IDC Results 2011/12 Presentation to the Portfolio Committee on Economic Development

1. IDC Results 2011/12Presentation to the Portfolio Committee on Economic Development 30 October 2012

2. Highlights • Record levels of funding activity: • 55% increase in the value of funding approved - R13.5 billion in 2011/12. • Reaching more businesses with a 33% increase in the number of funding approvals - 293 funding approvals in 2011/12. • Increasing impact on employment: • 45 900 jobs expected to be created and saved in South Africa compared to 39 400 in 2010/11. • 48% of these expected jobs will be in rural areas. Value of Funding Approvals

3. Highlights (continued) • Lowering the cost of funding for businesses: • Sourcing of an additional R2 billion from the UIF for funding more labour intensive businesses. • Financial sustainability underpinned by profits of R3.3 billion, a 22% increase from previous financial year. • Emerging as a leader in the development of green-industries: • Participation in funding for 12 of the projects that received preferred bidder status during the first round of the Renewable Energy Procurement Programme (REPP). • Launched the R500 million Green Energy Efficiency Fund (GEEF) to provide low-cost funding to businesses to implement energy saving technologies. Impact on Jobs

4. Highlights (continued) • Assisting to improve competitiveness in the clothing and textiles industry: • R501 million approved, expecting to create and save 2 400 jobs. • Administering the CTCIP and PIP on behalf of government: • CTCIP - 24 transactions benefiting 123 companies were approved since inception, with an average benefit of R1.2 million per company. • PIP - 344 grants totalling R1.0 billion approved since inception. • Localising components for SOE Capex and renewable energy. • Local production of solar water heaters gathering pace with approvals for two local manufacturers. Application of Funding Approved (2012)

5. Highlights (continued) • Developing key sectors including motor vehicle components and pharmaceuticals. • Localisation of components for the motor vehicle industry continues with approval for funding for component manufacturers supplying plastic interior components, chassis frame assemblies, electrical wiring harnesses and body components. • Rural development through agro-processing and developing community forestry projects. • Funding was approval for two community forestry projects, one in the Eastern Cape, and one in KwaZulu-Natal Businesses Receiving Funding (2012)

6. IDC Funding Activity Trends in IDC Funding Activity Indicators of IDC Funding Activity

7. Impact on Jobs Direct Jobs Expected to be Created and Saved • IDC aims to increase its funding levels to have a greater impact, directly and indirectly, on employment. • Approvals during 2012 are expected to create and save 45 900 direct jobswhen projects are implemented. • Of the total number of jobs, 4 500 are as a result of funding approved to intermediaries for on-lending to businesses where draws have taken place. • 48% of the total jobs are in rural areas, mainly as a result of mining and green industries with a significant number of jobs saved in agriculture. • The largest impact on job creation will be felt in the mining industry, with more than 10 600 jobs expected to be created – related to funding for a large platinum mine in the North West province. • Large contributors to the jobs saved were the agricultural industry and distressed funding for a large furniture manufacturer.

8. Supporting Government Priority Sectors • The green-economy, mining value chain and manufacturing industries dominated funding activity. • Green economy: • Supporting government’s renewable energy procurement programme; • Mining value chain: • Development of a new low-cost platinum mining project with potential to further develop downstream industry; • Manufacturing: • Manufacture of busses; • Manufacture of cleaning chemicals; • Manufacture of windscreens for the motor vehicle industry. Sectoral Distribution of Funding Approvals Infrastructure (3%) Agriculture and Forestry Value Chains (8%) Mining and Beneficiation (28%) Green Economy (30%) Manufacturing (25%) Tourism & Media (4%) ICT and Other Services (1%)

9. Increasing Economic Development across South Africa • 62% of funding approvals outside Gauteng, Western Cape and KwaZulu-Natal; • Examples of industries supported by province: • Eastern Cape • Wind energy generation • Assembly of televisions • Production of automotive glass • Dairy products • Free State • Concrete articles • Gauteng • Bus bodies • Soaps and detergents • Clothing • KwaZulu-Natal • Metal products • Textiles • Sugar processing • Limpopo • Coal mining • Citrus processing • Hospital PPP Provincial Distribution of Funding Approvals • Mpumalanga • Coal mining • Metal products • Tourism • North West • Platinum mining • Solar power generation • Sports tourism • Northern Cape • Solar power generation • Agriculture disaster relief • Agro-processing • Western Cape • Wind power generation • Tourism • Agro-processing

