KHULA ENTERPRISE FINANCE LTD BUSINESS PLAN FINANCIAL YEAR

KHULA ENTERPRISE FINANCE LTD BUSINESS PLAN FINANCIAL YEAR 2005/06 Division : Operations Business Unit : LREF Responsible Manager: George Mothoa 1

LREF Business Plan 2005/06 LREF Business Manager George Mothoa LREF Administrator Helena Scholtz LREF Accounts Executive Don Mashele LREF Business Monitor Thabo Matolo Black – Male White - Female 2

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LREF Business Plan 2005/06 Targets/ Outputs Activities Necessary to achieve targeted output 1. Achieve an 1. Aggressive LREF even Marketing and provincial creating awareness spread. in the target Special provinces. emphasis is to 2. Development and increase the management of a LREF closer relationship investments in with the different the following channels with underspecial attention to: serviced 1. Banks provinces : § § § Free State Northern Cape North West Mpumalanga Limpopo Eastern Cape 2. DFI’s 3. PDC’s 4. Private Sector Organisations 5. Selected National and Provincial departments 6. Parastatals Inputs/ Resources Required Key Performance Indicators Time Frame and Quarterly milestones GM MD Loan applications from the targeted provinces 1 st Quarter n 1 project FS n 1 project NC n 2 projects from any of (LMP, EC, NW, GP) Total = 4 projects 2 nd Quarter n 1 project FS n 1 project NC n 2 projects from any of (LMP, EC, NW, GP) Total = 4 projects 3 rd Quarter n 1 project FS n 1 project NC n 1 project from any of (LMP, EC, NW, GP) 4

LREF Business Plan 2005/06 Targets/ Outputs Activities Necessary to achieve targeted output 1. Continued 1. Identify, align and keep the LREF abreast with provincial economic development initiatives 2. Consider an interest rate discount (short term) incentive for projects coming from the under-serviced provinces 3. Engage the DLA Provincial office as well as the Provincial Directors 4. Closely engage Provincial Tourism and Parks Boards Situation Dec’ 04 = 52% WC Forecast Mar ’ 05 = 45% WC Target Mar ’ 06 = 40% WC Inputs/ Resources Required LREF Management Committee Approval Intervention and involvement by the DLA and Agric National Offices DEAT National Offices Key Performance Indicators Time Frame and Quarterly milestones Timely response to respective provincial economic development initiatives Ongoing Approval by the LREF Management Committee 1 st quarter Buy-in by provincial DLA and DOA offices Ongoing Buy-in by provincial DEAT offices Ongoing 5

LREF Business Plan 2005/06 Targets/ Outputs 2. Achieve a balanced Portfolio mix : Portfolio mix Mortgage Dec ’ 04 = 33% Activities Necessary to achieve targeted output n Incentivise the channel partners that deliver Mortgage loan applications with a short term (1 year) interest rate discount. Inputs/ Resources Required Key Performance Indicators Time Frame and Quarterly milestones GM Operations LREF Management Committee Approval and putting the strategy in operation End of 1 st quarter = 38% End of 2 nd quarter = 40% End of 3 rd Quarter = 42% End of 4 th quarter = 46% Forecast Mar ’ 05 = 36% Target Mar ’ 06 = 46% 6

LREF Business Plan 2005/06 Targets/ Outputs Activities Necessary to achieve targeted output 3. Source new funding : Market the LREF to GM MD current and prospective funders. CFO § Required fund > n R 50 m Sustainable annual disbursement of R 49 m till 2015 • DOA • • • DWAF DEAT DLA Khula Hands-on Stakeholder Relations Management Inputs/ Resources Required Key Performance Indicators Time Frame and Quarterly milestones Additional funding by new funders (and refinancing by current funders) The facility will be marketed continually Milestones R 25 m 1 st quarter R 25 m 2 nd quarter 7

LREF Business Plan 2005/06 Targets/ Outputs Activities Necessary to achieve targeted output 4. Programme Sustainability Review and revise the Facility’s Pricing Structure. Possible areas to consider : • A different pricing structure for each product • A broader pricing continuum • More discount incentive for the Mortgage loan • Introduction of fees Develop and maintain a provisions policy for LREF. Inputs/ Resources Required • LREF Management Committee approval • LREF Management Committee • Finance Key Performance Indicators n n Time Frame and Quarterly milestones An approval 1 st quarter pricing structure for each product Approval by LREF Management Committee Approval by LREF End of 1 st quarter Management Committee Approval by LREF Management Committee 8

LREF Business Plan 2005/06 Targets/ Outputs Activities Necessary to achieve targeted output Inputs/ Resources Required Key Performance Indicators 5. Sustainability 1. Broaden the LREF Intelligence information from other organisations offering a similar product / service. Ability to address the farmers production inputs and other movable asset finance needs. n Effective training & develop capacity of the beneficiaries at the project level Ability of our channel partners to understand & finance our target market. of LREF funded projects : product and service offering with the addition of a production loan finance product. 2. Hands-on approach in projects capacity building. 3. Hands-on and proactive engagement with relevant SETAS. 4. Develop a better understanding of the target market (enduser) in order to enable our channel partners to do effective lending. PAETA Thuso Mentorship SEDA THETA Marketing provincial DLA, DEAT and Agric Time Frame and Quarterly milestones Complete production input finance product at end of 1 st quarter n 4 projects 2 nd quarter n 4 projects 3 rd quarter n Review of progress in all 12 projects – 4 th quarter n 9

Notes to the income statement / budget Remuneration expense = 15% of annual payroll Consultation fee = Allocation for the payment of service providers ( training) on LERF funded projects ( at least 10 projects to start with training) Cell phone allowance = Allowance for 3 staff members (Manager, Accounts Executive and Monitor) Agency fee = Amount DLA pays Khula for the administration of the LREF at 3% of initial capitalisation March ’ 07 and March ’ 8 budgets are an escalation of 5% from March ’ 06 March ’ 05 forecast figures = Actual at 31 Dec’ 04 x 12 months 9 months March ’ 06 budget = March 05 forecast x current inflation ( 5% ) except for remuneration expense which is 25% of departmental annual payroll. 10

Notes to the income statement / budget Remuneration expense = 15% of annual payroll Consultation fee = Allocation for the payment of service providers ( training) on LERF funded projects ( at least 10 projects to start with training) Cell phone allowance = Allowance for 3 staff members (Manager, Accounts Executive and Monitor) Agency fee = Amount DLA pays Khula for the administration of the LREF at 3% of initial capitalisation March ’ 07 and March ’ 8 budgets are an escalation of 5% from March ’ 06 March ’ 05 forecast figures = Actual at 31 Dec’ 04 x 12 months 9 months March ’ 06 budget = March 05 forecast x current inflation ( 5% ) except for remuneration expense which is 25% of departmental annual payroll. 11

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