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PRESENTATION TO PARLIAMENT EXPENDITURE 2004/05 & BUDGET 2005/06 10 MAY 2006

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 .

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PRESENTATION TO PARLIAMENT EXPENDITURE 2004/05 & BUDGET 2005/06 10 MAY 2006

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  1. PRESENTATION TO PARLIAMENTEXPENDITURE 2004/05 & BUDGET 2005/0610 MAY 2006

  2. 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

  3. 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

  4. SINCE 1996 NURCHA HAS SUPPORTED: • >750 PROJECTS • CONTAINING >220 000 HOUSES • >175 000 HOUSES BUILT • FACILITATED PROJECTS TO THE VALUE OF R3.2BN

  5. FUNDING FRAMEWORK • AGREED MINISTER & SEDF JULY 2005 • AT TIME OF SIGNING NURCHA HAD • RM • Housing finance capital 139,11(Various grants - provisions) • Operating expense capital 42,8 • RECAPITALISATION SINCE SIGNING • SEDF 61,7 • SA GOVT 21,7

  6. FUNDING FRAMEWORK continued FINANCING FACILITIES WITH BANKS AVAILABLE AS NEEDED BANKRM RMB ±120 FNB 85 STANDARD BANK 100 FMO 45 350 POTENTIAL LOANS FROM SEDF R100 MILLION

  7. LIST OF BOARD MEMBERS Ms N Mjoli-Mncube Chairperson Mr T Nzimakwe (Chair – Audit Committee) Mr K Shubane (Chair – Strategic Programmes Committee) Mr A Canter (Chair – Investment Committee) Mr S Paperin SEDF Mr H Sturz SEDF Mr K Oliver Audit Committee Ms W Lucas-Bull Investment Committee Mr C de Beer Managing Director Mr S Mase Executive Director Ms J Strelitz Executive Director

  8. CORPORATE GOVERNANCE 10 YEARS CLEAN AUDITS PFMA COMPLIANT QUARTERLY REPORTS ANNUAL BUSINESS PLAN INDEPENDENT DIRECTORS EFFECTIVE BOARD AND COMMITTEES

  9. 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

  10. KEY STRATEGIC TRENDS 2006/7 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

  11. KEY STRATEGIC TRENDS2006/7 RENTAL BANKS ARE ENTHUSIASTIC ENTRANTS NURCHA’S SHORT-TERM FUNDING A LIMITATION OPPORTUNITIES OUTSIDE OF MAJOR METRO’S PROJECTION: IMPOSSIBLE TO PREDICT: THEREFORE CONSERVATIVE

  12. 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

  13. BUDGET & ACTUAL OUTPUTS FOR 2004/5

  14. BUDGET & ACTUAL OUTPUTS FOR 2005/6

  15. BUDGET OUTPUTS 2006/7

  16. BUDGET INCOME STATEMENT

  17. 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) • INTEREST PAYABLE  R11.9 MILLION • INCREASED USE OF LENDING FACILITIES • PROJECT LOSSES INCURRED (RECOVERED) • INCURRED R1 MILLION • RECOVERED R2.8 MILLION?? • ADMIN EXPENDITURE •  18% ON 2006 ESTIMATE •  3% ON LAST YEAR’S BUDGET COMMENTSINCOME STATEMENT

  18. BUDGET BALANCE SHEET

  19. COMMENTSBALANCE SHEET • DEPOSITS  R27 MILLION • R20 MILLION TRANCHE PAYMENT: DEPT OF HOUSING • PROJECT INVESTMENTS & LOANS  R103 MILLION • EQUITY R76 MILLION • R90 MILLION (RECLASSIFICATION OF BORROWING) • R20 MILLION  PAYMENT: DEPT OF HOUSING • OVERDRAFTS  R206 MILLION • RECLASSIFICATION OF BORROWING • R103 MILLION ADDIONAL LOANS

  20. NURCHA AS CORPORATE CITIZEN • EMPLOYMENT EQUITY PLAN • DRAFT BEE MANIFESTO • IMPROVED PROCUREMENT PROCEDURES IMPLEMENTED THIS YEAR • INVESTIGATING BURSARY SCHEME FOR ENGINEERS/QS

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