BUDGET PRESENTATION 11 JUNE 2008 PNS MAKGATHE-CEO NHBRC 2007/8 Financial Year BUDGET PRESENTATION 11 JUNE 2008 PNS MAKGATHE-CEO NHBRC 9/18/2018

VISION OF NHBRC To be a world class organization which protects housing consumers and regulates the home building industry. 9/18/2018

MISSION OF NHBRC Provide excellent customer care and service to all stakeholders in the homebuilding industry; Benchmark the NHBRC’s technical standards against national and international norms; Build the capacity home builders, with particular focus on the uplifting of historically disadvantaged individuals; Promote quality and innovative construction in the homebuilding industry; 9/18/2018

MISSION CONT… Grow and sustain the warranty fund; Capacitate housing consumers about their rights, duties and obligations; and Promote and maintain ethical standards in the homebuilding industry. 9/18/2018

VALUE STATEMENTS Customer service excellence Good corporate governance Learning and caring organization Accountability, responsibility and transparency Commitment and moral integrity Trust and loyalty 9/18/2018

MOTTO QUALITY IS OUR PRIORITY 9/18/2018

STRATEGY To improve visibility in the market and enhance interaction with homebuilders and housing consumers. 9/18/2018

OUR COMMITMENT CUSTOMERS ARE IN OUR HEARTS AND QUALITY IS OUR PRIORITY 9/18/2018

Objects of Council To regulate the home building industry. To provide protection to housing consumers in respect of the failure of home builders to comply with their obligations in terms of the Act. To establish and promote ethical and technical standards in the home building industry. To improve structural quality in the interest of housing consumers and the home building industry. To represent the interests of housing consumers by providing warranty protection against defects in new homes. 9/18/2018

Objects of Council To promote housing consumer rights and to provide housing consumer information. To communicate with and to assist home builders to register in terms of the Act. To assist home builders, through training and inspections, to achieve and maintain satisfactory technical standards of home building To regulate insurers as contemplated in section 23(9)(a) of the Act; and In particular, to achieve the stated object of this section in the subsidy housing sector. 9/18/2018

CONSUMER PROTECTION PROCESS 9/18/2018

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Corporate Governance 9/18/2018

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VALUABLE FINAL PRODUCTS VFP Target 2007/8 Actual 2007/8 Actual 2006/7 Registration 4790 4820 4595 Renewals 12320 12390 11033 Enrolments 76740 76969 78568 Late Enrolments 3830 4132 4583 Inspections 337490 650834 638294 Complaints 2824 2607 1241 Conciliations 1306 883 318 Suspensions 610 645 541 Deregistrations Withdrawals 83 435 Training 3170 4512 1837 9/18/2018

Subsidy Enrolment Target 2007/8 Actual 2007/8 Actual 2006/7 Project Enrolment 102850 63848 66643 Home Enrolment 130530 30678 53837 9/18/2018

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TRAINING 2007/8 PROVINCE TARGET ACTUAL Eastern Cape Free State Gauteng 500 429 Free State 270 392 Gauteng 480 1061 Kwazulu Natal 600 534 Limpopo 300 813 Mpumalanga 157 Northern Cape 120 235 North West 635 Western Cape 256 TOTAL 3170 4512 9/18/2018

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FORENSIC AUDITS PROVINCE UNITS AMOUNT('R") EC 16951 295460626.8 FS 815 1507662.78 GP 7203 2165000 KZN LP 7358 28310115 MP NW 6297 10600656.18 NC 101 2408287.55 WC 2027 38828389.79 TOTAL 40752 379280738.1 9/18/2018

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GRADING SYSTEM 9/18/2018 Selling Price Grade A Grade B Grades C & U Grade D (i) less than R500,000 0.9% of selling price 1.2% of selling price 1.3% of selling price 1.5% of selling price (ii) greater than or equal to R500,000 and less than R1,000,000 R4,500 + 0.69% of amount exceeding R500,000 R6,000 + 0.92% of amount exceeding R500,000 R6,5000 + 1.0% of amount exceeding R500,000 R7,500 + 1.15% of amount exceeding R500,000 (iii) greater than or equal to R1,000,000 and less than R2,000, 000 R7,950 + 0.60% of amount exceeding R1,000,000 R10,600 + 0.69% of amount exceeding R1,000,000 R11,500 + 0.75% of amount exceeding R1,000,000 R13,250 + 0.87% of amount exceeding R1,000,000 (iv) greater than or equal to R2,000,000 and less than R5,000,000 R13,950 + 0.40% of amount exceeding R2,000,000 up to R5,000,000 R17,500 + 0.46% of amount exceeding R2,000,000 up to R5,000,000 R19,000 + 0.5% of amount exceeding R2,000,000 up to R5,000,000 R21,950 + 0.58% of amount exceeding R2,000,000 up to R5,000,000 (v) greater than or equal to R5,000,000 R25,950 R31,300 R34,000 R39,350 9/18/2018

compared to budget for the Actual performance compared to budget for the year ended 31 March 2008 9/18/2018

