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2 Presentation to the Human Settlements Portfolio Committee – Parliament By Lindikhaya Mpambani Michael Rakgogo

3 1. Introduction Servcon has stopped operations in September 2009 as it is closing down. Since the cessation of operations, there were quality control activities that have been undertaken up until August To date most of the operations relate to the portfolio management of Servcon’s Original Mandate.

4 Annual Report Presentation 2010/11 Fiscal Period. PRESENTATION STRUCTURE. 1.Audit Opinion 2.Emphasis of Matters. 3.Annual Financial Statements. 4.Original Portfolio Management. 5.Closure Report.

5 Audit Opinion Our Financial statements remain unqualified since formation of the company in There were only three items raised in our management letter and we would have resolved all three items by the end of the current financial period.

6 Emphasis of Matters Two matters were raised by the auditors. –Interest payable to SARS –Going Concern Aspect We are engaging the office of the Commissioner Magashule of SARS to waive the interest. We are hopeful that once we confirm the payment date to SARS we would be given a reprieve on interest.

7 Emphasis of Matters(Continued) Going Concern. –We note that as per the instruction of the Minister’s office Servcon’s board of directors were told to cease operations and close the company. –We are thus finalizing the closure of Servcon and therefore the auditors needed to draw to the attention of users of Financial Statements this fact.

8 Original Portfolio Management Over a period of 14 years properties were satisfactorily resolved/normalized, leaving only 34 to be finalized. Should the some of the 34 properties remain outstanding at the time of Servcons’ closure, the same shall be transferred to National Human Settlements Department for management at that level.

OUTSTANDING PORTFOLIO PROVINCETOTALNEDBANKSAAMBOU / FNB ABSA Eastern Cape KZN4130 FREE STATE1001 MPUMALANGA0000 GAUTENG WESTERN CAPE0000 TOTAL

Annual Financial Statements BALANCE SHEET2011 ASSETS Property Plant and Equipment Other Financial Assets Trade and other receivables Prepaid Expenses Cash and cash equivalents LIABILITIES Tax Payable Trade Payables Financial Liability and Provisions ASSETS EXCEED LIABILITIES BY

Annual Financial Statements (CONT) INCOME STATEMENT2011 Revenue 1,482,100 Other Income34,870,565 Operating Expenses( ) Operating Loss(98,267,196) Investment Revenue13,353,627 Finance costs(1,743,529) Loss before Tax (86,657,098) Tax Expense(17,452,288) LOSS FOR THE YEAR (104,109,386 ) 11

12 Status of closure As indicated above, we have ceased operations at the end of September In April we transferred to the HDA all pieces of Land that were bought on behalf of the Free State Government. We remain in possession of other land parcels and three buildings which would be transferred to the HDA once we have settled our liabilities (Which the two of the three have been purchased by HDA at market price).

13 Status of closure (Continued) We have given notice to our landlord terminating our lease as at the end of November With effect from the 1 st December 2011, we will be moving to the HDA offices to finalise outstanding issues. We continue to receive queries/complaints from communities who either were never part of the original portfolio and/or if they were in the portfolio they were rehabilitated and then taken off the portfolio.

14 Status of closure (Continued) We still have less than 300 title deeds that need to be handed over to the beneficiaries, we thus are waiting for the conveyancers to complete the process. Once our liabilities are settled we will then follow the PFMA guidelines to delist the entity from Treasury. We apply to the court (Through the minister to liquidate the company) We then would de-register Servcon with Companies and Intellectual Property Commission (CIPC)

15 Status of closure (Continued) We thereafter would apply to the court (Through the minister to liquidate the company). We then would de-register Servcon with Companies and Intellectual Property Commission (CIPC).

16 Thank You Questions?