BRIEFING ON PROGRESS IN THE CLOSURE OF THUBELISHA, SERVCON AND SHF 11 JUNE 2009

BACKGROUND The change in the housing delivery landscape necessitated a review of relevance of housing entities A decision was taken by Minister to close down Thubelisha Homes, Servcon Housing Solutions (PTY) Ltd after their mandates matured in relation to the Record of Understanding with Association of Mortgage lenders [now BASA]. The decision to close Social Housing Foundation was taken following the enactment of Social Housing Act,2008 (Act No 16 of 2008) which establishes SHRA. The Accounting Authorities (Governing Boards) of the three entities were duly informed of the decision by the department Closure process began during 2008.

PREGRESS TO DATE THUBELISHA HOMES Following the decision to close, a Steering Committee was constituted comprising: National Department of Human Settlements, Department of Public Service and Administration, National Treasury, Executive Management of Thubelisha and the staff representatives Specialist consultant on winding up of companies was appointed to facilitate closure process and reports to the Steering Committee Closure Plan was developed, submitted and approved by Minister for implementation in December 2008 Closure is currently underway

Human Resources The following processes have been completed: Financial & personnel records aligned and staff profile compiled Contract staff identified and discussions held outlining the process and advising no renewal of contracts Revised letters, including Voluntary Severance Packages (VSP) calculation, sent out with deadline as 15 May 2009 A clarification letter sent to Unions and staff regarding VSP’s; consultation forum between Union & Thubelisha in place Discussions held with staff in a number of Provinces 4

Human Resources Staff schedules which includes CV’s, staff data, competencies, position, grade and remuneration handed to most Provinces; Positive feedback from North West; discussions still underway with Gauteng, KZN, NC. Limpopo, Western Cape not yet approached (no staffing issues in Mpumulanga) Final negotiations underway with HDA i.r.o. transfer of staff on Mega projects (Zanemvula, N2 Gateway Project) Negotiations underway with HDA i.r.o. redeployment of some Head Office staff 5

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Facilities The following processes are underway: All contracts & leases subject to early termination Lease termination letters: June 2009 Asset verification underway: coincides with year end audit All contractors, creditors & suppliers identified and negotiations are underway in relation to closure HDA to take over leases: in Eastern Cape, Western Cape & Head Office result is very beneficial - minimal cancellation penalty costs 7

SERVCON HOUSING SOLUTIONS (PTY) LTD Following the Minister’s decision to close, a Steering Committee was constituted comprising: National Department of Housing, Department of Public Service and Administration, National Treasury, Executive Management of Servcon and staff representatives Specialist consultant on winding up of companies was appointed to facilitate closure process and reports to the Steering Committee Closure Plan was developed and approved by Minister for implementation (February 2009)

Human Resource Closure Step 1 – Implementation of the closure plan by the Board will only be effected after the approval from the previous Minister. (Done) Step 2 – Serve notice letters on all staff informing them of the pending closure. – All staff have received letters informing them of closure. Step 3 – Commence formal consultation with Unions and staff, set up a schedule of report back meetings. Three meetings have been held and they progressed very well. In line with the Minister’s approval, all permanent employees expect continued employment within the sector.

Human Resource Closure Step 3 (Cont) – Options available to addressing Personnel aspects Option 1 - All Assets & Staff transferred to the HDA (NOT VIABLE) Option 2 - All assets together with some staff transferred to the HDA an others migrated to other Institutions/ National Dept/ Provinces. Option 3 - (Subject to option 2) All staff not accommodated above, form a consortium which shall be responsible for servicing all remaining SLAs and/or SLAs that will be confirmed.

Human Resource Closure (Cont) Step 4 – Issue notice of termination to contract staff in terms of their contracts. All contract staff are on a month to month contracts. Step 5 – Depending on the option chosen, once letters in step 2 have been issued, a notice will be sent to staff offering voluntary severance packages. Step 6 – Identify closure staff requirements and negotiate acceptable arrangements with identified staff. Step 7 - Negotiation with HDA regarding the redeployment/migration of certain staff with relevant skills. Step 8 – Negotiation with National Dept. regarding the redeployment/migration of staff.

Human Resource Closure (Cont) Step 9 – Notice to HR service providers and employee benefit organizations of pending closure. I.e. Medical Aid, Pension/Provident Fund, Group Life Insurance, Wellness Agency. 1 month notices will be given when finalizing closure excl. Provident Fund. Step 10 – Address disputes that may arise as a result redeployment. Step 11 – Serve final notice of redeployment with an indication of the last day of service (Determined by BCEA). 12

Logistics Closure Information Technology – Servcon must ensure that data migration and storage is properly managed. IT Migration plan has been prepared by ICT Unit and stock of all hardware has been taken. Documentation – Retrieve all documentation from the offices in a consistent manner and return the documentation boxed, indexed, labelled and sealed to the NDoHS. All documents are being scanned. All files are labelled and stored in fire-proof cabinets and will soon be boxed. Procurement Closure – Basic principles that govern the use of funds during corporate closure must be applied. These are: Accountability Openness.

Logistics Closure (Cont) Leases – All identified commitments of a contract nature need to be considered. Due professional care in the event of an extension must be applied not to over commit. All contracts are on month to month, except for Office rental which expires on 31 March 2010 Facilities Closure – The primary objective is to facilitate the transfer of offices and infrastructure together with the return of the projects to clients. All Assets would be transferred to HDA in consultation with National Treasury .

Logistics Closure (Cont) Final visit of buildings in the company of NDoHS will be required to ensure they are left in good condition and that buildings are properly handed back to the Landlord. Obtain permission from the Minister to put company under administration. Request permission from National Treasury to liquidate the company Appoint a liquidator.

SERVCON HOUSING SOLUTIONS (PTY) LTD cont. It is envisaged that Servcon will cease operations by end of September 2009 Minister took a decision that the staff of Servcon should be offered alternative employment Currently negotiations with Provincial Housing Departments, Housing Development Agency and other housing institutions are taking place with a view to redeploy staff Assets will be transferred to the Housing Development Agency including Pieces of land acquired by Servcon before the establishment of the HDA

SOCIAL HOUSING FOUNDATION (SHF) Following the decision to close, a Steering Committee was composed comprising: National Department of Housing, Department of Public Service and Administration National Treasury Executive Management of SHF Specialist consultant on closure has been appointed to facilitate closure process and reports to the Steering Committee First draft of the Closure Plan has been developed for consideration by the Steering Committee (17 June 2009) Closure Plan will be submitted to Minister for approval & closure concluded by March 2010.