10. Regional Representation and Rural Development • Regional offices being supplemented by satellite offices allowing increased access by entrepreneurs to IDC; • Role of regional offices expanded to assist with improving IDC’s turnaround times. Regional Presence Funding Approvals in Rural Areas

11. Regional Breakdown of Portfolio – Eastern Cape Eastern Cape Total Exposure: R5.8 billion Black women owned: <1% Black owned: 22% Black empowered: 23% Non-BEE: 55% Non-Rural: 59% Rural: 41% Rural sectoral exposure

12. Regional Breakdown of Portfolio – Free State Free State Total Exposure: R374 million Non-Rural: 18% Rural: 81% Black women owned: <1% Black owned: 8% Black empowered: 5% Non-BEE: 87% Rural sectoral exposure

13. Regional Breakdown of Portfolio – Gauteng Gauteng Total Exposure: R19.2 billion Non-Rural: 99% Rural: <1% Black women owned: <2% Black owned: 23% Black empowered: 16% Non-BEE: 59% Rural sectoral exposure

14. Regional Breakdown of Portfolio – KwaZulu-Natal KwaZulu-Natal Total Exposure: R5.2 billion Black women owned: 2% Black owned: 16% Black empowered: 23% Non-BEE: 59% Non-Rural: 92% Rural: 8% Rural sectoral exposure

15. Regional Breakdown of Portfolio – Limpopo Limpopo Total Exposure: R4.6 billion Black owned: 44% Black empowered: 28% Non-BEE: 27% Non-Rural: 47% Rural: 53% Rural sectoral exposure

16. Regional Breakdown of Portfolio – Mpumalanga Mpumalanga Total Exposure: R2.4 billion Black women owned: 3% Black owned: 13% Black empowered: 13% Non-BEE: 72% Non-Rural: 23% Rural: 77% Rural sectoral exposure

17. Regional Breakdown of Portfolio – North West North West Total Exposure: R6.2 billion Black women owned: <1% Black owned: 24% Black empowered: 65% Non-BEE: 11% Non-Rural: 29% Rural: 71% Rural sectoral exposure

18. Regional Breakdown of Portfolio – Northern Cape Northern Cape Total Exposure: R12.4 billion Non-Rural: 3% Rural: 97% Black women owned: 15% Black owned: 3% Black empowered: 26% Non-BEE: 56% Rural sectoral exposure

19. Regional Breakdown of Portfolio – Western Cape Western Cape Total Exposure: R4.9 billion Black women owned: 2% Black owned: 12% Black empowered: 5% Non-BEE: 80% Non-Rural: 75% Rural: 25% Rural sectoral exposure

20. Distressed Funding Regional Breakdown of Distressed Funding (2008/09 to 2012/13) Sectoral Breakdown of Distressed Funding (2008/09 to 2012/13) • 33% of the companies that were funded through distressed funding were black-empowered; • 23% of the funding were for empowered companies.

21. Industrial Development –Television Assembly • Vektronix was the first TV manufacturing plant established in South Africa. • IDC’s involvement with Vektronix began with 2008, when it funded the acquisition of 30% of the equity in Vektronix on behalf of a BEE grouping. • The IDC approved an initial $5 million guarantee in 2009 to allow the company to assemble Samsung flat-panel televisions. • This was increased to $10 million in 2010 and more recently, a larger $15 million facility was approved. • IDC is supporting local assembly of flat-panel televisions from one of the world’s largest producers. • Setting the base for increased local electronics manufacturing. • Local assembly of products which would have been imported • Creating jobs in a high-tech industry

22. Industrial Development – Automotive Glass Production • PG Group is the largest automotive and building glass corporation in sub-Saharan Africa. • The company was impacted by the global recession, a strong rand, weakened local and export markets. • IDC’s funding will allow the company to improve its competitiveness and save 430 jobs in the process. • The transaction supports the drive to establish South Africa as a producer of motor vehicles for local and international markets with high local content. • Retention of industrial capacity • Localising production of motor vehicle components

23. Industrial Development – Dairy Products • Coega Dairy is a greenfields project formed by dairy farmers in the Eastern Cape to set up a modern ultra high temperature milk processing facility. • It will produce custard, condensed milk, and butter. • The plant will increase the demand for milk in the Eastern Cape by 18%, enabling expansion of the dairy farming industry. • The project directly employs 100 employees with more jobs being created in services to the dairy. • Linkages to primary agriculture has the potential to create an additional 490 jobs in rural communities. • Promoting rural development through development of agro-industries • Job creation through backward linkages with primary agriculture

