ANNUAL REPORT 2011 12 October 2011 Morgan Pillay

CONTENT The mandate The year in perspective Development performance 2010/11 Financial performance 2010/11 Breakdown of reasons for poor performance Key strategic issues Conclusion

THE MANDATE NURCHA ensures the availability of bridging finance to small, medium and established contractors building low and moderate income housing and related community facilities and infrastructure

THE YEAR IN PERSPECTIVE Poor economic trading conditions Business growth and performance negative Contracts signed reduced by 44% Houses built decreased by 33% Value of loans decreased by 51% (Value of Projects reduced) Infrastructure projects completed decreased by 31% Provisions for project losses increased from R51 to R104m Mobilized private sector funding R75m High cost of financing Persistent non-payment from government departments Restricted lending (Infrastructure and Subsidy Programme)

THE YEAR IN PERSPECTIVE (cont) Government recapitalization of R300m approved (First tranche of R100m received 2011) Geographical footprint and coverage consolidated Alignment with intermediaries weakened Loss of Sebra

DEVELOPMENT PERFORMANCE 2010/11

HOUSES IN APPROVED LOANS AND COMPLETED HOUSES 12750 8254

LOAN AND PROJECT VALUES (R MILLIONS) 1019.2 267.9

COMPLETED HOUSES/SITES

NUMBER OF HOUSES/SITES IN APPROVED LOANS

NUMBER OF PROJECT LOANS APPROVED BY PROVINCES

VALUE OF LOANS FINANCED (R MILLIONS)

VALUE OF PROJECTS FINANCED (R MILLIONS)

ANNUAL EMPOWERMENT STATUS April 2009-March 2010 April 2010-March 2011 Value of loans (Actual) Number of contractors 98 59 Number of 1st time applicants 70 39 Black owned 80.5% 268,655,382.11 86 184,985,080.30 Non BEE 19.5% 286,158,888.34 14 82,928,501.00 TOTAL 100% 554,814,270.45 267,913,581.30 Male owned 78.3% 484,791,495.84 220,172,344.30 Female owned 21.7% 70,022,774.61 30 47,741,237.00 Emerging 73% 231,476,772.11 87 167,888,253.30 Established 27% 323,337,498.34 13 100,025,328.00

FINANCIAL PERFORMANCE 2010/11

KEY STATISTICAL INFORMATION YEAR ENDED 31 MARCH 2011 16161616 KEY STATISTICAL INFORMATION YEAR ENDED 31 MARCH 2011 2010 2011 % INCREASE/ (DECREASE) R’000 Income from operations 43,012 35,167 -18.23 Administration expenses 40,058 41,316 3.14 (Deficit)/surplus for the year -18,826 (66,398) 252.71 Loans for construction projects 403,527 375,933 -6.84 Provision for losses 51,384 104,204 102.79 Bank loans to finance projects 152,406 91,083 -40.24

BREAKDOWN OF REASONS FOR POOR PERFORMANCE 17171717 BREAKDOWN OF REASONS FOR POOR PERFORMANCE Volume of new public sector tenders low Late payments by employers especially government departments Final accounts and retention money to settle the debt – disputed by employers Budgetary constraints by employer departments Poor project costing and inability to manage contractor

BREAKDOWN OF REASONS FOR POOR PERFORMANCE (cont) 18181818 BREAKDOWN OF REASONS FOR POOR PERFORMANCE (cont) Perceived risk - Commercial banks not willing to grant loans to end users Lack of loan facilities at concessionary rates No prospect of grants and or donor funding

KEY STRATEGIC ISSUES 19191919 Alignment to Outcome 8 Affordable Housing in GAP market Fee Income opportunities Free State Province KZN – Account Administrator New Contractor Finance and Development Programme Renewed payment and contracting arrangements with government departments to spearhead business growth

VALUE OF PROJECTS SUPPORTED SINCE INCEPTION 20202020 CONCLUSION R 14 BILLION VALUE OF PROJECTS SUPPORTED SINCE INCEPTION NURCHA “GOING BEYOND FINANCE”