim

100

Net loss / profit (100) (125) (207)

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Loan book and Provisioning

2007 2006 2005 2004

Total Gross loan book

R17.3bn R16.3bn R18.3bn R16.2bn

Non-Performing Loan (NPL) R2.6bn R2.2bn R1.7bn R3bn

NPL as a % of gross loan book 15% 13.5% 9.3% 18.5%

Loan provision R1.7bn R1.4bn R1.2bn R1.2bn

Provision as a % of total loan book 9.8% 8.6% 6.6% 7.4%

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Equity to Total Assets Ratio

2007 2006 2005 2004 2003

Equity to total assets 9.7% 8.7% 7.3% 11.8% 14.5%

Equity to total assets adjusted for National Treasury guarantee

R1.5bn letter of undertaking

Capital injection R700m (20%)

18.4% 16.4%

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Audit Qualification

Land for Development Product may not be in terms of the Land Bank Act and this uncertainty has led the auditors to raise a qualification

Bank is in the process of selling this book

Treasury Review

Makgale GwangaTreasurer

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Bank Borrowings

2007 2006 2005 2004

Long Term 3 415 3 731 3 814 1 889

Medium Term 4 146 2 884 4 801 2 814

Short Term 8 570 10 643 9 864 10 732

TOTAL 16 131

17 258 18 479 15 435

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Funding Portfolio

Funding (Million)

2007 2006 2005

FIXED RATE

Long Term 1 754 3 731 3 814

Medium Term 739 - -

Short Term 9 996 7 720 9 529

3 489 11 451 13 343

FLOATING RATE

Long Term 1 661 - -

Medium Term 3 407 2 884 4 801

Short Term 7 574 2 923 335

12 642 5 807 5 136

Total Funding Portfolio 16 131 17 258 18 479

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Funding Program

Board approved R10bn DMTN programR2bn long term bond to be issuedArrangers and lead managers have been

appointedRoad Shows will be conducted with investors

THANK YOU