24. Industrial Development – Soaps and Detergents Production • Bliss Chemicals manufactures MAQ washing powder, a rapidly growing powder detergent in a market previously controlled by multinationals. • IDC has funded the establishment of Bliss in 2003 and has continued to be a partner through the company’s growth. • The new funding is to be used for working capital required for the company to expand its capacity and product mix. • 915 additional people will be employed in the expanded plant. • Through a long-term partnership between IDC and Bliss, we are increasing competition and offering consumers more choice. • Increasing market competition

25. Industrial Development – Clothing and Textiles • Thula Sindi started developing his own fashion range which hit the runway at South African Fashion Week 2006. • He has been nominated as a finalist in numerous designer contests and showcased his collections in New York, Paris, Beijing, Hong Kong, and throughout Africa. • Thula has developed very strategic working relationships with cut, make and trim (CMT) operators in the Johannesburg CBD. The largest of these CMT operators developed from a cooperative of 6-8 highly skilled ladies who produce the majority of the garments for the brand. • IDC approved funding to Thula Sindi to enable the company to make the most of the increasing demand. Products are available through various leading retailers and boutiques around the country. • Finding solutions to stabilise and grow the clothing and textiles industry by focussing on niche areas

26. Industrial Development – Sugar Processing • The Gledhow Sugar Mill operates in the KwaDukuza area of KwaZulu-Natal. • IDC approved funding for the mill to on-lend to growers that will grow cane on fallow land. • The 1 900 ha to be replanted will create 650 jobs in the area. • The largest number of growers that will gain from this transaction is small-scale farmers that benefited from land restitution. • The intention is for these farmers to be provided with the necessary skills to allow them to upscale operations over time. • Rural development and agro-processing

27. Industrial Development – Citrus Processing • African Realty Trust is a fruit growing and processing company. • It is embarking on a refurbishment of its processing plant as well as replanting some of its citrus orchards to remain viable and sustainable in the long term. • The project will create an additional 580 jobs and sustain 93 existing jobs. • The investment will ensure that the company remains competitive in the global market and boost export volumes. • Rural development and agro-processing • Export industry

28. Industrial Development – Hospital PPP • Due to a lack of funds for maintenance, the Phalaborwa Hospital was in need of refurbishment. • Clinix Health Group and Phalaborwa Health Group was selected through a tender process to renovate and operate the hospital as a 62 bed private hospital, including the installation of equipment. • Under the PPP agreement, the group will operate the hospital for 15 years after which ownership reverts back to the state. • The hospital’s rates will be lower than other private hospitals and improve access to healthcare in the area. • Promoting access to health services

29. Industrial Development – Metal Products • Tubular Construction Projects won a contract to fabricate and supply steel platforms, fans, piping, support plate work and a ducting system for Eskom’s Kusile power station. • The company has to gear-up its workshops and requires working capital to execute the contract. • Due to skills shortage, it has also established an in-house apprenticeship and training programme. • An expected 680 new jobs will be created by the project. • The project is supporting the aim of Eskom to increase local sourcing of components for its Capex programme and is giving people practical skills. • Local procurement for SOE Capex

30. Industrial Development – Renewable Power Generation • IDC Providing funding for 12 out of the 28 projects that received preferred bidder status; • These projects will generate 558MW of electricity: • 150MW from concentrated solar; • 63MW from solar photo-voltaic; and • 345MW from wind; • Making use of natural resources in underdeveloped regions in the Northern Cape, Eastern Cape, Western Cape and North West; • !Khi Solar One: • 50 MW electricity generation capacity; • Incorporates storage capacity to continue generating at night; • Will be the largest concentrated solar power project in the world at the time of completion; • Combines elements of proven technologies that have not been implemented jointly before. • Establishing a new industry • Lowering carbon intensity of SA’s economy • Creating opportunities for local manufacturing • Rural development • Benefits to local communities

31. Industrial Development – Disaster Relief • IDC provided funding to the LandBank and GWK for on-lending to farmers that were affected by the 2010/11 floods and the subsequent drought conditions. • For the LandBank facility, R34 million was disbursed to 54 farmers, securing 900 jobs, mostly in KwaZulu-Natal – encouraging cooperation between DFIs. • For the GWK facility, funding of R120 million was disbursed to 52 farmers, securing 1 900 jobs in the Northern Cape. • Securing jobs in rural areas

32. Industrial Development – Tourism • The Deaf Federation of SA, the umbrella body that coordinates and facilitates the services to the deaf and hard hearing communities in SA, main source of income comprises of grants which has been declining over the past few years. • The Federation will establish a 122 room (3 star) hotel in Newlands, Cape Town, specifically designed to cater for the needs of people with disabilities. • This business shall provide the deaf community of SA with a commercial alternative to their reliance on subsidies and enhance product provision and choice to people with disabilities. • Allowing ongoing training of deaf people. • Improving travel facilities for people with disabilities.

