Presentation to the Portfolio Committee on Housing held on 10 May 2006 – ROOM 146 Marks Building – CAPE TOWN

Presentation Topics Introduction Mandate Funding Framework List of Board Members Corporate Governance Strategic Plan including Budgets – Focus on the MTEF 2005/6 and 2006/7 Key Challenges Specific Challenges in Relation to Delivery Equity/Procurement/BEE and Contribution to ASGISA Way Forward

1. Introduction Presentation will cover the following: Establishment Mandate and Expanded Mandate Funding Framework by both Shareholders Board Representation Corporate Governance and alignment to the Policy Framework on Public Entities and DPSA Requirements Key Strategic Plan, including Budgeting covering 2005/6 and 2006/7 Key Challenges and Proposed Corrective Measures Specific Challenges in relation to Delivery Equity Issues Way Forward

2. Establishment and Mandate Servcon was established in 1995 Its Agreement was renewed in 1998 to dispose a further 33 386 ring-fenced portfolio by 31 March 2006 and/or when the last property has been transferred to the last Servcon client; Mandate was to Normalize Non-Performing Properties – Status of Redundancy to Liquidity

2. Establishment and Mandate… Servcon expanded Mandate over the Contractual Period: Relocation Assistance Programme– 25/10/04; Incentivized Vacant Possession: End of 2003/4; Eviction of Defiant Occupants – Ended 30/9/04 PHD Normalization Programme – Started in 2003/4 Special in Situ Rightsizing Programme – 25/10/2004 Properties outside Servcon – Under Consideration but most PHDs wants that to form part of the Normalization Programme Special Purpose Vehicle on Land and Landed Props.

3. Funding Framework Banks contributes 50%: Operational Costs Government contributes 50%: Operational Costs NDoH: Restructuring of Servcon and incidental costs regarding exiting Banks PHDs: Incidental Subsidy Amounts – Qualified Beneficiaries Normalization Programme

4. List of Board Members Current Servcon: BNG Re-aligned Servcon: Banking Association (BASA): BASA; Nedbank; ABSA; FNB; STBANK Government NDoH; Treasury; SAPS; Justice; GPPHD; WCPHD BNG Re-aligned Servcon: Ministerial Appointments as soon as the current portfolio has been finalized and/or Signed Sale of Shares Agreement

5. Corporate Governance Compliant; King Finance – 95%: PFMA – 100%; Same Chairperson since 1998 Chairperson heading Audit/Remuneration Com. PFMA – 100%; DPSA Requirements – 100%: Model used to Restructure Servcon Policy Framework of Public Entities – 95%: Materiality Requirements Met

6. Strategic Plan and Budgets Strategic Plan in place cover the period 2004/6 to 2009/10 Finalization of the Ring-Fenced Portfolio; Normalization Programme of PHD owned or managed properties – Designated Portfolio; Use of Servcon expertise post 31 March 2006; Land identification and acquisition for Integrated Housing Development - BNG

6. Strategic Plan and Budgets RESTRUCTURED SERVCON Land Parcel Landed Properties Identification (Data) Identification (Data) Receipt/Acquisition Receipt /Acquisition Holding Holding Mixed Use Program Mixed Use Program Disposal Disposal/ Management

6. Strategic Plan and Budgets… Financial Year 2005/6: Budget R59m Expenditure R59m Servcon Cost-Sharing Concept: R40m CIDA R19m Financial Year 2006/7: Budget R60m Servcon Budget R35m Restructured Servcon R25m PHD Normalization is dependent on Approved Designated Properties for the year KZN; WC;GP; EC

7. Key Challenges Specific PHDs having delayed transfer of incidental Special in Situ Rightsizing Programme; Normalization Programme of PHDs: Delayed understanding; Misunderstood Value-Adding to PHDs; Outside Servcon Portfolio – Facilitative Role; Stalled process accommodating other PHDs to benefit through the Normalization Programme

8. Specific Challenges Exited Banks from Servcon: Qualified VOETSTOOT sale of Shares; Continued Normalization Programme: PHDs have now motivated for a linked SPV/ Normalization Programme Restructured Servcon: Finalization on the Capitalization Programme Inter-Departmental Linkages; Private Sector Raising of Funds

9. Equity/Procurement/BEE and contribution to ASGISA Equity: Servcon will be restructured into a 100% State Owned Section 32 Company with the Capacity to transact as a Private Entity and yet accountable to the Minister; Procurement is according to applicable Corporate and Government Requirements; BEE – Process is still being determined but Service Level Agreement require following applicable Process ASGISA – Rapid Housing Delivery Models

10. Way-Forward Finalized Ring-Fenced Portfolio – targeted 30 June 2006; Normalization Programme – PHDs recommended to the Minister a Linked Process – Redundant Portfolio; Portfolio outside of Servcon; Shack Audit; Rectification Quantification Programme etc Restructured Servcon Business Case articulated and will be presented to the DG within the next 7 Days

KE A LEBOGA