Summary Income Statement R’ Million Description 2007/8 Actual Budget Variance Favourable/ (unfavourable) Total Revenue 576 644 (68) Unearned premium /unexpired risk provision (260) Operating Cost (60) (40) (20) Outstanding claims provision 290 Gross Margin 546 604 (58) Fixed Costs (261) (353) 92 Operating Surplus/(Loss) 285 251 34 Interest Revenue 177 89 88 Surplus after interest 462 340 122 9/18/2018

Revenue Variance R’ Million Non-Subsidy Actual 2007/2008 Budget Variance Registrations/renewals 12,4 12,6 (0,2) Home Enrolments 540,0 555,8 (15,8) Late Enrolments 1,9 1,8 0,1 Subsidy In Project Enrolments 7,6 23,3 (15,7) 3,8 29,5 (25,7) Other – prior year technical invoices - Provisions 10,3 21,0 (10,7) Total: 576 644 (68) 9/18/2018

Major Expenditure Variances R’ Million Actual 2007/200/ Budget 2007/2008 Variance > R3 million Operating (Inspections) 60 40 (20) Fixed 261 353 92 Major variances Consulting 6 10 4 Technical (Audits) 13 20 7 Depreciation (ERP system) 27 21 Employment (Inspectorate) 131 169 38 Marketing 18 11 Premises (Gauteng) 17 Travel (Employment costs) 9/18/2018

Reserves 9/18/2018

Enrolment fee adequacy 9/18/2018

Solvency 9/18/2018

Insurance provisions Non Subsidy Subsidy Total Unearned Premium 850,173,362 20,276,454 870,449,816 Outstanding Claims 44,997,442 2,268553 47,265,995 Unexpired Risk 56,837,956 895,170,804 79,382,963 974,553,767 9/18/2018

Emerging Contractor Reserve Reserves R’ Million Emerging Contractor Reserve Investments Opening reserve 16,1 1943 Transfer to Reserves 37,0 535 Utilised (15,9) (41) Closing Reserve 37,2 2437 9/18/2018

BUDGETS ( 2008/9-2010/11) 9/18/2018

Revenue Assumptions Non-Subsidy Registration fees R 750 (Inc) per builder Annual fee R 600 (Inc) per builder Manuals R 100 (Inc) per set Enrolment fee structure 0 – R500k 1,3% (a) R501k – R1 mill (a) + 1% of difference (b) R1 mill – R 2 mill (b) + 0.75% of difference (c) R 2 mill – R 5 mil (c) +0,5% of difference Above R 5 mill Maximum of R 34 000 Late Enrolment Fee R 546 (Inc) per enrolment 9/18/2018

Revenue Assumptions Subsidy Housing Subsidy Enrolments 1% Project enrolment 0,75% Home enrolment fee 9/18/2018

Revenue Registrations Renewals Late Enrolments Home Enrolments Non-Subsidy Units R’ Millions Registrations 5 296 6,5 Renewals 11 534 6,1 Late Enrolments 3 982 2,0 Home Enrolments 76 145 561,4 Technical and Other - 5,0 Builder Grading Discount (7,2) Total: 573,8 9/18/2018

Revenue Subsidy Project Enrolment Subsidy Home Enrolment Sub Total: Subsidy Housing Units R’ Millions Subsidy Project Enrolment 124 190 45,8 Subsidy Home Enrolment 100 000 27,6 Sub Total: 73,4 9/18/2018

Enrolment Distribution Non Subsidy Province Number of Units Gauteng 37 791 KwaZulu-Natal 5 985 Eastern Cape 5 624 Western Cape 15 200 Polokwane 2 484 Northern Cape 0 551 Free State 1 710 North West 2 991 Mpumalanga 3 810 TOTAL: 76 146 9/18/2018

Enrolment Distribution Subsidy Housing Province Number of Enrolments Projects Gauteng 35 200 44 000 KwaZulu-Natal 11 000 16 500 Eastern Cape 12 100 Western Cape 4 200 Polokwane 6 050 Northern Cape 1 900 2 500 Free State 8 800 14 300 North West 18 000 17 390 Mpumalanga 2 750 TOTAL: 100 000 124 190 9/18/2018

