23 OCTOBER 2005


CONTENTS

1.Introduction :

i Mandate

ii Funding Offered

2.Organizational Performance

i Progress on application

ii Investment Portfolio

iii Financial

3.Current year

MISSION

" The National Empowerment Fund ( NEF) is the catalyst of broad Black Economic Empowerment in South Africa

We enable, develop. Promote and Implement innovative investment and transformation solutions to advance sustainable Black economic participation"

• Established under National Empowerment Fund Act 105 of 1998

• Launched current products in May 2004

• First capital drawdown of cash of R 1520 M

• During year to March 2005

• Second capital drwandown of cash of R400M

• over current year to 31 March 2006

• Transfer of MTN and Uthingo share set asides

• during year to March 2004

WHAT DOES THE NEF DO AND WHY?

Main Objective: The be a catalyst in facilitating economic equality and transformation

Driven by:

• Current market needs

• Broad- based empowerment charter

• Government policy and other sectoral charters

• Addressing past failures of BEE structures

• BB BEE Codes on Good Practice

New Focus: Maximize the empowerment divided.

CONTENTS

1 Introduction :

i Mandate

ii Funding Offered

2.Organizational Performance

i Progress on application

ii Investment Portfolio

iii Financial

3. Current year

DETAILED INVESTMENT CRITERIA- ENTREPRENEAUE SUPPORT

1. Start up, expansion and buy-in and buy- out capital

2. Funding for rural & Community Development especially through co- operative structures

3. Funding threshold from R 250 000 to R10 M ( R20 M in Exceptional cases)

1.Underwriting of BEE Initial Public Offerings

2.Liquidity support of a strong secondary market for exiting BEE investors to allow maintenance of BEE participation. ;

3.Equity warehousing for BEE participation in Strategic projects

APPLICATION OF INVESTED CAPITAL

• Acquisition of equipment

• Financing of work capital

• Bridging finance especially for the purpose of honoring preferential procurement contracts.

• Business expansion by acquisition or organically

• Acquisition of shares in or by- outs or exiting business

INVESTMENT INSTRUMENT

KEY QUALIFYING CRITERIA

• Participation by black women's groups
• Participation by broad-based black consortium

INVESTMENT RETURN PRICING

The following calculations provide a sum-of-the-parts breakdown of the NEF's required returns:

Rate p.a.

Inflation rate 3%-6%

Real return required 3%-4%

Risk Factor 2%-8%

Operational Costs 2%-3%

Taxation ( income tax & CGT) 2%-3%

Subtotal 12%-24%

Less: empowerment benefit concessions achieved (0%-5%)

Total Return Required 12%-19%

LESS Benefits transferred:

Operational Costs ( dti) (2%-3%)

Taxation (exempt) (2%-3%)

NET NOMINAL RETURN RANGE ( IRR) 8%-13%

INVESTMENT STAGE REPORT: TRANSACTIONS UP TO R5M

As at 30 September 2005

As at 30 September 2005

ANNUAL REPORT HIGHLIGHTS

• 47 % annual operational budget savings

• Divided and interest income received

• 17.6 % funded investment impairment in terms of investment policy.

NATIONL EMPOWERMENT FUND TRUST

REGISTRATION NUMBER: IT 10145/00

CONSOLIDATED BALANCE SHEET

At 31 March 2005

FINANCIAL STATEMENT

NATIONL EMPOWERMENT FUND TRUST

REGISTRATION NUMBER: IT 10145/00

CONSOLIDATED INCOMES STATEMENT

For the year ending 31 March 2005

CURRENT YEAR ACTIVITIES

Recruitment of additional staff

Collaboration with commercial banks on funding products;

Further cash capitalization of NEF to meet eligible applications;

Framework to facilitate transfer of balance of share set asides for mass retail purposes