PRESENTATION TO PARLIAMENT

EXPENDITURE 2004/05 &

BUDGET 2005/06 

10 MAY 2006

NURCHA: A BRIEF HISTORY

• FOUNDED: 1995 AS A NON PROFIT COMPANY

• JV: SA GOVERNMENT AND OSI (NOW A PUBLIC ENTITY)

• TASK: ATTRACT BANKS BACK TO LOW INCOME HOUSING

• MECHANISM: GUARANTEES (OSI $50 MILLION IF MATCHED)

• FOCUS: PROJECT BRIDGING FINANCE VIA GUARANTEES

CURRENT MANDATE

TO ENSURE THE AVAILABILITY OF PROJECT BRIDGING FINANCE TO

SMALL AND MEDIUM SIZED CONTRACTORS AND DEVELOPERS

WHO ARE BUILDING HOUSES, INFRASTRUCTURE AND COMMUNITY

FACILITIES NECESSARY FOR THE DEVELOPMENT OF SUSTAINABLE

HUMAN SETTLEMENTS – MOSTLY ON CONTRACT TO GOVERNMENT

•>750 PROJECTS

•CONTAINING >220 000 HOUSES

•>175 000 HOUSES BUILT

•FACILITATED PROJECTS TO THE VALUE OF R3.2BN

SINCE 1996 NURCHA HAS SUPPORTED:

FUNDING FRAMEWORK

AGREED MINISTER & SEDF JULY 2005

AT TIME OF SIGNING NURCHA HAD

RM

1. Housing finance capital 139,11(Various grants - provisions)

2. Operating expense capital 42,8

RECAPITALISATION SINCE SIGNING

SEDF 61,7

SA GOVT 21,7

FUNDING FRAMEWORK continued

FINANCING FACILITIES WITH BANKS

AVAILABLE AS NEEDED

BANK RM

RMB ±120

FNB 85

STANDARD BANK 100

FMO 45

350

POTENTIAL LOANS FROM SEDF R100 MILLION

LIST OF BOARD MEMBERS

Ms N Mjoli-MncubeChairpersonMr T Nzimakwe (Chair – Audit Committee)Mr K Shubane (Chair – Strategic Programmes Committee)Mr A Canter (Chair – Investment Committee)Mr S Paperin SEDFMr H Sturz SEDFMr K Oliver Audit CommitteeMs W Lucas-Bull Investment CommitteeMr C de Beer Managing DirectorMr S Mase Executive DirectorMs J Strelitz Executive Director

CORPORATE GOVERNANCE

10 YEARS CLEAN AUDITS

PFMA COMPLIANT

QUARTERLY REPORTS

ANNUAL BUSINESS PLAN

INDEPENDENT DIRECTORS

EFFECTIVE BOARD AND COMMITTEES

KEY STRATEGIC TRENDS 2006/7

 SUBSIDY HOUSING INCREASE IN SUBSIDY = LARGER LOANS PER HOUSE PRESSURE TO INCREASE DELIVERY (MAJOR IMPACT NEXT YEAR)

 ONGOING PROBLEMS: BLOCKED & INCOMPLETE PROJECTS

CONFLICTING PRIORITIES: EMERGING OR LARGER DEVELOPERS

EFFECTIVE CO-OPERATION WITH THUBELISHA

PROJECTION: MODERATE GROWTH THIS YEAR BUT BIAS TO UPSIDE

CREDIT LINKED HOUSING (≤R250 000 HOUSE PRICE)

COST PRESSURES UP •         PROPERTY BOOM•       MATERIALS PRICES•       LAND COSTS

WHERE IS THE BANKS R42 BILLION

SLOW IMPACT OF CREDIT LINKED SUBSIDY  PRESSURE FOR MIXED DEVELOPMENTS (R250 000 – R500 000)

PROJECTION: SLOW GROWTH IN BUSINESS

KEY STRATEGIC TRENDS 2006/7

RENTAL

BANKS ARE ENTHUSIASTIC ENTRANTS NURCHA’S SHORT-TERM FUNDING A LIMITATION OPPORTUNITIES OUTSIDE OF MAJOR METRO’S  PROJECTION: IMPOSSIBLE TO PREDICT: THEREFORE CONSERVATIVE

KEY STRATEGIC TRENDS2006/7

INFRASTRUCTURE

SPENDING IS TAKING OFF

NURCHA’S EFFORTS BEGINNING TO BEAR FRUIT FUNDING NOW IN PLACE PROGRAMMATIC OPPORTUNITIES EMERGING:• LOCAL AUTHORITIES• CERTAIN BANKS 