Operation Expenditure Assumptions Accreditation Costs Based on number of new applications and number of annual renewals Full credit check done on all new applications Full credit check done on 50% of renewals Cost per check R350.00 Inspection fees Enrolment value # Inspections Less than R500 k 4 R500k – R1 mill 5 R1 mill – R2 mill 6 > R2 mill 8 9/18/2018

Inspection Assumptions Province Number of Inspections Inspection Fees R’ Million Gauteng 189 654 22,9 KwaZulu-Natal 31 873 10,9 Eastern Cape 52 813 9,8 Western Cape 96 945 19,3 Polokwane 13 025 7,9 Northern Cape 3 795 1,6 Free State 11 182 3,5 North West 16 104 13,6 Mpumalanga 19 945 6,9 TOTAL: 435 336 96,4 9/18/2018

Fixed Expenditure Satellite Offices R’ Million TOTAL: 18,1 Gauteng - Tshwane 3,7 KwaZulu-Natal – New Castle 2,4 KwaZulu-Natal – Port Shepstone Eastern Cape – East London 1,9 Polokwane - Tzaneen 1,1 Polokwane - Bela Bela 1,2 Free State - Betlehem 1,0 North West - Klerksdorp 1,7 Mpumalanga - Witbank 2,7 TOTAL: 18,1 9/18/2018

Fixed Expenditure Marketing R’ Million TOTAL: 10,0 Annual Report 0,4 Advertising 2,8 National Awards 0,9 Print Media Promotions 1,3 Provincial - Awards 1,5 Provincial - Exhibitions 2,0 Provincial – Road Shows 0,7 TOTAL: 10,0 9/18/2018

Fixed Expenditure Special Projects R’ Millions TOTAL: 161,4 Chairperson’s Projects 3,4 Innovations 150,0 Youth Training (350) 7,5 Contact Centres 0,5 TOTAL: 161,4 9/18/2018

Summary Income Statement R’ Million (before Actuarial) Description 2007/8 Actual 2008/9 Budget 2009/10 2010/11 Revenue 576 647 683 721 Operating cost 60 101 107 115 Gross Margin 516 546 606 Fixed Costs 261 509 382 413 Operating Surplus/(Loss) 255 37 194 193 Interest Revenue 177 163 175 189 Surplus after interest 432 200 369 9/18/2018

Revenue Variance R’ Million Non-Subsidy Actual 2007/2008 Budget 2008/2009 Variance Registrations/renewals 12,4 12,6 0,2 Home Enrolments 540,0 561.4 21,4 Late Enrolments 1,9 2,0 0,1 Subsidy In Principal Enrolments 7,6 27,7 20,1 3,8 45,8 42,0 Other – technical invoices - Grading 10,3 5,0 (7,2) (5,3) Total: 576 647,3 (71,3) 9/18/2018

Major Expenditure Variances R’ Million Actual 2007/2008 Budget 2008/2009 Variance R’million Operating (Inspections) 60 101 41 Fixed 261 509 248 Major variances Premises (Satellite/Gauteng/Innovation hub) 13 23 10 Employment( Satellite/ Engineers) 131 181 50 Depreciation (ERP system) 6 34 28 Special projects 2 162 160 9/18/2018

Summary Balance Sheet R’ Million Description Actual 2007/8 2008/9 Budget 2009/10 2010/11 2011/12 Non-current assets 2527 2,428 2,797 3,179 3,586 Current Assets 94 59 62 65 69 ASSETS 2621 2,487 2,859 3,244 3,655 Reserves 1417 1,520 1,888 2,270 2,676 Current Liabilities 201 53 57 60 Technical Liabilities 1003 914 Equity and Liabilities 9/18/2018

Fixed Expenditure Emerging Contractor Training Course R’ Millions Construction Management 3,5 Finance for Non Financial Managers 1,5 Construction Project Management 3,1 Plumbing Painting 4,7 Plasters 4,8 Brick Laying 8,3 Roofing 18,9 TOTAL: 47,9 Reserve 30,5 Budget 17,4 9/18/2018

Capital Budget Computer Equipment R 7,2 Million Software R 12,0 Million Furniture R 3,5 Million Equipment R 0,3 Million Innovation Hub R 10,5 Million Motor Vehicles R 0,4 Million Total: R 33,9 Million 9/18/2018