Select Committee on Labour and Public Enterprises 8 March 2005 Presentation on the

1. SAFCOL Select Committee on Labour and Public Enterprises 8 March 2005 Presentation on the SAFCOL Annual Report 2003/04 Charles Ntuli Sikkie Kajee Kobus Breed Joe Coetzer

2. Outline • 1. Introduction to SAFCOL Operations • Map • Video 2. Corporate Governance • 3. Status of Privatisation • Core Assets • Non-core Assets • Interest in privatised entities 4. Overview of performance against objectives 5. Financial Review 2004

3. Introduction to SAFCOL Operations[PMG note: map not included]

4. Corporate Governance Code of Corporate Practices and Conduct The Directors endorse the Code of Corporate Practices and Conduct as set out in the King Report. The Directors confirm the need to conduct the business with integrity and in accordance with generally accepted corporate practice.

5. Public Finance Management Act, 1999 (“PFMA”) The PFMA became effective on 1 April 2000. As part of the implementation of the PFMA, there is an ongoing process of awareness, education, instruction and advice to the SAFCOL Board and employees. The Board of Directors are the accounting authority of SAFCOL. The Directors comply with their fiduciary duties as set out in the Act. Since its inception in 1993, SAFCOL followed a policy of good corporate governance and sound accounting principles and internal control and as a result, comprehensive accounting policies, accounting procedures, internal control procedures, conditions of employment and disciplinary procedures, including a code of conduct, were prepared and documented and are well entrenched in the operations of the company.

6. As a substitute for the corporate plan and shareholders’ compact, SAFCOL submitted a privatisation framework, which outlines Government’s privatisation objectives for SAFCOL. This privatisation framework does not contain the performance objectives as stated in the Chief Executive Officer’s Report, other than the privatisation objective. The other responsibilities have been addressed by SAFCOL, as far as practically possible, within the constraints resulting from privatisation.

7. Except for one item listed below, SAFCOL complies with the PFMA and Treasury Regulations in all material respects with regard to the provisions applicable to public entities. • Projections of revenue, expenditure and borrowings for a financial year are included in the annual budget that is approved by the Board. This approval does however not take place at least one month before the commencement of the financial year, but within • one month of such commencement.

8. Status of privatisation No privations transactions were completed during the year under review in respect of the core assets. The status can be summarised as follows:-

9. Core Assets In preparation for the eventual privatisation, SAFCOL acquired certain commercial forestry assets and business from DWAF at a nominal value.

10. The combined sale assets, comprising the major portion of businesses and commercial forestry assets of the company as well as the relevant portions of the commercial forestry assets and businesses acquired from DWAF were transferred to wholly-owned subsidiaries of SAFCOL, as follows :-

11. The following table provides an indication of the impact of the said transactions :

12. Non-Core Assets The portion of the operations in KwaZulu-Natal not transferred to Siyaqhubeka Forests (Pty) Ltd and therefore remaining with SAFCOL, the St Lucia region, comprises of approximately 7 200 ha of commercial forestry plantations. Other assets remaining with SAFCOL are as follows :-

13. Interest in privatised entities Up to 19% of SAFCOL’s interest in the privatised entities has been earmarked for disposal to the following entities :

14. Overview of performance against objectives

21. Financial Review

22. Financial Review (continued)

23. Key Ratios