33. Agency Development and Support • 34 agencies supported to date; • Given the challenges facing development in outlying rural areas, further funding of R27 million was approved in 2011/12 for 9 agencies to expand their work; • R265 million was leveraged by agencies to expand their work (1:9 ratio of IDC investment to other funds obtained). Agency Development Activity

34. Regional Development • IDC’s exposure to the rest of Africa stood at R6.2 billion on 31 March 2012; • This represents 41 projects in 17 countries. • The bulk of the approvals revolves around: • Mining • Industrial infrastructure • Agro-processing • Tourism (mainly hotels) • IDC aims to be more proactive in its approach to the rest of the continent with the aim to integrate value chains and maximise the benefit to local industry. Projects in the rest of Africa

35. Corporate Social Investment • Total CSI spend for the 2011/12 financial year was R18.9 million; • Education: • Most important CSI focus area for IDC; • Focus on the Dinaledi Schools Project, initiated by the Department of Basic Education, being the main beneficiary; • 30 schools have benefited through renovated laboratories and new equipment; • 85 bursaries awarded to students to pursue tertiary qualifications in science and technology, engineering and accounting. • Economic development: • Efforts being channeled towards food security, business skills development and craft development; • Nguni cattle project currently operational in 6 provinces with 158 farmers having been assisted. • Health: • Examples of projects funded during the year include the renovation of Alexandra and Harry Gwala clinics’ X-ray rooms in Gauteng, providing Mafane Clinic in the Free State with clinical equipment and helping to rebuild one of the Red Cross Children’s Hospital medical wards. Distribution of CSI Spend – 2011/12

36. New Initiatives to Increase Development Impact • Rural Development • Spatial Interventions – Initiated in 2011. Allowing IDC to intervene effectively to address the socio-economic and developmental needs of a particular targeted area. Currently reactive, but capacity is being created to enable a more proactive approach to these interventions. • Social Enterprises – New initiative being piloted that aims to promote enterprises that place social and environmental issues and creation of social value as their primary purpose and have a long term strategy towards a degree of self-sustainability. • Presidential Infrastructure Coordinating Commission (PICC) • IDC is managing the planning phase for the Saldanha-Northern Cape Development Corridor (SIP5); • Will potentially play a role in funding industrial projects identified in all of the Strategic Integrated Projects (SIPs); • Localisation office being set up to increase the levels of local inputs being produced for infrastructure projects. • Manufacturing Competitiveness Enhancement Programme (MCEP) • R765 million managed on behalf of the Department of Trade and Industry (dti); • Assisting manufacturers to access more affordable working capital facilities with a portion aiming to stimulate new or underdeveloped markets, such as the boat-building industry.

37. Medium-term Prospects • Green-economy – focus on increasing localisation of components and energy efficiency; • SOE Capex and infrastructure development programmes – continue working with SOEs to identify and implement opportunities to shift towards local supply; • Agro-processing – identify and develop import replacement opportunities; • ICT – improve last-mile access and drive down communication costs; • Healthcare – Localising pharmaceutical production; • Tourism – underdeveloped tourism nodes; • Media – developing a sustainable level of local production of films.

38. Financial Performance

39. Abridged Statements of Comprehensive Income – R’m Other subsidiaries, associates & consolidation entries 549 578 28 (57) 45 (239) 227 227 1 228 (1) 229 229 (2,799) (2,570) Foskor 2012 5 152 3 739 97 1 316 76 1 132 260 260 3 263 79 184 ( 5) 179 Group 2012 10 985 4 317 446 6 222 121 3 809 2 534 878 3 412 ( 2) 3 410 107 3 303 (4 155) (852)

40. Abridged Statements of Comprehensive Income for the year ended 31 March 2012 – R’m

41. Sources of Income – R’m

42. Administration Expenses composition – R’m * The cost-to-income-ratio excludes project costs

43. Impairments as a % of Total Financing

44. Abridged Statements of Financial Positionas at 31 March 2012 – R’m

45. Balance Sheet Items for the last 5 years – R’m

46. Borrowings - R’m

47. Commitments and Advances – R’m

48. Listed Investments Trend Analysis – R’m

49. IDC Group – Strong Financial Base – R’m

50. Conclusion Financial performance remains sound as reflected by increased profitability and a strong balance sheet, which enables us to assume high risk levels and support continued growth into the future.