CORPORATE PLAN

PRESENTATION TO THE PORTFOLIO

COMMITTEE

04/09/2007

TURNAROUND STRATEGY

BANK HAD IDENTIFIED 6 ISSUES TO TURN AROUND ITS BUSINESS

• PEOPLE• SYSTEMS AND PROCESSES• RISK • BRAND• COST AND REVENUE • CAPITAL

Current Posture

Current Posture

Commercial

Emerging Farmers

Subsistence Farmers

Not To Scale

Bottom Line

Our Customers• Commercial Farmers

– (food security at national level)

• Emerging Farmers – (Equitable access and empowerment Issues)

• Small scale farmers – (food security at household level)

Expectations

Commercial Farmers• Disaster Relief and Structural Support• Role to play in the transformation of the sector• Speedy Resolution of Empowerment Deals to

include Land related matters

Expectations Conti….

Emerging Farmers• Consideration of Land Bank and Products

– And repayments (livestock etc.)

• Value Chain Participation • Issues around debt development which has failed them

so far• Lack of Extension and Business Support• Empowerment to allow for engagement with the

commercial sector (AgriBEE)• That the Land Bank should play its historic role

Expectations Conti….

Small scale farmers • Rural Development Issues• Food Security• Jobs / Regular Income• Skills and Support• Development for them should not be just about tilling the

soil• Sustainability of Projects• That the Bank should do for them what it did historically

Expectations Conti….

Government • Land Bank Act (15 of 2002)• Strauss Commission• Sector Strategy• Support Structures• IRDS• Alignment Processes• SPV and AOSS• Job Creation and Rural development

Development imperatives

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

Mission

To support economic growth in South Africa through the development of farmers and rural economies by way of prudent investments to support the agricultural sector

Development Imperatives - Objectives

The Bank must promote, facilitate and support:

Ownership and access by previously disadvantaged groups of agricultural resources such as land is increased.

Indicators Number of emerging farmers supported to acquire land Increase in land ownership by previously disadvantaged

individuals (PDI’s) Increased production by black and emerging farmers

Development Imperatives - Objectives

The Bank must promote, facilitate and support:Agrarian reform and development programmes that are aimed at previously disadvantaged groups are implemented.

Indicators Number of programmes targeting PDI farmers Number of farmers benefiting from such programmes Number of farmers who show increased productivity and

profitability Number of support programmes dealing with rural poor and

farm dwellers Improved access by rural poor to services of Land Bank

Development Imperatives - Objectives

The Bank must promote, facilitate and support:

Financial services which are provided to the agricultural sector of rural South Africa in a manner that stimulates the establishment of enterprises

Indicators: Number of agricultural entrepreneurs supported Number of enterprises established Number of jobs created

Development Imperatives - Objectives

The Bank must promote, facilitate and support:

Commercial agriculture to ensure food security at national level is enhanced and maintained

Indicators: Number of commercial agricultural ventures

supported Value of production stimulated Tonnage produced in various areas to support

grain, diary and animals

Development Imperatives - Objectives

The Bank must promote, facilitate and support:

Creation of employment opportunities in the agricultural sector

Indicators:

Number of permanent jobs created Number of temporary or seasonal jobs created

The Response

That the Land Bank is by its nature a DFIThat the Strauss Commission Report further

entrenches this perspectiveThat the Land Bank is part of the South African

Agricultural Support Structure (OBP, PPECB, NAMC, ARC etc.)

That the institution has historically played a role in Agrarian reform and the expectations are still the same.

Response

That the nature of the sector has changed particularly around coops

That the Bank needs to find space in assisting the national agricultural program as articulated among other policy documents, the Sector Strategy

That the opportunities for the Bank lie in the proper understanding of the value chain internally initially and SADC and NEPAD secondarily.

Response

DFI network to include provincial, local and international

Rural Development IssuesProper understanding of Policy and integrationDevelopment of appropriate products Alignment with Government objectives of

economic empowerment, agriculture development and poverty alleviation

Product Orientation Model

Product Orientation Model

Aligning with Government

Product Orientation Model The case of Dairy

Dairy Processing

Producer Consumer

Land Bank

DOA/DLA

Land Bank Market

• Catalyst

• Targeted people

• Specific Purpose

• Food security

• Market balance

• Cooperative

• Common Purpose

• Household Food security

Product Orientation Model The case of Dairy

Dairy Processing

Producer Consumer

Land Bank

DOA/DLA

Land Bank Market

• Catalyst

• Targeted people

• Specific Purpose

• Food security

• Market balance

• Cooperative

• Common Purpose

• Household Food security

Equitable Access and Rural Development Drive

Commercial banks

or

syndicated loans

New Modus Operandi

Commercial

Emerging Farmers

Subsistence Farmers 1

2

3

4

100% loans

100% loans

60% Loan

40% Grants

100% Grants

Commercial banks

or

syndicated loans

New Modus Operandi

Commercial

Emerging Farmers

Subsistence Farmers 11

22

33

44

100% loans

100% loans

60% Loan

40% Grants

100% Grants

desired posture of resource allocation and expected outcome

Subsistencefarmers

EmergingFarmers

Commercialfarmers

IncreasingGrowthReduced Growth

Growth in Commercial

business

Subsistencefarmers

EmergingFarmers

Commercialfarmers

IncreasingGrowthReduced Growth

Growth in Commercial

business

Corporate structure

Land Bank

LBIC Risk mitigation products

For small enterprises

Commercial10% Capital

Adequacy

Development20% Capital

Adequacy

Commodity Trading Funding

Expected Outcomes

All projects will assume a commercial posture (emerging farmers)

Branding of all Land Bank ProductsPartnerships with other state organs and Coops

(old and new)Partnership with other DFI’s and Commercial

BanksAgree on development targets

Accountability Indicators

Employment creation and maintenance Establishment of emerging farmers Conclusion of BBBEE transactions % growth in the development loan book over three years Performance of the development loan book Provision of advisory services Geographic spread

Way Forward

Development of implementation plans for the new business model

Operational and financial strategies to be finalised by 30 November 2007

Outcome of the forensic audit and the review of DFI’s mandate to be taken into account

The Land and Agricultural Development Bank

BUDGET PRESENTATION

4 SEPTEMBER 2007

Key Assumptions

Roll actual experience for the loan bookDevelopment to grow by R300m in 2008, R1bn in

2009 and R2bn in 2010.Detailed review of operating expenditure required

to support the revenue stream still to be done

Income statement - Budget 2008

Budget 2007

R’m

Actual 2007

R’m

Budget 2008

R’m

Interest Income 1,693 1,744 1,940

Interest expense (1,162) (1,279) (1,417)

Net interest income 531 465 523

Impairment of loans (48) (369) (124)

Non interest income 57 267 64

Operating expenses (562) (462) (537)

Net profit / (Loss) (22) (99) (74)

Land Bank – Key Ratios

Budget 2007

Actual 2007

Budget 2008

Net Interest income as a % of Interest Income

26.97% 36.64% 37.24%

NIR as a % of Net Interest 12.2% 13.12% 13.19%

Cost to Income 91.44% 75.00% 61.14%

Total Loan Book R19.2bn R17.1bn R18.1bn

Thank You