PROJECTION: RAPID GROWTH OFF A LOW BASE

KEY STRATEGIC TRENDS2006/7

BUDGET & ACTUAL OUTPUTS FOR 2004/5

Contracts Signed Houses/Sites in Contracts Loans Signed (Rmillion) Project Value (Rmillion) Houses/Sites Completed

Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual

Subsidy Housing 68 53 28,400 19,926 187,0 70,6 662,6 457,2 25,186 16,015

Credit-Linked 30 15 3,000 2,928 97,5 54,8 390,0 319,7 3,070 2,395

Serviced Sites No Program

Rental 28 15 1,750 440 35,5 8,3 116,8 14,8 1,700 64

HOUSING TOTAL 126 83 33,150 23,294 320 133,7 1,169,4 791,7 29,956 18,474

BUDGET & ACTUAL OUTPUTS FOR 2005/6

Contracts Signed Houses/Sites in Contracts Loans Signed (Rmillion) Project Value (Rmillion) Houses/Sites Completed

Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual

Subsidy Housing 100 51 39,950 25,665 217,8 80,9 1,167,1 645,9 34,192 14,769

Credit-Linked 27 24 4,050 4,729 92,0 90,4 435,2 392,0 4,050 4,196

Serviced Sites 16 6 4,000 6,395 19,8 6,0 49,6 39,8 4,158 3,392

Rental Housing 30 3 1,200 205 56,0 8,4 68,6 11,4 1,100 380

HOUSING TOTAL 173 84 49,200 36,994 385,6 185,7 1,720,5 1,089,1 43,500 22,737

Infrastructure/Community Facilities 50 11 N/A N/A 80,0 11,4 316,6 125,1 N/A N/A

BUDGET OUTPUTS 2006/7

Contracts

signed Value of loans Project value Houses and sites

in contracts Houses

built Subsidy housing 78

240,145,920

1,210,761,600

40,000

26925

Credit linked 31

108,500,000

527,750,000

4,950

5100

Serviced sites 10

24,000,000

60,000,000

10 000

5576

Rental 6

6,704,800

10,000,000

145

145

Infrastructure & Community facilities

55

59,870,799

315,953,135

Small Sub- contractors 80

1,440,000

1,600,000

TOTAL 260 (-80 = 140)

440,661,519

2,568,166,254

55 095

37,746

Housing/Sites in Contract and Houses/Sites Completed

0

10000

20000

30000

40000

50000

60000

2004/2005 2005/2006 2006/2007

Houses/Sites inContracts

Houses/SitesCompleted

Project Value and Loan Signed (Rmillion)

0.0

500.0

1000.0

1500.0

2000.0

2500.0

3000.0

2004/2005 2005/2006 2006/2007

Loans Signed(Rmillion)

Project Value(Rmillion)

BUDGET INCOME STATEMENT

COMMENTSINCOME STATEMENT

1. INCOME RECEIVABLE R19.8 MILLION (71%)• MONEY MARKET INVESTMENTS 82%

RECAPITALISATION BY SEDF AND GOVERNMENT

• PROJECT INCOME R68.5%(INCREASE IN PROJECT LENDING: R103

MILLION)

2. INTEREST PAYABLE R11.9 MILLION• INCREASED USE OF LENDING FACILITIES

3. PROJECT LOSSES INCURRED (RECOVERED)• INCURRED R1 MILLION• RECOVERED R2.8 MILLION??

4. ADMIN EXPENDITURE 18% ON 2006 ESTIMATE 3% ON LAST YEAR’S BUDGET

BUDGET BALANCE SHEET

COMMENTSBALANCE SHEET

1. DEPOSITS R27 MILLION• R20 MILLION TRANCHE PAYMENT: DEPT OF

HOUSING

2. PROJECT INVESTMENTS & LOANS R103 MILLION

3. EQUITY R76 MILLION• R90 MILLION (RECLASSIFICATION OF BORROWING)• R20 MILLION PAYMENT: DEPT OF HOUSING

4. OVERDRAFTS R206 MILLION• RECLASSIFICATION OF BORROWING• R103 MILLION ADDIONAL LOANS

NURCHA AS CORPORATE CITIZEN

1. EMPLOYMENT EQUITY PLAN

2. DRAFT BEE MANIFESTO

3. IMPROVED PROCUREMENT PROCEDURES IMPLEMENTED

THIS YEAR

4. INVESTIGATING BURSARY SCHEME FOR ENGINEERS/QS