Land Bank Annual Report: Inspiring Growth and Inclusivity in Agriculture

1. DATE: 8 September 2015 LAND BANK ANNUAL REPORT PRESENTATION INSPIRING GROWTH AND INCLUSIVITY: in Agriculture SCOF PRESENTATION

2. TABLE OF CONTENTS EXECUTIVE LEADERSHIP OF THE BANK INTRODUCTION & CONTEXT GOVERNANCE: AUDIT REPORT OPERATIONAL PERFORMANCE: HIGHLIGHTS ENVIRONMENTAL & SOCIAL SUSTAINABILITY FINANCIAL PERFORMANCE DEVELOPMENT IMPACT PERFORMANCE GOING FORWARD: NEW STRATEGY FRAMEWORK IMPROVING COORDINATION & COOPERATION OPPORTUNITIES & CHALLENGES

3. EXECUTIVE LEADERSHIP OF THE BANK Mr Bennie van Rooy Chief Financial Officer Mr TP Nchocho Chief Executive Officer Mr Mpumi Tyikwe MD: Land Bank Insurance Company Mr Willie Jacobs EM: Corporate Banking Ms KoneGugushe EM: Risk Management Ms Mpule Dlamini EM: Human Resources Ms Loyiso Ndlovu EM: Strategy, Comm’s& Policy Ms Lindiwe Mdlalose EM: Portfolio Management Services Mr Gary Conway EM: Organisation Integration & Tech Mr Jerome Mthembu EM: Legal Services Mr Sydney Soundy EM: Commercial Development Banking

4. INTRODUCTION & CONTEXT (Page 6,8 & 12) • The importance of the Agriculture sector in igniting economic growth and ensuring food security • Recognition that Land Bank’s operational effectiveness can be greatly enhanced through collaborations with other DFI’s & Sector Departments • At a governance and leadership level, the appointment during the year of new Chairperson of the Board (Mr. MA Moloto) and Chief Executive Officer (Mr. TP Nchocho) • Economically, the agri sector faced difficult conditions, being the generally slow economy and the impact of drought • Despite the difficult conditions, the agri sector remains fairly resilient, and the Bank itself performed well under the circumstances

5. GOVERNANCE: AUDIT REPORT (Page 14, 16 & 17) • The Bank’s Audit Committee is duly constituted per the PFMA and functions independently as per its Charter • The Internal Audit function of the Bank is fully capacitated with appropriately qualified and experienced staff • The Audit Committee has expressed satisfaction regarding the governance and control environment of the Bank • Therefore, an Unqualified Audit Report for the year 2014/15 • No material findings were identified on the usefulness and reliability of performance information • Financial statements that were free from material misstatements

6. OPERATIONAL PERFORMANCE: HIGHLIGHTS (Page 20 - 27)

7. OPERATIONAL PERFORMANCE: HIGHLIGHTS (…continues) (Page 20 - 27)

8. ENVIRONMENTAL & SOCIAL SUSTAINABILITY (Page 32 - 36) • The Bank prioritises the protection of the environment and society to ensure shared value creation with the South African community at large • The Bank pledges to be a good corporate citizen and its desire to lead by example in pursuing sustainable development • The Bank is committed to ensuring that all activities it finances are implemented in a sustainable manner to protect the environment and society and promote sustainable development • As a good corporate citizen, the Bank endeavours to always invest in social responsibility and shared value creation

9. FINANCIAL PERFORMANCE (Page 82)

10. FINANCIAL PERFORMANCE (Page 83) (…continues) • Well-managed borrowing costs • Two B&CB clients went into distress • Administration fees on service level agreements • Cost containment

11. FINANCIAL PERFORMANCE (Page 40 & 41) (…continues) LIQUIDITY & CASH MANAGEMENT EQUITY AND RESERVES (Excl. Government Guarantees) • Liquidity ratio of 8.2% (FY2014: 8.2%) against target of 7.5%

12. FINANCIAL PERFORMANCE (Page 42) (…continues) CAPITAL ADEQUACY (GEARING RATIO) • Additional R4bn guarantee from Government • Total guarantees from Government R5.5bn

13. DEVELOPMENT PERFORMANCE (Page 46 - 48) Development Impact of the Land Bank funding

14. NEW STRATEGY FRAMEWORK: TARGETED OFFERINGS TO PRIORITY SEGMENTS & AGRI COMMODITIES • Sector Growth Financing • Accelerate high-potential regions and crops • 1 • Supply chain development • Focus on agro-processing • 2 • 3 • Sector Productivity & Intensification • Support next-generation farming • 4 • Agri - Innovation • Spur Agri - Innovation • Target end customers Emerging commercial farmers • New farm development • Expansion projects • Strategic growth acquisitions Agro-processors • Enterprises that require capital expansion • Commercial farmers moving up the value chain Established commercial farmers • Commercial farmers with potential for expansion or yield improvement Ag innovation start-ups • Enterprises with evolutionary agri. technology or products • Approach taken • 4 high potential provinces and 5 value chains prioritised • Convene stakeholders to originate opportunities • Pursue 4 financing gaps: land acquisition, farm expansion, insurance and production loans • 11 high potential commodities selected • Strong syndication with other institutions e.g., IDC, DBSA • Pursue 3 financing gaps: greenfield project financing, contract farming, and value chain financing • Focus on capital projects with high potential to expand output or increase yields • Provide • Tailored production finance • Specialised asset finance • Invest in the commercialization of high potential Agri. innovation companies either directly or via VC funds

15. IMPROVING COORDINATION & COOPERATION Alignment of Strategies Programmes: Priority Alignments Agri Commodities: Priority Focus Areas Land Reform-specific Initiatives: Complementarities Projects Development & Financing: Delivery Models Policy Dialogues Review of Existing MoU’s / Funds: Enhance and/or Reframing

16. OPPORTUNITIES & CHALLENGES • Expansion of agricultural exports, especially into Sub-Sahara • Room for rural economy development & job creation, but requires a viable land access dispensation • Continued focus on improving sector productivity and yields of the established commercial farming sector • Smallholder farmers development support needs to be underpinned by strong institutions, preferably with regional focus • Special initiatives required for investments in infrastructure to enable agriculture growth • On-going policy clarifications, e.g. Land rights; Water rights